Manhattan Institute for Policy Research, March 2015

No. 35 July 2015 Issue Brief

Published by the Manhattan Institute How toExtendAmerica’s STEP ONTHEGAS! Energy Advantage Senior Fellow Oren Cass N EXECUTIVE SUMMARY slowing in response. 100,000. current boomandextenditfarintothefuture: U.S.energypolicy,craft asmarter onethatwillamplify the bivalent federal policy. This papersuggests 11reforms tohelp has driven anoilandgasrevolution inthefaceof, atbest,am- abundance.Indeed,manage thenew America’s private sector based onanassumptionofresource scarcity, isillequipped to oil andgasglutistemporary. be anenormousmistake.Demand forecasts indicatethatany Yet failingtopress America’s current energyadvantage would viable before fuelcostsfellby half, dim. willfurther turbines, whichhadenoughdifficultybecomingeconomically carbon emissions;andthatprospects forelectriccarsandwind cheap, progress abundantfossilfuelswillfrustrate onlimiting it is too bust. MANHATTAN INSTITUTEFORPOLICYRESEARCH 5 Observers concerned about output typically worry that concernedaboutoutputtypically worry Observers high: that drilling will damage local environments; that 4 Headlines announcethattheboomhasalready gone Domestic output has reached an all-time high, tance ofincreasing U.S.oilandgasproduction. ow may seemanoddtimetoemphasize theimpor- prices have plummeted, 3 Job are approaching cuts in the industry M 6 Further, U.S.energypolicy, still I 2 anddrillingactivity is 1

2 Issue Brief No. 35 July 2015 75 percent ofourenergyare out,” running pling scarcity. oilandnaturalgaswe rely onfor “The at atimeofcrisisandunderanassumptioncrip- Current U.S.energypolicywasforgedinthe1970s, ADVANTAGE I. INTRODUCTION: AMERICA’S ENERGY 2. 1. “we mustendtheageofoilinourtime.” three percent oftheworld’s addingthat oilreserves,” of ourlandandshores, we wouldstillfindonly singlesquare inch opened upanddrilledonevery then-candidate Barack Obama declared that“ifwe President in1977.Asrecently Carter as2008, Source: EIA

2014 Oil Production (million bbl/d) replicate growth theextraordinary oftight oil. eral landandwaterstoenergydevelopment to Extend (Reforms theBoom 6–11).Open fed- fectiveness ofU.S.energymarkets. reforms toincreaselatory theefficiencyandef- (ReformsAmplify theBoom 1–5).Enact regu- 0 1 2 3 4 5 ( 2 I n 0 c U 4 0 r 5–14) . . e S 7 a .

s e

C 4 h Figure 1.IfRecentGrowth inU.S.OutputWere aCountry . i 6 n a C a 4 n . 4 a d a U 3 . A . 5 . E . 8 7 warned 3 I r a . 4 n producer ofbothresources (Figure 1). percent (gas). tion during2005–14by 69 percent (oil)and42 massive from reserves shale have increased produc- Ford (Texas), andPermian (Texas) shaleformations. oil” unlockedinthe Bakken (North Dakota), Eagle New U.S.oilproduction hascomeprimarilyfrom “tight ergy Information Administration (EIA). 16 percent to4percent, according totheU.S.En- fromcent of consumption, and natural-gas imports petroleum products fellfrom 60percent to26per- oiland During ofcrude 2005–14,netU.S.imports From Scarcity to Abundance creased. the formerremains steadyandforthelatterhasin- to curbingdemandforoilandgas,U.S. After 40years ofnationalenergypolicydedicated ment intervention. lution isnot,however, ofsuccessful govern astory - 2013 Natural Gas Production (tcf) 1 0 2 4 6 8 0 10 ( I 2 But drillingtechnologiesthatrelease new n 0 c 7 U 0 r . e . 5–14) 7 S a 11 .

s e The U.S.isnow theworld’s largest

5 I r . a 7 n Q 5 a . 6 t a r C a 5 n . 1 a d 12 a 9 This revo- This C 4 h . 0 i n a Figure 2. The Changing Picture, 2010 vs. 2015

EIA Forecast in 2015

Actual 10

EIA Forecast in 2010 5 Forecast and Actual Forecast U.S. Oil Production (million bbl/d), U.S. Oil Production

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: EIA

In 2008, the Bakken produced 180,000 barrels per energy and petrochemical feedstock are enabling a day (bbl/d), on average; in April 2015, it produced resurgence of domestic manufacturing.17 Continued more than 1.3 million bbl/d. During the same period, shale development could add an incremental $380 the Eagle Ford’s output soared from 55,000 bbl/d billion–$690 billion to annual GDP by 2020 and to 1.7 million bbl/d, as did the Permian’s, doubling create 1.7 million permanent jobs, according to the to 2 million bbl/d.13 New gas production has come McKinsey Global Institute—larger than any other primarily from the Marcellus shale formation, which U.S. growth opportunity identified by McKinsey.18 stretches across New York, Pennsylvania, Ohio, and West Virginia. Output there leaped from 500 billion Benefits of the Energy Boom cubic feet (bcf) in 2008 to more than 5,600 bcf in the America’s new status as an energy superpower con- 12 months ending April 2015.14 fers considerable geopolitical benefits. U.S. drillers are now the swing producers in global markets.19 Ex- America’s shale boom took energy markets by tensive spare capacity—such as the 300,000 bbl/d surprise. The EIA’s current projections for 2015 of tapped but not yet produced U.S. reserves20— U.S. oil and gas output are 66 percent and 37 dampens price volatility and reduces the threat of percent higher, respectively, than its 2015 output supply shocks.21 Declining oil prices are squeezing projections made in 2010 (Figure 2).15 Soaring the finances of Iran, Russia, Venezuela, and other re- production helped lift America’s economy out of pressive, energy-rich regimes, too.22 the Great Recession—boosting annual GDP by hundreds of billions of dollars and creating hundreds The $1,500 that the average U.S. household now of thousands of shale-related jobs.16 Lower-cost saves annually from plunging energy prices—$1,000

Step on the Gas! 3 4 Issue Brief No. 35 July 2015 air pollution gas, ratherthancoal,togenerateelectricityreduces by renewables) during2005–13, annually (muchlargerthanthereduction delivered emissions by more than 200 million metric tons bbl/d (nearly 50 percent) in non-OECD countries, as bbl/d (nearly50percent) innon-OECDcountries,as oped countriesto2035butwilljumpby 19million timates thatoilconsumptionwillremain flatindevel- for oilandgaswillrisefasterthanU.S.output.BPes- ous long-term projections suggest that global demand Notwithstanding energyglut,numer- thetemporary Doubling Down top prioritiesforpolicymakers. boom andmaintainingitsmomentumshouldbe Given suchbenefits, maximizing the value oftoday’s 1986–2013 increase inmedianhouseholdincome during natural gasasaninput electricity, heating,andfinishedgoodsthatuse at the pump cut emissionsby more thananyothercountry. Source: U.S.CensusBureau; EIA;BostonConsultingGroup

