Information provided by USPIRG

The public land provisions in the Senate Energy bill reflect a clear attempt to make energy production the dominant use of our wildest Western public lands, regardless of environmental or social consequences. The public lands provision also ignores the fact that, right now, extreme oil and especially natural gas development is already occurring on federal lands within the Rocky Mountain West.

Currently there are over 100,000 active oil and gas wells on public lands managed by the Bureau of Land Management (BLM). In New Mexico alone, there are over 22,700 oil producing wells, and over 23,500 gas producing wells. BLM plans call for an additional 15,000 oil & gas wells to be drilled on public lands in the coming years.

In Fiscal Year 2001, the BLM permitted 4,850 drilling projects, up from 3,400 permits issued in Fiscal Year 2000. The BLM’s recently released Wyoming and Montana Powder River Basin Environmental Impact Statements (EIS) plan the development of over 65,000 new coal bed methane wells in that Basin within the next 10 years.

Rather than emphasizing energy production over all other uses and values of public lands, efforts are needed to ensure that federal energy resources are developed in a careful, balanced manner that protect the many values of our public lands and private surface owners.

                                                                Map Design: Colorado Environmental Coalition

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Natural Gas--Our Latest Crisis?

An In-Depth Analysis

• More than 88 percent of the natural gas resources on public lands in the West are available for development. (Scientific Inventory of Onshore Federal Lands’ Oil and Gas Resources and Reserves and the Extent and Nature of Restrictions or Impediments to their Development, U.S. DOE & U.S. DOI, January 2003)

• Federal regulators warned in December 2002 that manipulation in gas markets “has occurred ... and may be continuing.” (Federal Energy Regulatory Commission, 2003 Natural Gas Market Assessment, Winter 2002-03, p. 25)

• “For the near term -- the next two to three years -- moderating energy demand is the most realistic and effective approach to balancing natural gas markets." (Bill Prindle, Deputy Director, American Council for an Energy Efficient Economy, Congressional testimony, June 18, 2003)
  
• Rapid expansion of the nation's wind turbine fleet could sharply boost wind generation over the next four years, increasing its output to the equivalent of three billion cubic feet of natural gas a day -- about as much natural gas as the states of Colorado and Alaska produce today.

Public Lands are Open to Drilling

• In January 2003, the U.S. Departments of Interior and Energy released their “Scientific Inventory of Onshore Federal Lands’ Oil and Gas Resources and Reserves and the Extent and Nature of Restrictions or Impediments to their Development.” According to this inventory:
  
• Only 12 percent of the natural gas resources on public lands in the West are off-limits to energy exploration and development, including lands inside National Parks.
  
• More than 63 percent of the natural gas resources on public lands in the West can be leased by the energy industry with standard development stipulations.
  
• Roughly 25 percent of the natural gas resources on public lands in the West are available for energy leasing with some restrictions to protect wildlife and critical habitat, but the U.S. Bureau of Land Management waives these restrictions more than 80 percent of the time. (See “BLM Exceptions” Fact Sheet)
  
• The oil and gas industry currently has existing oil and gas leases on 32 million acres of federal minerals in the Rocky Mountain states. (Public Land Statistics, FY 1997-2002)

Market Manipulation: A Serious Problem

• In two recent analyses of the natural gas industry, the General Accounting Office (GAO) and Federal Energy Regulatory Commission (FERC) warned that gas companies can easily manipulate production and storage data to change the market price of natural gas. Following are excerpts from GAO and FERC data:
  
• “Incorrect information concerning storage can also greatly affect the market. ... storage data have quickly become a widely used indicator to estimate the supply of natural gas. When this information is incorrect, it can increase volatility in the natural gas market.” (Analysis of changes in market price. GAO-03-46. December 2002, p.21)
  
