Drill, baby, drill? There’s more to oil and gas leases, says insider

Mar 11, 2022, 1:21 PM | Updated: 3:45 pm
Lack of Russian oil supply greatly effects Utah along with rest of Country...
FILE - A pumping unit sucks oil from the ground near Greensburg, Kan. on March 6, 2012. AP Photo/Charlie Riedel.

SALT LAKE CITY — There are 9,000 oil and gas leases out there in America, so start drilling, President Joe Biden said recently. But it’s not that simple, says a trade association insider representing the oil and natural gas industry.

President Biden banned all Russian oil and gas imports to the United States, saying “defending freedom is going to cost.”

As of March 10, the average price of a gallon of gasoline in Utah was $4.30; a month ago, $3.37, according to AAA.

“And then he said there are some 9,000 oil and gas leases out there. So start drilling, and it seemed like and — Voila, we have more supply,” Debbie Dujanovic said.

“Drill, baby drill, right? If only it were that simple,” guest host Taylor Morgan said. Of those 9,000 leases, he said, 2,200 are being litigated by environmental groups.

During his State of the Union address on March 1, Mr. Biden said, “‘The oil and gas industry has millions of acres leased. They have 9,000 permits to drill now, that could be drilling right now, yesterday, last week, last year. They have 9,000 permits to drill onshore that are already approved.”

Ask the expert

Kathleen Sgamma of Western Energy Alliance joined Dujanovic and  Morgan to explain more of the  context to the 9,000 oil and gas leases.

Out of 700 million acres of the federal mineral estate, 26.2 million are leases — “that is a historic low,” Sgamma said, adding some leases are never developed due to lack of oil and gas at the well site.

“A federal permit, that’s not the only permit required, there has to be right of way. There’s all kinds of red tape to cut through in this process, right?” Taylor asked.

“That’s right. So your first step is getting a lease, then you’ve got to do years of environmental analysis on it. And then you have to get a permit. So the White House has been confusing permits and leases somewhat,” Sgamma said, adding there are also air and water permits that must be obtained.

She said there also must be infrastructure in place to drill for natural gas and oil. 

‘Obstacles in front of our path’

“When pipelines are held up, which this administration has been doing, then we can’t tap into that pipeline and develop or deliver that natural gas off that well,” Sgamma said.

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She added the Biden administration has been pressuring banks not to lend to oil and natural gas companies.

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“If we don’t have the capital to develop a well, which is multimillion dollars, then we can’t even begin to get a rig and move in and start to use that permit,” Sgamma said. “They’ve tried to trip us up, and now they’re saying, ‘Well, why aren’t you developing on those 9000 permits?’ Great. We want to go do that if they would just release some of these other obstacles in front of our paths.”

“How long would it actually take — start to finish — for oil production to have an impact in lowering the price [of gasoline]?” Taylor asked.

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Sgamma said if new workers can be hired, new regulations removed and financing can happen, then oil and gas production can be ramped up.

“We’re suffering from the same supply chains that other industries are . . . It does take a while to ramp up, but it’s not two to five years. It’s six months to a year to a year and a half,” she said.

Dave & Dujanovic can be heard weekdays from 9 a.m. to noon. on KSL NewsRadio. Users can find the show on the KSL NewsRadio website and app, as well as Apple Podcasts and Google Play.  

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Drill, baby, drill? There’s more to oil and gas leases, says insider