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U.S. Oil Production From Federal Leases Exceeds Record 1 Billion Barrels

Shale rig

Streamlined permitting processes and advances in technology helped U.S. oil production from offshore and onshore sites managed by the federal government to exceed a record 1 billion barrels in fiscal year 2019, U.S. officials told The Associated Press on Tuesday.

The oil production from federal land and waters in fiscal year (FY) 2019, which ended on September 30, increased by 13 percent compared to the production in FY 2018, according to officials at the U.S. Department of the Interior who spoke to AP.

The federal government also saw royalties from federally managed onshore and offshore sites rise by 21 percent year on year to US$7.5 billion in FY 2019.   

The permitting process has also significantly accelerated in recent years. Back in 2016, the Bureau of Land Management (BLM) took on average

257 days to approve a drilling application, while that time has now more than halved. In FY 2019, it took BLM on average 108 days to approve drilling applications, federal officials told AP.  

BLM said last year, referring to FY 2018, that it had improved its oil and gas leasing program by reducing processing times for Applications for Permit to Drill (APDs). Lease sales resulted in a record US$1.1 billion from 28 oil and gas lease sales held in FY 2018, BLM said in May last year.

While the Trump Administration says it is protecting U.S. energy production and jobs while boosting royalties for the federal government and states, critics of the shorter permitting process say that the streamlining of drilling approvals comes at the expense of reduced environmental considerations to protect the land and waters and their habitats.

Meanwhile, the U.S. federal agencies regulating offshore leases are considering granting royalty relief to new oil and gas drilling in shallow waters in the Gulf of Mexico, in a bid to avoid the stranding of what they estimate could be US$20 billion worth of American oil and gas resources.

By Tsvetana Paraskova for Oilprice.com

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