• “For example, when AGA reported on August 15, 2001, that injections for the week ended Friday, August 10 totaled a record low of 3 bcf, the September futures contract daily settlement price jumped by 12 percent from the previous day. Analysts has predicted that injections for that week would range from 45 to 70 bcf. Later, AGA discovered that it had received erroneous data from an entity included in its survey and issued a corrected gas storage report on August 22 showing that gas injection during the week ending August 10, 2001, was 50bcf. As a result, the September futures contract price on August 22 decreased by more than 10 percent from the day before. On October 12, 2001, AGA announced that in 2002 it would stop providing weekly reports on the volume of gas in underground storage.” (Analysis of changes in market price. GAO-03-46. December 2002, p. 21)
  
• “A 2002 FERC report found that published natural gas price data are susceptible to manipulation and cannot be independently validated. The lack of formal verification opens the door for entities to deliberately misreport information in order to manipulate prices and/or volumes of both electricity and natural gas.” (Analysis of changes in market price. GAO-03-46. December 2002, p. 26)
  
• “FERC lacks assurance that today’s energy markets are producing interstate wholesale natural gas and electricity prices that are just and reasonable.” (Analysis of changes in market price. GAO-03-46. December 2002, p. 29)
  
• “The potential for manipulation in energy markets remains a concern. Without proper monitoring, the likelihood of successful manipulation could increase under current tight supply conditions.” (Federal Energy Regulatory Commission. 2003 Natural Gas Market Assessment. Winter 2002-03, p. 3)
  
• “The energy trade press creates natural gas price indices through systematic polling of market participants. ...A drawback of the reported approaches are that the traders who traditionally provide price quotes often have has financial incentives to influence market prices and behavior. ...Confidence in price indices has weakened with recent allegations and admissions of false reporting of priceand volume information.” (Federal Energy Regulatory Commission. 2003 Natural Gas Market Assessment. Winter 2002-03, p. 15)
  
• “Evidence indicates that price manipulation has occurred in certain natural gas marketplaces, and may be continuing. ...it is likely that revelations of improper behavior will continue for some time. The fair and effective functioning of energy marketplaces requires robust industry institutions designed to prevent manipulation and promote customer confidence. To date, the natural gas industry has not adequately developed these institutions.” (Federal Energy Regulatory Commission. 2003 Natural Gas Market Assessment. Winter 2002-03, p. 25)
  

Compassionate Conservation: Promote Efficiency and Renewables

• Less than 1% of New Mexico’s electricity is generated from renewable energy.

• Since the 1970’s New Mexico has gone from number 1 in alternative energy production to 48 th in the nation. Renewable technology, and implementation is available today at relatively cheap costs.

• New Mexico is home to Sandia and Los Alamos National Labs, and has one of only two Alternative Energy programs in the nation at NMSU.

• New Mexico’s annual wind energy potential is estimated to be 435 billion kilowatt-hours—twenty five times more than the State’s annual electricity consumption of 17 billion kilowatt-hours.

• Wind power costs $0.03 per kilowatt-hour (kWh); cheaper than natural-gas and coal fired electricity

• New Mexico experiences approximately 3,200 hours of sunshine a year.150 acres of land covered with solar panels would generate enough electricity to power over 6,000 homes.

• In many States, financial incentives are given to producers and consumers of renewable energy. Renewable energy is proven to produce long-lasting, well-paid jobs, generate large amounts of income for States, establish a balanced, and sustainable economy, and significantly cleanup the environment.

 

• “For the near term -- the next two to three years -- moderating energy demand is the most realistic and effective approach to balancing natural gas markets." (Bill Prindle, Deputy Director, American Council for an Energy Efficient Economy, Congressional testimony, June 18, 2003)
  
• "We estimate that the wind farms already in place, and those that will be installed by the end of this year, will be saving about 0.5 billion cubic feet per day [of natural gas] in 2004. That means the natural gas shortage would be 10 to 15 percent worse if it were not for the relatively small amount of wind generation we have today." (American Wind Energy Alliance executive director Randall Swisher, June 18, 2003)
  
• Rapid expansion of the nation's wind turbine fleet could sharply boost wind generation over the next four years, increasing its output to the equivalent of 3 billion cubic feet per day -- about as much natural gas as the states of Colorado and Alaska produce today. (http://www.awea.org/news/news030618gas.html)