U.S. Median Household Income (2013 USD) 40 50 60 ,0 ,0 ,0 (Figure 3). 26 23

19 andhaslowered carbondioxide

80 and $500 from lower costs for 19 81 19 82 19 Value ofreductioninenergycosts 83 24

19 25 84 —is largerthanthetotal 19 The spread ofnatural 85 Figure 3.Energy SavingsforU.S.Households 19 86

19 27 87 19 helpingtheU.S. 88 19 89 19 90 19 91 19 92 19 93

19 28

94 19 demand willgrow by 53percent. carsarea billionnew addedtotheroads. Global gas natural gas(21percent to19percent); grow dependentonhighenergyprices,therelative duction. Whereas energy-producing nationsoften my faceslittleriskofoverdependence onenergypro- Thanks toitslargedomesticmarket, theU.S.econo- todoso.portunity mit the capital and accept the risk if given the op- judgments aboutreturns oninvestment, willcom- ment—the private sector, bestincentivized tomake create an environment conducive to private invest- government betsbutsimply neednotplaceindustry groundwork forexpandedproduction. The U.S. are accurate,there islittledownside tolayingthe Regardless oftheextenttowhichsuchforecasts forU.S.producers. opportunity duction tofallforoil(15percent to11percent) trends, EIAforecasts America’s globalshare ofpro - 95 to risesignificantly. 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 32

03 Such conditionsofferenormous 20 04 20 05 20 06 20 07

20 29

08 Indeed, oncurrent 20 09 20 10 20 31

11 andprices 20 12 20

13 30 and and balance between U.S. production and consumption Thus, the time to invest more is now, at the very mo- leaves its economy evenly exposed to both sides of ment that more investment seems superfluous. Oppo- the market. Likewise, the threat of “Dutch disease,” nents of further exploration and development tend to whereby resource-dependent economies lose manu- cite long lead times as an argument against pursuing facturing competitiveness as their currencies appre- such a course; in this instance, however, lead times are ciate,33 poses little risk to the United States: produc- a feature, not a bug. Further, the commercialization tion helps reduce the country’s large trade deficit and of new gas and oil technologies and the installation its manufacturers’ energy costs. of new infrastructure take years to complete. Smart policy today can ensure that the necessary pieces are Some environmental groups argue that any increase in place to sustain U.S. energy leadership for decades in oil and gas production is undesirable. Every unit to come. Doubling down will require the following of fossil fuels extracted and consumed, they note, steps: (1) amplify the boom; and (2) extend it. emits carbon dioxide, increasing the threat posed by climate change. However, given that the world II. AMPLIFY THE BOOM will consume fossil fuels for the foreseeable future, America is a better place than most to produce such As exploration and technology advance, the major- fuels. A recent study reported in Nature, for instance, ity of current forecasts for U.S. oil and natural-gas found that consumption of U.S. oil and gas reserves output likely understate future production. Perhaps (excluding Arctic reserves) is consistent even with the greatest risk to output comes not from resource the aggressive international goal of limiting global scarcity but from a hostile regulatory environment. warming to less than two degrees Celsius.34 U.S. energy policy has not been updated to reflect new production realities: sometimes the result is As investment continues in the capital needed to simply wasteful, as when the government mandates consume fossil fuels, it makes little sense to avoid the use of costly ethanol as a substitute for cheaper capital investment in fossil-fuel production. For ex- oil;38 yet other government-imposed obstacles, such ample, as long as American manufacturers build cars as inadequate infrastructure and excessive environ- that consume gasoline, each such vehicle will burn mental regulation, pose a far greater long-run threat hundreds of thousands of miles worth of gasoline in to sustaining America’s energy advantage. coming decades. Policies that restrict U.S. oil supply will only succeed in ensuring that oil is imported. Markets and Infrastructure As surging production overwhelms current infra- Stifling production also does little to advance U.S. structure, cracks are widening in the foundation of interests in international climate negotiations. Aus- the U.S. energy market. The canary in the coal mine: tralia, for instance, is expanding coal production;35 the growing gap between the price that American oil Norway is preparing to drill for oil in the Arctic;36 and gas producers receive for their output domesti- and Canada continues to invest in oil sands.37 If the cally and the price available internationally (Figure rest of the world rapidly develops its oil and gas re- 4). While the West Texas Intermediate benchmark sources and the U.S. does not, America’s economy price for crude oil has historically moved in tandem will suffer mightily, for little environmental gain. with Europe’s Brent benchmark price, WTI traded If U.S. negotiators hope to forge an international in early 2015 at a more than 10 percent discount; agreement to cut carbon emissions, it will also be- in 2012, WTI briefly traded 20 percent lower.39 The hoove them to have chips of their own—chips such gap for natural gas is greater still, with landed prices as a robust, growing domestic oil and gas industry to for liquefied natural gas (LNG) in Europe and Asia curtail if others do the same. nearly three times the Gulf Coast price.40

Step on the Gas! 5 6 Issue Brief No. 35 July 2015 bbl inadditionalcost Coast refineries. from roughly zero tothemajoritysuppliedEast During leaped 2012–15, rail shipmentsofcrude ronmental andsafetyrisks. -crewed vessels, represents anothermajorhurdle. to traveltween onAmerican-builtand U.S. ports The Jones Act, whichrequires products shipped be- have increased theiruseofrailby afactorof50. legal restrictions. Since 2008,U.S.oilproducers Such gaps are the result of logistical challenges and leave by train. of North Dakota, where two-thirds ofoilmustnow XL pipelinewould,however, efficientlymove oilout Source: EIA;FederalEnergyRegulatoryCommission approvals onafixedtimeline. identify asingleagencytocoordinate reviews and such infrastructure tobein thenationalinterest, and pedited pipeline-permittingprocess thatdeemsall Reform 1.Approve KeystoneXL,establishanex-

Price Gap from WTI to Brent Crude Spot Price (%) -3 -2 -1 1 0 0 0 0 0 Jan-2007 45

42 Jan-2008 Rail transport alsoadds$5–$10/ Railtransport

Jan-2009 43 andposesfargreater envi- Jan-2010 44 The proposed Keystone Jan-2011 Figure 4.InternationalEnergy PriceGaps Jan-2012

Jan-2013

Jan-2014

Jan-2015 41

during thepast30years. 80 percent declineinthenumberofU.S.tankers at such uncompetitive prices, the result has been an the event ofwar. Yet withlittledemandforshipment aU.S.merchant topreserve marinein is necessary ly ($5–$6/bbl). geria +<$2/bblbackacross theAtlantic) thandirect- Coast totheEastCoast,viaNigeria (<$2/bbltoNi- costs—one canmore cheaplysendoilfrom theGulf This nakedlyprotectionist lawtriplesshipping tion, boostGDP, andlower prices forAmerican show thatfreeing would increase exports produc- law—at great cost.Empirical studiesconsistently are oil exports also banned under federal U.S. crude ficiently move U.S.fuels. much gainedby allowing international vessels toef- products. minimum, asitpertainstothetransportofenergy Reform 2.RepealtheJonesActentirely—or, ata LNG Estimated June 2015 Landed Prices (USD) 1 0 2 4 6 8 0 C G 2 o u a . l 6 s f 46 t

