The largest chunk of active permits for drilling on federal lands where leases have already been issued. is now in New Mexico. EOG Resources (Houston) and Devon Oil (OKC) are the two largest stakeholders holding these federal permits.
The fields are rich in shale-oil, which requires successful tapping and fracking in order to be lucrative.
“Just because you have a lease doesn’t mean there’s actually oil and gas in that lease, and there has to be a lot of development that occurs between the leasing and then ultimately permitting for that acreage to be productive,” said Mike Sommers, of the American Petroleum Institute.
A review of federal drilling permits shows that half of unused onshore permits are for acreage in New Mexico’s Lea and Eddy counties, part of the Permian Basin that’s responsible for most of U.S. oil output. EOG held the most permits there, followed by Devon and Occidental Petroleum Corp.
“I’m a little mystified that there hasn’t been some dialog,” Muncrief said in an interview in New York. A request from the Biden team, he said, could make it easier for companies like Devon, one of the biggest explorers in the U.S., to boost output without angering shareholders who have been demanding investment discipline. “If they were to reach out and maybe be a little more collaborative, it might provide some cover.”
The American Exploration and Production Council, a trade group representing EOG, Devon and others, pushed back on the notion that holding permits constitutes an obligation to drill. “This claim shows a fundamental misunderstanding of how exploration and production works,” said Anne Bradbury, chief executive officer of the association.
While the U.S. is key to replacing Russian oil, it won’t happen immediately or without more support from the Biden administration, Occidental CEO Vicki Hollub told Bloomberg Television on the sidelines of the CERAWeek by S&P Global conference in Houston Tuesday. "U.S. oil drillers simply can’t significantly expand production in the near term because of personnel shortages and supply-chain snarls."
Biden campaigned on pledges to combat climate change, & clamp down on drilling. The administration initially halted oil and gas lease sales — a move later reversed by a Louisiana-based federal district court.
Interior Department's Bureau of Land Management has yet to auction onshore oil leases under Biden. It is still issuing permits on existing leases, with nearly 4,000 authorized onshore last year, in line with recent, pre-2020 levels. And more of those leases actually have wells in production, according to Bureau of Land Management data cited by the industry.
There are barriers to ramping up output in Lea and Eddy counties. Oil produced on that side of the Permian tends to generate higher quantities of associated natural gas and water, which are more costly to dispose of in New Mexico, where air and water regulations are stricter than in Texas.