Exploration and Production (Upstream)

Exploration and Production: Exploring for America's Energy Future
Access to oil and natural gas resources from federal lands and waters is critical to supplying the energy needs of American consumers, businesses and homeowners.  In the United States, we are fortunate to be able to produce oil and natural gas from leases with private ownership, but these resources can provide only a modest portion of the energy our modern economy requires.  Oil and natural gas on the Outer Continental Shelf and on multiple-use, non-park public lands in the Inter-Mountain West and in Alaska will be increasingly important to our nation's energy future.    

Offshore
Currently, approximately 25% of U.S. oil and natural gas production comes from offshore areas. Technology has enabled the industry to explore deeper waters in the Gulf of Mexico and to make many new discoveries while minimizing impact on the environment. This section discusses the industry’s offshore activities, including the technology we use and the steps we take to protect our workers and the environment.

Onshore Government Lands
The federal government owns nearly one-third of the land in the country, mostly in the Western U.S. That is an area roughly four times the area of the state of Texas.

According to the Energy Policy Conservation Act (EPCA) Phase III Inventory, completed in October 2008 by the Department of Interior, the U.S. Geologic Survey, the U.S. Forest Service and Energy Information Administration, of 279 acres of federal land in the Western U.S. with oil or natural gas potential, some 60 percent of that land is off limits to exploration or development because it has been set aside as wilderness areas, national parks, and other protected areas. The remainder is designated by Congress as "multiple use" land. This means that a variety of activities ranging from oil and gas exploration and development, recreation, to ranching are permitted on these lands. Substantial volumes of undiscovered oil and gas are believed to underlie these government lands. Despite the intent of Congress, substantial portions of this multiple-use land are also off limits. It is important to note that natural gas and oil production currently takes place on some 200,000 surface acres of this multiple use public land, or on less than one percent of federal lands with energy resource potential. And it is important to note that all oil and gas operations on federal lands are subject to full compliance with all environmental laws and regulations. This section discusses current access to these lands and the growing role that onshore government lands need to play in meeting the nation’s energy needs.

Alaska
Alaska is currently the source of nearly 14% of U.S. oil production, and it holds a number of the most promising areas for future large discoveries. Alaska also has vast natural gas reserves that will make a valued contribution to U.S. supply once a pipeline is constructed to deliver the gas to market. This section discusses arctic technology and issues related to exploration and production in Alaska.

Environment & Safety
The oil and natural gas industry has an excellent track record of environmental stewardship. Our companies are committed to developing the oil and gas resources that our country needs in a manner that is protective of the environment. Production and environmental protection are not mutually exclusive. This section discusses our stewardship efforts and results, regulations and performance, and specifics in the areas of air, water, and waste.

Royalty Management
When oil and gas companies develop hydrocarbon resources on government lands, they pay a royalty percentage of the value of production to the government. These royalties are one of the largest sources of income to the federal government and have totaled over $153 billion since 1953, including $6.6 Billion in 2009. This section explains royalties and discusses issues and innovative approaches to royalty management.

Technology and Standards   
Advances in technology have transformed the exploration and production business.  In addition to increasing efficiency, these innovations generate significant environmental benefits.  Technology assures that exploration and production can be conducted in harmony with environmental protection.

Revenue to State and Federal Government
Oil and natural gas producers pay billions of dollars in taxes to states and the federal government.  The amount and complexity of these taxes can affect the ability of U.S.-based companies to compete on a worldwide market against foreign competitors not subject to the U.S. tax system.