Supporters argue that the Jones Act K U i n 6 n g . i 7 d t e o

d m 47 C Littlewouldbelostand 7 h . i 6 n a

J R a 7 i n o . e

6 d i r

e o J a 7 p . 8 a n consumers,48 while strengthening U.S. influence in significant environmental advantages over an existing international markets. America has long exported coal-fired plant, the former faces an additional layer natural gas, via pipeline, to Mexico and Canada. Ex- of costs that existing natural-gas plants do not face. porting to other markets will require the construc- tion of specialized LNG terminals. Though LNG A proposed U.S. Environmental Protection Agency exports are not banned, the U.S. Department of rule, reducing the level of acceptable ozone in the Energy (DOE) must determine that LNG exports atmosphere,53 would discourage drilling. The more and terminals serve the “public interest.” The Fed- stringent standard would cause many areas to be re- eral Energy Regulatory Commission (FERC) must classified as overly polluted. The result: draconian approve new terminals, too.49 restrictions on new pollution sources in such areas, including potential new oil and gas wells.54 Invest- Such regulatory hurdles have dramatically slowed ment costs for new wells would rise significantly, the development of America’s LNG infrastructure. making fewer economically viable. As of late 2014, DOE had approved three of 35 new terminal applications submitted since 2010; FERC Certain environmental restrictions on heavy indus- had approved three of 17. (FERC specifically cited try are valuable, but current standards have already the “number of permits and reviews required by fed- helped deliver impressive improvement in U.S. air eral and state law” as a cause of delays.)50 None will and water quality.55 Rather than impose new, even begin operating before 2016.51 tighter standards that weaken America’s energy advantage, existing standards should be applied to new Reform 3. Lift restrictions on the export of oil and energy projects. natural gas. Accord such products the same treat- ment as other American commodity exports. Reform 5. Exempt new and expanded natural- gas plants, new and expanded refineries, and new drilling sites and export terminals from the Reform 4. Streamline permitting for natural-gas and Clean Air Act’s and Clean Water Act’s new-source crude oil export terminals. Designate such terminals requirement. Instead, apply current standards to in the public interest, without a need for case-by- such projects. case review. Enact a single approval process with clear timelines. Updating America’s energy-policy framework will help amplify the boom under way. Yet there is an Environmental Regulation even larger opportunity, directly under the country’s A series of environmental regulations, some in feet, to extend it. place, some under consideration by the Obama administration, have the potential to slow U.S. III. EXTEND THE BOOM production. The Clean Air Act imposes “new source performance standards” on new and renovated The federal government owns 28 percent of the land industrial facilities—including refineries, power area of the U.S.56 and controls its coastal resources in plants, and drilling sites52—requiring the installation the Outer Continental Shelf. Such land and waters of costlier pollution-control technology than used have historically been a significant source of oil and in current facilities. These heightened standards gas, accounting for 28 percent of U.S. production as discourage refineries from retooling or expanding recently as 2010.57 Federal territory has, alas, failed to accommodate new volumes and types of crude. to join America’s shale boom. During 2010–13, Even though a new natural-gas plant would offer natural-gas production on private- and state-owned

Step on the Gas! 7 8 Issue Brief No. 35 July 2015 By 2005,itwasusedintheBakken. was madesteadilymore effective duringthe1990s. Hydraulic fracturinginhorizontal wells (“fracking”) in 1955,andthefirsthorizontal well drilledin1987. was describedin1953,thefirstoilextractedfrom it has beenknown fordecades. The Bakken formation of shale. The existence of bountiful shale oil andgas preneurs andengineersthanthepeculiarproperties has farmore todo withthe ingenuity ofitsentre- and waters,outputfellby 16percent. owned landexpandedby 52percent; on federalland same period,oilproduction on private- andstate- and waters,outputfellby 24percent. During the lands grew by 29percent (Figure 5) ; onfederalland the formation’s potential.Until 2008,USGS Bakken’s have reserves consistentlyunderestimated U.S. Geological Survey (USGS) estimates of the federal jurisdiction. sponsible fortheU.S.boom,theynote,fallsunder dence of geology. None of the shale formations re- Some analystsarguethatsuchfigures are acoinci- Source: EIA

U.S. Oil and Gas Production (2010 = 100) 1 1 1 0 2 5 7 0 5 0 5 2 0 1 0 59 Yet America’s shalerevolution Figure 5.Federal LandsSkippingtheBoom 2 60 0 1 58 1 contain 24billionbbl.) in theBakken, estimatedthattheformationmight (In 2011,ContinentalResources, aleadingproducer USGS increased itsestimateto3.7billionbbl. In 2008, with production beginning to accelerate, 2013, USGSdoubleditsestimate,to7.4billionbbl. million bblto33bbl. tion, USGSactuallylowered itsestimate,from 270 In 2003,initsassessmentoftheEagleFord forma- America’s shaleboom. The more thatdevelopment Wildly wrong officialestimatesare notexclusive to raised itsestimateto1billionbbl. bbl/d in2016; EIA revised itsestimatetoapeakof1.56million would peakat800,000bbl/din2020.In 2014,the same year, theEIAestimatedthatEagleFord technically recoverable oil resources (UTRR). estimated only151millionbblofundiscovered, had exceeded 1.6million bbl/d. proved ofmore reserves than3billionbbl. EIA, meanwhile,reported thattheEagleFord had 2 0 1 2 68 by November 2014,production 64 2 0 1 3 N 65 F F N o e In 2011,USGSthen e o n d 69 d n f e e e f r d r e a a d e l

l 66 ( r e

( g a o r In 2013,the a l a i

s ( l l ) o )

( g i l ) a s ) 67 In the 62 In In 63 61 occurs, the more that resources are discovered. The eastern Gulf, estimated to hold 5 billion bbl, During 1974–2006, the federal government’s remains under congressional moratorium and is off- estimate of UTRR natural gas in the Atlantic and limits to development until at least 2022.73 Another Pacific Outer Continental Shelf increased by a 10 billion bbl likely lie off California’s coast, where factor of four, even as such areas remained off-limits past production is petering out and no new develop- to development; for the Gulf of Mexico, which saw ment is under way.74 active development, the government’s estimate increased by a factor of seven.70 During 1996–2011, The federal Atlantic zone, estimated to hold the government saw little change in its oil estimates more than 3 billion bbl of oil, saw its one lease for offshore areas closed to development. But its sale, off Virginia’s cost, canceled in 2010 by the Gulf estimate increased fivefold: what had been a Obama administration.75 In 2015, the adminis- less than 5 percent chance of finding more than 10 tration announced that it would put lease sales billion bbl became an expectation of finding nearly back into future development plans,76 though 50 billion bbl.71 no sales will occur before 2021.77 In the federal Arctic zone off Alaska’s coast, estimated to Today, resource endowments under federal control hold 27 billion bbl of oil, only one lease has and largely off-limits still appear larger and more been sold, a 2008 sale to drill in the Chukchi attractive than did the Bakken and Eagle Ford at Sea.78 In 2015, after extensive permitting de- comparable stages of development: reserve estimates lays,79 litigation,80 and accidents,81 Shell finally for the former are even higher than current reserve received permission to begin drilling.82 While estimates for the latter. several additional leases are slated for sale in 2016–17,83 the Obama administration has also Offshore Opportunities announced that it will place new federal Arctic A 2011 U.S. Bureau of Ocean Energy Manage- zones off-limits.84 (Most environmental groups ment survey identified 89 billion bbl of UTRR oil object to any Arctic exploration on the grounds in federal waters—the majority underexplored and that local climatic conditions make drilling too off-limits to development (Figure 6).72 The western dangerous.)85 Meanwhile, Russia, Canada, and and central Gulf of Mexico, where significant pro- Norway are all moving forward with their own duction occurs, are estimated to hold 43 billion bbl. Arctic development plans.86

