Access to domestic resources

To look for natural gas resources, a company must first get permission from the owner of the mineral rights.

In many cases, the federal government owns the mineral rights, both on land and in the ocean, and there is a formal process to determine whether the government will allow development of these resources – whether it’s natural gas, oil, coal or wind. When the federal government discusses energy policy for the country, access to domestic resources is often an important part of this debate.

Devon photo: Searching for natural gas in Carthage, Texas

The U.S. Department of the Interior is the federal agency responsible for managing these government owned lands. The agency determines what areas will be open to development, what areas will be designated as multiple use, including recreational activities and resource development, and what areas are off limits for development. And Congress plays an important role as well.

Access to resources on land

The federal government owns the mineral rights to almost 30 percent of the land in the United States, and its biggest holdings are in the West. In 2008, the Departments of the Interior, Agriculture and Energy released a study that showed that the government prohibits development of natural gas and oil resources on about 60 percent of this land.
That report, “Inventory of onshore federal oil and natural gas resources and restrictions to their development,” looked at the 279 million acres where there potentially could be resources. It concluded that these lands contain at least 231 trillion cubic feet of undeveloped natural gas on the 279 million acres of federal land where there potentially could be

The report notes:

• About 41 percent of the natural gas resources – 94.5 trillion cubic feet—is off-limits to development.
  
• About 49 percent of the natural gas -- 112.9 trillion cubic feet -- is one federal is accessible with restrictions.
  
• About 10 percent of the gas -- 23.6 trillion – is accessible under standard lease terms.

Access to resources under the ocean floor

The Bureau of Ocean Energy Management, Regulation and Environment, under the U.S. Department of the Interior, is responsible for overseeing the development of resources in the federal lands off the coastline of the United States. While the states have responsibility for the waters closest to their coastline (anywhere from 3 to 10 miles), the federal government’s responsibility extends from the state’s boundary out 200 miles.

The companies pay the federal government for the right to produce these resources. In the oil and natural gas industry, this includes bonuses, royalty and lease payments. In 2008, these payments amounted to $22 billion.

The country began developing natural gas and oil resources in the ocean in the late 1940s, beginning in shallows waters and then extending into much greater depths, sometimes up to 10,000 feet of water. Most of the production has been off four states – Louisiana, Texas, Mississippi, and Alabama – in the Gulf of Mexico, where there are vast quantities of natural gas.

For almost 30 years, Congress would not allow companies to look for additional resources in federal waters in the Atlantic and the Pacific, but in late 2008, in response to high fuel prices, Congress lifted the ban. No one really knows exactly how much natural gas may be discovered but using outdated data, the federal government has estimated that about 55 trillion cubic feet of natural gas is technically recoverable in the areas that were subject to the moratorium. In addition, there are prohibitions against searching for resources in the Eastern Gulf of Mexico, where the government estimates there are potentially 21 trillion cubic feet of gas.

In March 2010, President Obama announced that as part of his comprehensive energy strategy, he would support opening more areas off the nation’s coastline for offshore drilling. But those plans were put on hold after a tragic accident in the Gulf of Mexico when a drilling rig exploded and sunk, killing 11 members of the crew and causing the largest environmental spill ever in the Gulf of Mexico. The industry worked closely with the federal government to review and improve all safety procedures in the wake of the accident. In May 2011 the President announced that he would support opening more areas for exploration, including speeding up the evaluation of oil and gas resources off the shores in the mid and south Atlantic region, and leasing new areas in the Gulf of Mexico.

Access to property owned by individuals

The federal government is not involved when a private landholder owns the property and the mineral rights. In this case, the owner of the mineral rights and the company that wants to develop these resources sign a private contract, or lease, where the owner of the mineral rights receives payment for the right to develop resources on their property.