Figure 6. Opportunities Offshore

UTRR Oil Area (billion bbl) Status Western Gulf of Mexico 12.4 Underdevelopment

Central Gulf of Mexico 30.9 Underdevelopment

Eastern Gulf of Mexico 5.1 Moratorium

Atlantic Outer Continental Shelf 3.3 No lease sales until at least 2021

Pacific Outer Continental Shelf 10.2 No lease sales planned

Alaska Outer Continental Shelf 26.6 One lease sale in 2008

Source: U.S. Bureau of Ocean Energy Management

Step on the Gas! 9 10 Issue Brief No. 35 July 2015 7). bbl, significantlymore thanthe Bakken (Figure play, isestimatedtocontainmore than10billion Wildlife Refuge (ANWR),thelargestonshore federal would permanentlystrandAmerica’s Arctic resources. is closed,itmust,by law, bedismantled—afatethat Alaskan fieldsputsitatriskofshuttingdown. If TAPS System (TAPS), whosedwindlingflow from active viathe ply ofoiltransported Trans-Alaska Pipeline Production from ANWRwouldalsoincrease the sup- above 1millionbbl,according toEIA, the Bakken’s current output. to development. restrictions, andonly8percent inlandlargelyopen limits todevelopment, 30percent inlandsubjectto billion bbl,with62percent inlandentirely off- (BLM) estimated UTRR oil on federal lands at 31 In 2008,theU.S.Bureau ofLandManagement Onshore Opportunities decades geological research atANWR has beenbannedfor forced torely onbadlyoutdatedtechnologybecause 88 Daily production atANWRcouldpeak well 91 —likely understatethereserve’s potential. Source: U.S.GeologicalSurvey 87

UTRR Oil (billion bbl) The off-limitsArctic National 1 2 3 0 0 0 0 B ( 1 Figure 7.TheShaleBoomvs.theFederal Future a 0 9 k 9 . k 2 90 e 5 n ) Such estimates—

A O t 3 l a C . n 89 3 S t i similarto c

B ( 2 a 3 0 k 0 . k 7 e 8 n 92 )

G afford stillgreater thereserve protection. ignate largeswathsofANWRas“wilderness” would Nevertheless, President Obama’s recent to des- efforts been converted toprovedbeen converted reserves. Whereas states rates atwhichtechnicallyrecoverable resources have In additiontofalling output,considerthedifferent resource development. tively, relative to the previous six-year period. annually fellby 45percent and58percent, respec- year;leasesandacres new leased land hasfallenevery number ofleases, as well asacres, ineffecton federal proved difficulttoaccessinpractice. Since 2008,the Even where federalland is accessiblein theory, ithas high asin2008. acreagewas more sought bythan twice as industry ed tomore either:in2013, attractive opportunities, slowdown- attentiondivert isnotaresult ofindustry eral permittingprocess isnotoriouslyslow, too. land. still more stringentregulation offrackingonfederal early 2015,theObama administrationannounced E u a 5 l s f t

. e O 1 r C n 97

S The result: anabjectfailure offederalenergy- B ( 2 a 7 0 k . 1 k 4 e 3 n )

95 Where leasesare active, thefed- A 1 N 0 W . 4 R A 2 O l a 6 C s . k S 6 a 93 94 This 96 In In with less than 10 percent of land federally owned saw scenarios tied to various price levels—for federally proved reserves rise by 104 percent during 2008–13 owned lands on- and offshore. Such targets would (excluding North Dakota, which saw a tenfold in- communicate policy goals, provide a basis on which crease) and states with 10–50 percent of land feder- to plan for royalties, and establish a yardstick against ally owned saw a 35 percent rise, states with more which to measure leasing plans. More federal lands than 50 percent of land federally owned saw proved should also be incorporated into each plan, with the reserves drop by 7 percent (Figure 8).98 goal of ramping up development, over the next ten years, of the most attractive resources. Opening Access The goal should not be to lease as much federal land Reform 6. Establish five-year leasing plans for feder- as quickly as possible. Industry does not have the ca- al lands—similar to those for current offshore leases pacity to conduct all exploration simultaneously, nor and determined by the BLM—with annual price-de- does government have the ability to review applica- pendent output targets. Require that plans demon- tions overnight. Instead, the goal should be to create strate sufficiency to meet such targets. a transparent, predictable process that optimizes the conditions for private investment over time. Reform 7. Eliminate restrictions that prohibit development of ANWR and the Outer Continental Shelf. The current federal model for offshore exploration, in which the government establishes an advance five-year plan, is sensible. As part of this process, the government Encouraging private investment and exploration of should establish clear annual output targets—with federal lands will require creating a better business

Figure 8. Federal Frustration

125 104 100

50 35

Growth in Proved Reserves, 2008–13 (%) in Proved Growth -7 -25 < 10% 10%–50% >50% Federally Owned Federally Owned Federally Owned 2013 Proved reserves (billion bbl) 12.9 6.1 3.5

2008 Proved reserves (billion bbl) 6.3 4.5 3.8

Source: EIA; Congressional Research Service

Step on the Gas! 11 12 Issue Brief No. 35 July 2015 One Review system, process, similartoCanada’sregulatory One Project, the federalgovernment shouldadoptanefficient facilitate development oflandafteritisleased, interference drive upcostsandslow progress. To requirements, permittingdelays,andpolitical environment. Repetitive reviews, overlapping better record of efficient administration, possess more experienceregulating drillinganda for project approval. State governments, which lead thepermittingprocess. quirements. sufficient tomeet federal environmental review re- activity onfederallands.Deemstateproject reviews Reform 9.Allowstateregulatorsdrilling togovern for approval. responsiblecountability inthefederalgovernment for eachproject type,withasinglepointofac- Reform 8.Establishaclearprocess andtimeline Source: EIA;OfficeofNaturalResources Revenue growth inroyalty revenue. achieved, sohypothetical2013revenue is81%higherthanactual. 2014federaloutputgrowth extrapolatedfrom 2013–14 (nonfederal) vs.-16%(federal).Federalgrowth atnonfederalratewouldhaveresulted inoutput81%higherthanactually *Annual gapcalculatedasinfederalvs.nonfederalgrowth ratessince2010.Example:Growth from 2010–13was52%

Royalty Revenue (Petroleum, USD billions) 1 1 2 0 5 0 5 0 2

0 1 0 99 thatprovides cleartimelines Figure 9.TheCaseoftheMissingRevenue* 2 0 1 1 100 should 2 0 1 2 prices hovered at$90–$100/bbl revenue waters wouldbringaninfluxofleaseand royalty An outputboomonfederallyowned landsand Royalties lease-sale plansandproject revenues. output. This informationwouldbeusedtovalidate the size development ofreserves, time,andexpected andgovernmentthe bestestimatesfrom industry on robust informationinfrastructure thatconsolidates The federalgovernment shouldinvest inamore million bbl/d, lands andwatersproduced approximately 2 of leasingplans. Use results asthebasisfortestingsufficiency Forecast developmenttimelinesandpeakoutput. ed under the Energy Policy and Conservation Act). federal landsandwaters(akintoreviews conduct- Reform 10.RegularlyupdateUSGSinventoriesof 2 (Figure 9). During 2011–14, 0 1 3 lost royalties cumulative $21 billionin 103 producers paid$7.0billion–$8.4 2 0 1 4 I a n b f E t o o

a nf o r r r a m o n t e w e e d d

n o e 102

r f

a l andfederal

101 as oil billion in annual oil royalties.104 Had federal more actively developing its collectively owned output grown, since 2010, by 80 percent—as it energy resources. Such revenue would also offer an did on lands outside of federal control—royalty opportunity to self-fund activity related to managing payments during 2011–14 could have been more oil and gas production and to better align the than $20 billion higher, contributing an additional incentives of different interest groups. Earmarking $9 billion in 2014 alone.105 incremental royalties for investment in new energy technology research and development offers a win- Performance on nonfederal lands is an imprecise win that ensures that the country is investing in proxy for federal potential. Yet, in many respects, economic development, for the short and long term, the federal revenue opportunity going forward is by guaranteeing both resource access and technology significantly greater because the base of existing investment as two sides of the same coin. production is comparatively small. Were ANWR alone to produce 1.35 million bbl/d (a high- Reform 11. Channel most federal oil and gas reve- end EIA estimate),106 federal output would rise nue into a separate account responsible for funding by nearly 70 percent and federal revenue by $4 federal investment in energy research and develop- billion annually, according to the Congressional ment; channel some revenue to increased invest- Budget Office.107 ment in inventorying U.S. energy resources. (In his 2015 budget, President Obama requested $5.2 bil- 112 If underdeveloped areas of the Outer Continen- lion in DOE R&D funding, while subsidies for energy technologies deployed in the market account tal Shelf—which hold the majority of offshore for another $5–$10 billion.)113 resources—simply matched current western and central Gulf output, they would deliver an additional 1.5 million bbl/d. Various studies place the IV. CONCLUSION production potential of the Atlantic108 and eastern Gulf109 zones at more than 500,000 bbl/d each and America’s failure to develop federally owned lands that of the Arctic at more than 1.5 million bbl/d.110 and waters and to update its energy-policy frame- Federal onshore reserves, though subject to more work represents today’s low-hanging policy fruit. disparate estimates, hold enormous potential as Untapped federal oil and natural-gas resources are es- well. If prices return to $90–$100/bbl, an increase timated to be significantly larger than the shale plays of 3 million bbl/d could generate $10 billion in an- that have driven the current boom—if development nual federal royalties. Though such revenue would, proceeds, such estimates will likely rise considerably of course, need to be shared with states, additional higher. Improving America’s energy regulatory envi- lease and bonus payments and natural-gas royalties ronment will amplify today’s boom by encouraging would substantially add to the total.111 resources to be used more efficiently. Opening federal land and waters to development over the next Potential federal revenue generated by oil and decade will extend the boom. Together, such reforms gas production serves as an important reminder will further the country’s energy advantage and make of the benefits that America would derive from it an enduring fixture of U.S. prosperity.

Step on the Gas! 13 14 Issue Brief No. 35 July 2015 23. 22. 21. 20. 19. 18. 17. 16. 15. 14. 13. 12. 11. 10. 9. 8. 7. 6. 5. 4. 3. 2. 1. ENDNOTES to BeLowestin11Years,” EIA,December16,2014, http://www.eia.gov/todayinenergy/detail.cfm?id=19211. http://www.eia.gov/todayinenergy/detail.cfm?id=9831 with“U.S.HouseholdGasolineExpenditures in2015onTrack Cf. “U.S.HouseholdExpenditures forGasolineAccountNearly 4%ofPretax Income,” EIA,February4,2013, hard/2015/01/18/a92ca05a-9cd9-11e4-bcfb-059ec7a93ddc_story.html. 18, 2015,http://www.washingtonpost.com/opinions/jackson-diehl-falling-oil-prices-hit-venezuela-iran-and-russia- See, e.g.,JacksonDiehl,“FallingOilPricesHitVenezuela, Iran,andRussiaHard,” Washington Post(opinion),January energy-markets. http://www.bloomberg.com/news/articles/2010-06-27/oil-price-swings-to-worsen-as-spare-opec-capacity-shrinks- asSpare Capacity Shrinks,”BloombergBusiness,June28,2010, Alexander Kwiatkowski,“OilsSwingsMayWiden out-of-market-i8u004xl. April 23,2015,http://www.bloomberg.com/news/articles/2015-04-23/u-s-shale-fracklog-triples-as-drillers-keep-oil- Lynn DoanandDanMurtaugh,“U.S.ShaleFracklogTriples asDrillersKeep Oilfrom Market,”BloombergBusiness , to SetOilPrices,”CNBC,October27,2014,http://www.cnbc.com/id/102124851. com/2015/04/23/business/energy-environment/new-balance-of-power.html; HaileyLee,“WhyOPEC’s LosingItsAbility See, e.g.,Clifford Kraus,“NewBalanceofPower,” NewYork Times, April22,2015,http://www.nytimes. www.mckinsey.com/insights/americas/us_game_changers. “Game Changers:FiveOpportunitiesforU.S.Growth andRenewal,”McKinseyGlobalInstitute,July2013,http:// 0001424127887324244304578472711635162982. See, e.g.,DanielYergin, “TheNewPrometheus,” Wall StreetJournal,May31,2013,http://www.wsj.com/articles/SB1 Policy Research, February2014,http://www.manhattan-institute.org/html/pgi_04.htm. Mark P. Mills,“Where theJobsAre: SmallBusinessesUnleashEnergyEmploymentBoom,”ManhattanInstitutefor tables_ref.cfm, tableA11: oil; tableA13:gas. table A11:oil;A13:gas;“AnnualEnergyOutlook2015,”EIA,April2015,http://www.eia.gov/forecasts/aeo/ “Annual EnergyOutlook2010,”EIA,April2010,http://www.eia.gov/forecasts/archive/aeo10/pdf/0383(2010).pdf, Ibid. “Drilling Productivity Report,”EIA, May11,2015,http://www.eia.gov/petroleum/drilling. EnergyStatistics,”EIA,accessedMay27,2015,http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm.“International Ibid. Ibid. “Monthly EnergyReview,” supra,n.1. obamaenergy_08-04. Barack Obama,“NewEnergyforAmerica,”August4,2008,http://www.pbs.org/newshour/bb/politics-july-dec08- americanexperience/features/primary-resources/carter-energy. Jimmy Carter, “The President’s Proposed EnergyPolicy,” April18,1977, http://www.pbs.org/wgbh/ economics/Energy-Outlook/Energy_Outlook_2035_booklet.pdf. A4; “BPEnergyOutlook2035,”BritishPetroleum, January2014,http://www.bp.com/content/dam/bp/pdf/Energy- EnergyOutlook2014,”EIA,September9,2014,http://www.eia.gov/forecasts/ieo,See, e.g.,“International table for-now. May 3,2015,http://www.bloomberg.com/news/articles/2015-05-03/the-shale-boom-has-already-gone-bust-at-least- Bradley OlsonandDanMurtaugh,“TheShaleBoomHasAlready GoneBust—atLeastforNow,” BloombergBusiness, articles/oil-layoffs-hit-100-000-and-counting-1429055740. Dan Molinski,“OilLayoffs Hit100,000andCounting,”Wall StreetJournal,April14,2015,http://www.wsj.com/ http://www.eia.gov/todayinenergy/detail.cfm?id=20392. “Falling RigCountsDriveProjected Near-Term OilProduction Declinein3KeyU.S.Regions,”EIA,March 17,2015, ng_pri_fut_s1_d.htm (gas). (oil); “NaturalGas:NaturalGasSpotandFuture Prices(NYMEX),”EIA,May20,2015,http://www.eia.gov/dnav/ng/ “Petroleum &OtherLiquids:SpotPrices,”EIA,May20,2015,http://www.eia.gov/dnav/pet/pet_pri_spt_s1_w.htm data/monthly/index.cfm, table3.1:oil;4.1:gas. “Monthly EnergyReview,” EnergyInformationAdministration(EIA),May22,2015,http://www.eia.gov/totalenergy/ 24. Harold L. Sirkin, Michael Zinser, and Justin Rose, “How Cheap Natural Gas Benefits the Budgets of U.S. Households,” Boston Consulting Group, February 3, 2014, https://www.bcgperspectives.com/content/articles/lean_manufacturing_ energy_environment_how_cheap_natural_gas_benefits_budgets_us_households. 25. “Historical Income Tables: Households,” Census Bureau, accessed May 27, 2015, http://www.census.gov/hhes/www/ income/data/historical/household, table H-6. 26. “Air Emissions: Clean Energy,” Environmental Protection Agency (EPA), accessed May 27, 2015, http://www.epa.gov/ cleanenergy/energy-and-you/affect/air-emissions.html. 27. See “U.S. Energy-Related Carbon Dioxide Emissions, 2013,” EPA, October 21, 2014, http://www.eia.gov/environment/ emissions/carbon. 28. “Fracking Great,” The Economist, June 2, 2012, http://www.economist.com/node/21556249. 29. “BP Energy Outlook 2035,” supra, n. 6. 30. “International Energy Outlook 2014,” supra, n. 6, table A4. 31. “Annual Energy Outlook 2015,” supra, n. 15, table A13: U.S. gas production; “BP Energy Outlook 2035,” supra, n. 6 (global gas consumption). 32. “Annual Energy Outlook 2015,” supra, n. 15, table A12: oil; table A13: gas. 33. “What Dutch Disease Is, and Why It’s Bad,” Economist (online), November 5, 2014, http://www.economist.com/blogs/ economist-explains/2014/11/economist-explains-2. 34. Christophe McGlade and Paul Ekins, “The Geographical Distribution of Fossil Fuels Unused When Limiting Global Warming to 2° C,” Nature, January 8, 2015. 35. James Regan, “Australia Coal Mining Marks Challenge for U.N. Green Push,” Reuters, November 3, 2014, http:// www.reuters.com/article/2014/11/03/coal-australia-climate-change-idUSL4N0ST1NN20141103. 36. Margaret Kriz Hobson, “Is Arctic Oil Exploration Dead in the U.S.?,” EnergyWire, July 18, 2013, http://www.eenews. net/stories/1059984582. 37. See, e.g., “Alberta’s Oil Sands,” Alberta Government, accessed May 27, 2015, http://oilsands.alberta.ca/ economicinvestment.html. 38. Robert Bryce, “The Hidden Corn Ethanol Tax,” Manhattan Institute for Policy Research, March 2015, http://www. manhattan-institute.org/html/ib_32.htm. 39. “Petroleum & Other Liquids: Spot Prices,” EIA, June 24, 2015, http://www.eia.gov/dnav/pet/pet_pri_spt_s1_m.htm. 40. “World LNG Estimated June 2015 Landed Prices,” Federal Energy Regulatory Commission, May 2015, http://www. ferc.gov/market-oversight/mkt-gas/overview/ngas-ovr-lng-wld-pr-est.pdf. 41. John Frittelli et al., “U.S. Rail Transportation of Crude Oil: Background and Issues for Congress,” Congressional Research Service (CRS), December 4, 2014, https://www.fas.org/sgp/crs/misc/R43390.pdf. 42. “Crude by Rail Accounts for More than Half of East Coast Refinery Supply in February,” EIA, May 5, 2015, http:// www.eia.gov/todayinenergy/detail.cfm?id=21092. 43. Frittelli et al., “U.S. Rail Transportation of Crude Oil,” supra, n. 41. 44. Diana Furchtgott-Roth, “Pipelines Are Safest for Transportation of Oil and Gas,” Manhattan Institute for Policy Research, June 2013, http://www.manhattan-institute.org/html/ib_23.htm. 45. Amy Harder, “Is Keystone Still Needed to Transport U.S. Oil?,” National Journal, August 26, 2013, http://www. nationaljournal.com/daily/is-keystone-still-needed-to-transport-u-s-oil-20130826. 46. John Frittelli, “Shipping U.S. Crude Oil by Water: Vessel Flag Requirements and Safety Issues,” CRS, July 21, 2014, http://fas.org/sgp/crs/misc/R43653.pdf. 47. Ibid. 48. See, e.g., “Changing Crude Oil Markets: Allowing Exports Could Reduce Consumer Fuel Prices, and the Size of the Strategic Reserves Should Be Reexamined,” Government Accountability Office (GAO), September 30, 2014, http:// www.gao.gov/products/GAO-14-807; Charles K. Ebinger and Heather Greenley, “8 Facts About U.S. Crude Oil Exports,” Brookings Institution, September 9, 2014, http://www.brookings.edu/research/reports/2014/09/09-8-facts- about-us-crude-oil-production; Mark P. Mills, “Prime the Pump: The Case for Repealing America’s Oil Export Ban,” Manhattan Institute for Policy Research, July 2014, http://www.manhattan-institute.org/html/ib_29.htm. 49. Michael Ratner et al., “U.S. Natural Gas Exports: New Opportunities, Uncertain Outcomes,” CRS, January 28, 2015, https://www.fas.org/sgp/crs/misc/R42074.pdf. 50. “Federal Approval Process for Liquefied Natural Gas Exports,” GAO, September 2014, http://gao.gov/ assets/670/666177.pdf.

Step on the Gas! 15 16 Issue Brief No. 35 July 2015 73. 72. 71. 70. 69. 68. 67. 66. 65. 64. 63. 62. 61. 60. 59. 58. 57. 56. 55. 54. 53. 52. 51. “Areas UnderMoratoria,”BOEM,accessedMay27,2015, http://www.boem.gov/Areas-Under-Moratoria. Ibid. national_assessment_factsheet.pdf. 2011,” Bureau ofOceanEnergyManagement(BOEM),November 2011,http://www.boem.gov/uploadedfiles/2011_ “Assessment ofUndiscovered Technically RecoverableOilandGasResources oftheNation’s OuterContinentalShelf, CRS, April26,2010,http://fpc.state.gov/documents/organization/142736.pdf. Marc Humphries,RobertPirog, andGeneWhitney, “U.S.Offshore Oiland GasResources: Prospects andProcesses,” “Drilling Productivity Report,”supra,n.13. http://www.eia.gov/forecasts/archive/aeo14/section_issues.cfm. Dana Van Wagener, OilProduction,” EIA,April7,2014, “AnnualEnergyOutlook2014:IssuesinFocus—U.S.Tight crudeoilreserves, table2. “U.S. CrudeOilandNaturalGasProved Reserves,”EIA,December4,2014,http://www.eia.gov/naturalgas/ 2012, http://pubs.usgs.gov/fs/2012/3003. Petroleum SystemsintheUpperCretaceous EagleFord Group, U.S.GulfCoastRegion,2011,”USGS,February7, Russell F. Dubieletal.,“AssessmentofUndiscovered OilandGasResources inConventionalandContinuous dds/dds-069/dds-069-h/REPORTS/69_H_CH_2.pdf. the UpperCretaceous Navarro andTaylor Groups, Western GulfProvince, Texas,” USGS,2006,http://pubs.usgs.gov/ S. M.CondonandT. S.Dyman,“2003GeologicAssessmentofUndiscovered ConventionalOilandGasResources in com/articles/SB10001424052970204226204576602524023932438. Stephen Moore, “HowNorth DakotaBecameSaudiArabia,”Wall StreetJournal,October1,2011,http://www.wsj. gov/fs/2013/3013. BasinProvince, Montana,NorthDakota,andSouth2013,”USGS,April30,2013,http://pubs.usgs. Williston Stephanie B.Gaswirth,“AssessmentofUndiscovered OilResources intheBakkenandThree Forks Formations, fs/2008/3021. BasinProvince, MontanaandNorthDakota,2008,”USGS,April2008,http://pubs.usgs.gov/ Formation, Williston Richard M.Pollastro etal.,“AssessmentofUndiscovered OilResources intheDevonian-MississippianBakken asp?ID=1911. More than1995Estimate,”USGS,April10,2008,http://www.usgs.gov/newsroom/article.Formation—25 Times Press release, “3to4.3BillionBarrels ofTechnically RecoverableOilAssessedinNorthDakotaandMontana’s Bakken accessed May27,2015,http://www.undeerc.org/bakken/developmenthistory.aspx. “Bakken FormationDevelopmentHistory,” UniversityofNorthDakotaEnergy&Environmental Research Center, westernpriorities.org/wp-content/uploads/2013/03/CFWPreport_030513_v9.pdf. testimonies/sieminski_08022012.pdf; “FollowtheOil,”CenterforWestern Priorities,March 5,2013,http:// on EnergyandCommerce), U.S.HouseofRepresentatives, August2,2012,http://www.eia.gov/pressroom/ See, e.g.,AdamSieminski,EIAadministrator, testimonybefore theSubcommitteeonEnergyandPower(Committee Ibid. www.eia.gov/analysis/requests/federallands, table1. “Sales ofFossilFuelsProduced from FederalandIndianLands, FY2003through FY2013,”EIA,June19,2014,http:// misc/R42346.pdf. Ross W. Gorteetal.,“FederalLandOwnership:OverviewandData,”CRS,February8,2012,https://fas.org/sgp/crs/ “Air QualityTrends,” EPA, accessed May27,2015,http://www.epa.gov/airtrends/aqtrends.html. bakken.com/news/id/227765/disagreements-possible-new-epa-ozone-standards-debated. Peif, “Disagreements overPossibleNewEPA OzoneStandards Debated,”GreeleyTribune, December15,2014,http:// December 2008,http://www.nps.gov/frhi/learn/management/upload/GRD-M-Shale_12-11-2008_high_res.pdf; Sherrie See e.g.,“PotentialDevelopmentoftheNaturalGasResources intheMarcellus Shale,”NationalParkService, emissions.html. 25, 2014,http://www.nytimes.com/2014/11/26/us/politics/obama-to-introduce-sweeping-new-controls-on-ozone- Coral Davenport,“ObamatoIntroduce SweepingNewControls Aimed atOzone,”NewYork Times, November pdfs/20120419infoStates.pdf. “EPA’s AirRulesfortheOil&NaturalGasIndustry,” EPA, April19,2012,http://www.epa.gov/airquality/oilandgas/ Article?id=971551. “Outlook: 2015MayClarifyUSLNGExports,”ArgusMedia,January2,2015,http://www.argusmedia.com/News/ 74. “Federal Offshore PADD 5 Field Production of Crude Oil,” EIA, April 29, 2015, http://www.eia.gov/dnav/pet/hist/ LeafHandler.ashx?n=PET&s=MCRFP5F1&f=M. 75. “Virginia Lease Sale 220 Information,” BOEM, accessed May 27, 2015, http://www.boem.gov/Oil-and-Gas-Energy- Program/Leasing/Regional-Leasing/Gulf-of-Mexico-Region/Lease-Sales/220/Virginia-Lease-Sale-220-Information.aspx. 76. Coral Davenport, “Obama’s Plan: Allow Drilling in Atlantic, but Limit It in Arctic,” New York Times, January 27, 2015, http://www.nytimes.com/2015/01/28/us/obama-plan-calls-for-oil-and-gas-drilling-in-the-atlantic.html. 77. “2017–2022 Lease Sale Schedule,” BOEM, accessed May 27, 2015, http://www.boem.gov/2017-2022-Lease-Sale- Schedule. 78. Ibid. 79. Tim Bradner, “With Air Permit, Shell’s Optimism for Summer Grows,” Alaska Journal of Commerce, January 19, 2012, http://www.alaskajournal.com/Alaska-Journal-of-Commerce/AJOC-January-22-2012/With-air-permit-Shells- optimism-for-summer-grows. 80. Tim Bradner, “Shell Now Hopes to Use Two Drill Rigs for Chukchi Exploration in 2014,” Alaska Journal of Commerce, August 28, 2014, http://www.alaskajournal.com/Alaska-Journal-of-Commerce/Breaking-News-2013/Shell-now- hopes-to-use-two-drill-rigs-for-Chukchi-exploration-in-2015. 81. John M. Broder, “With 2 Ships Damaged, Shell Suspends Arctic Drilling,” New York Times, February 27, 2013, http:// www.nytimes.com/2013/02/28/business/energy-environment/shell-suspends-arctic-drilling-for-2013.html. 82. Press release, “BOEM Conditionally Approves Shell’s Revised Chukchi Sea Exploration Plan,” BOEM, May 11, 2015, http://www.boem.gov/press05112015. 83. “2017–2022 Lease Sale Schedule,” supra, n. 77. 84. Davenport, “Obama’s Plan,” supra, n. 76. 85. See, e.g., Carol Browner and Michael Conathan, “What the BP Oil Disaster Tells Us About Arctic Drilling: Keep Out!,” Newsweek, April 20, 2015, http://www.newsweek.com/what-bp-oil-disaster-tells-us-about-arctic-drilling-keep- out-323475. 86. Hobson, “Is Arctic Oil Exploration Dead in the U.S.?,” supra, n. 36. 87. “Inventory of Onshore Federal Oil and Natural Gas Resources and Restrictions to Their Development,” Bureau of Land Management (BLM), 2008, http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas/EPCA_III.html, table ES-1. 88. “Potential Oil Production from the Coastal Plain of the Arctic National Wildlife Refuge: Updated Assessment,” EIA, May 2000, http://www.eia.gov/pub/oil_gas/petroleum/analysis_publications/arctic_national_wildlife_refuge/pdf/ anwr101.pdf. 89. Ibid. 90. “Drilling Productivity Report,” supra, n. 13. 91. M. Lynn Corn, Michael Ratner, and Kristina Alexander, “Arctic National Wildlife Refuge (ANWR): A Primer for the 114th Congress,” CRS, http://www.fas.org/sgp/crs/misc/RL33872.pdf. 92. Russell Gold, “Shrinking Oil Supplies Put Alaskan Pipeline at Risk,” Wall Street Journal, May 11, 2011, http://www. wsj.com/articles/SB10001424052748704570704576274682119735102. 93. Juliet Eilperin, “Obama Administration to Propose New Wilderness Protections in Arctic Refuge—Alaska Republicans Declare War,” Washington Post, January 26, 2015, http://www.washingtonpost.com/news/energy-environment/ wp/2015/01/25/obama-administration-to-propose-new-wilderness-protections-in-arctic-refuge-alaska-republicans- declare-war. 94. “Oil & Gas Statistics,” BLM, last updated October 31, 2014, http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas/ statistics.html, tables 2–5. 95. Ibid., table 14. 96. Phil Taylor, “BLM Permitting Times ‘Very Long,’ Accountability Lacking—IG,” GreenWire, July 1, 2014, http://www. eenews.net/stories/1060002229. 97. Joby Warrick, “Obama Administration Tightens Federal Rules on Oil and Gas Fracking,” Washington Post, March 20, 2015, http://www.washingtonpost.com/news/energy-environment/wp/2015/03/20/obama-administration-tightens- rules-on-oil-and-gas-fracking. 98. Gorte et al., “Federal Land Ownership,” supra, n. 56, table 1, federal ownership of state land; “Crude Oil Proved Reserves, Reserves Changes, and Production,” EIA, December 4, 2014, http://www.eia.gov/dnav/pet/pet_crd_pres_a_ epc0_r01_mmbbl_a.htm (reserves growth by state).

Step on the Gas! 17 18 Issue Brief No. 35 July 2015 113. 112. 111. 110. 109. 108. 107. 106. 105. 104. 103. 102. 101. 100. 99. www.cbo.gov/sites/default/files/03-12-EnergyTechnologies.pdf. on Energy(CommitteeScience,Space,andTechnology), U.S.HouseofRepresentatives, March 13, 2013,http:// Terry M.Dinan,“FederalFinancialSupportforFuelsandEnergyTechnologies,” testimonybefore theSubcommittee 2015%20R&D.pdf. Science andTechnology Policy, March 2014,https://www.whitehouse.gov/sites/default/files/microsites/ostp/Fy%20 “The 2015Budget:Science,Technology, andInnovationforOpportunityGrowth,” WhiteHouseOfficeof “Potential BudgetaryEffects ofImmediately OpeningMostFederalLandstoOilandGasLeasing,”supra,n.107. Oil%20and%20Gas%20Development.pdf. com/pdfs/ShellOCS/Shell%20OCS%20Report%20-%20Economic%20Benefits%20of%20Future%20Offshore%20 Economics(forShellExplorationandProduction),Basin,” Northern March 2009,http://www.northerneconomics. “Economic AnalysisofFuture Offshore OilandGasDevelopment:BeaufortSea,Chukchi andNorthAleutian offshore_overview_egom.PDF. Institute, November2014,http://www.api.org/~/media/files/oil-and-natural-gas/exploration/offshore/eastern-gulf-ocs/ “The BenefitsofOffshore GulfofMexico,”AmericanPetroleum OilandNaturalGasDevelopmentintheEastern Resources.pdf. Offshore/Atlantic-OCS/Executive-Summary-Economic-Benefits-of-Increasing-US-Access-to-Atlantic-Offshore- American Petroleum Institute,December 2013,http://www.api.org/~/media/Files/Oil-and-Natural-Gas/Exploration/ “The EconomicBenefitsofIncreasing U.S.AccesstoOffshore OilandNaturalGasResources intheAtlantic,” Budget Office(CBO),August2012,https://www.cbo.gov/sites/default/files/08-09-12_Oil-and-Gas_Leasing.pdf. “Potential BudgetaryEffects ofImmediately OpeningMostFederalLandstoOilandGasLeasing,”Congressional anwr101.pdf. May 2000,http://www.eia.gov/pub/oil_gas/petroleum/analysis_publications/arctic_national_wildlife_refuge/pdf/ “Potential OilProduction from Refuge:UpdatedAssessment,”EIA, theCoastalPlainofArctic NationalWildlife from 2010through 2014,mirrored nonfederal-landproduction growth overthosesameyears. lands 2013–14assumedtoequalroyalty growth). Marginal royalty dollars,calculatedbyassumingannualincreases 2013–14); “ReportedRevenues—Revenues—AllLandCategories,”supra,n.104(production growth onfederal 2015, http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MNGFPUS1&f=A (natural-gasliquidsgrowth, oil growth, 2013–14);“U.S.GasPlantProduction ofNatural GasLiquidsandLiquidRefineryGases,”EIA,May28, “Crude OilProduction,” EIA,May28,2015,http://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbbl_a.htm (crude 2015, http://statistics.onrr.gov/ReportTool.aspx. “Reported Revenues—Revenues—AllLandCategories,”OfficeofNaturalResources Revenue,accessedMay27, supra, n.57,table1. “Sales ofFossilFuelsProduced from FederalandIndianLands, FY2003through FY2013,”EIA,June19,2014, “Petroleum &OtherLiquids:SpotPrices,”EIA,May20,2015,supra,n.2. Federal royalty-related dataare reported forthefiscalyear(October–September),notcalendaryear. gov/oig/reports/upload/CR-EV-MOA-0003-2013Public.pdf. “Onshore OilandGasPermitting,”DepartmentoftheInterior(InspectorGeneral),June26,2014,http://www.doi. accessed May27,2015,http://actionplan.gc.ca/en/page/r2d-dr2/frequently-asked-questions-responsible-resource. See, e.g.,“Frequently AskedQuestions:ResponsibleResource Development,” Canada’s EconomicActionPlan,