[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
THE AMERICAN ENERGY INITIATIVE, PART 27: A FOCUS ON GROWING DIFFERENCES 
       FOR ENERGY DEVELOPMENT ON FEDERAL VERSUS NON-FEDERAL LANDS

=======================================================================

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             AUGUST 2, 2012

                               __________

                           Serial No. 112-170


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         TAMMY BALDWIN, Wisconsin
CHARLES F. BASS, New Hampshire       MIKE ROSS, Arkansas
PHIL GINGREY, Georgia                JIM MATHESON, Utah
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington   DORIS O. MATSUI, California
GREGG HARPER, Mississippi            DONNA M. CHRISTENSEN, Virgin 
LEONARD LANCE, New Jersey            Islands
BILL CASSIDY, Louisiana              KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 7_____

                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
JOHN SULLIVAN, Oklahoma              BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               KATHY CASTOR, Florida
GREG WALDEN, Oregon                  JOHN P. SARBANES, Maryland
LEE TERRY, Nebraska                  JOHN D. DINGELL, Michigan
MICHAEL C. BURGESS, Texas            EDWARD J. MARKEY, Massachusetts
BRIAN P. BILBRAY, California         ELIOT L. ENGEL, New York
STEVE SCALISE, Louisiana             GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington   LOIS CAPPS, California
PETE OLSON, Texas                    MICHAEL F. DOYLE, Pennsylvania
DAVID B. McKINLEY, West Virginia     CHARLES A. GONZALEZ, Texas
CORY GARDNER, Colorado               HENRY A. WAXMAN, California (ex 
MIKE POMPEO, Kansas                      officio)
H. MORGAN GRIFFITH, Virginia
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     4
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     6
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     7
    Prepared statement...........................................     9
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................    10

                               Witnesses

Michael D. Nedd, Assistant Director, Minerals and Realty 
  Management, Bureau of Land Management, Department of the 
  Interior.......................................................    12
    Prepared statement...........................................    14
    Answers to submitted questions...............................   161
Mary Wagner, Associate Chief, Forest Service.....................    20
    Prepared statement...........................................    22
Adam Sieminski, Administrator, Energy Information Administration.    27
    Prepared statement...........................................    29
Lynn D. Helms, Director, North Dakota Industrial Commission, 
  Department of Mineral Resources................................    76
    Prepared statement...........................................    78
Dan Sullivan, Commissioner, Alaska Department of Natural 
  Resources......................................................    86
    Prepared statement...........................................    88
Thomas Clements, Owner, Oilfield CNC Machining, LLC..............   104
    Prepared statement...........................................   106
Kathleen Sgamma, Vice President, Government and Public Affairs, 
  Western Energy Alliance........................................   111
    Prepared statement...........................................   113
Reed Williams, President, WillSource Enterprise, LLC.............   119
    Prepared statement...........................................   121
Christy Goldfuss, Director, Public Lands Project, Center for 
  American Progress Action Fund..................................   125
    Prepared statement...........................................   127
Corey Fisher, Assistant Energy Director, Sportsmen's Conservation 
  Project, Trout Unlimited.......................................   137
    Prepared statement...........................................   139

                           Submitted Material

Article, dated July 28, 2012, ``The Conversion of a Climate-
  Change Skeptic,'' by Richard A. Muller, The New York Times, 
  submitted by Mr. Rush..........................................   157


THE AMERICAN ENERGY INITIATIVE, PART 27: A FOCUS ON GROWING DIFFERENCES 
       FOR ENERGY DEVELOPMENT ON FEDERAL VERSUS NON-FEDERAL LANDS

                              ----------                              


                        THURSDAY, AUGUST 2, 2012

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:08 a.m., in 
room 2123, Rayburn House Office Building, Hon. Ed Whitfield 
(chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Shimkus, 
Walden, Terry, Burgess, Bilbray, Scalise, Olson, Gardner, 
Griffith, Upton (ex officio), Rush, Markey, and Waxman (ex 
officio).
    Staff present: Maryam Brown, Chief Counsel, Energy and 
Power; Allison Busbee, Legislative Clerk; Cory Hicks, Policy 
Coordinator, Energy and Power; Heidi King, Chief Economist; 
Jason Knox, Counsel, Energy and Power; Ben Lieberman, Counsel, 
Energy and Power; Michelle Ash, Democratic Chief Counsel, 
Commerce, Manufacturing, and Trade; Greg Dotson, Democratic 
Energy and Environment Staff Director; Kristina Friedman, 
Democratic EPA Detailee; Caitlin Haberman, Democratic Policy 
Analyst; Angela Kordyak, Democratic DOE Detailee; and Elizabeth 
Letter, Democratic Assistant Press Secretary.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. We will call today's hearing to order and 
certainly want to welcome our witnesses today. We will have two 
panels of witnesses. At this time, I would recognize myself for 
a 5-minute opening statement.
    Today is the 27th day of hearings on what we refer to as 
the American Energy Initiative, and in this series of hearings, 
we have examined various aspects of the energy needs of our 
country, the policies and ways to be more productive, and 
today, I think most Americans would agree that we do face two 
primary problems. We have many others, but one, of course, 
relates to energy production and becoming more energy 
independent, and the other relates to our struggling economy 
and still relatively high unemployment rate, and today we are 
going to be focusing on two States that have different stories 
to tell about energy production and lowering unemployment 
rates.
    First of all, I would like to just talk briefly about North 
Dakota. North Dakota has an unemployment rate today of around 3 
percent, and so it raises the question on the energy policy and 
economic policy, what is North Dakota doing that is different 
than other States? And what can we in Washington learn from 
that? And while we try to learn what North Dakota is doing 
right, we also need to contrast it with another State that has 
a lot of energy as well, and I might say that the picture is 
not nearly as bright in another oil producing State, Alaska, 
where output has been declining over the same span that North 
Dakota's output has been increasing.
    Now, the main difference between Alaska and North Dakota is 
that Alaska has far more areas of federally owned and 
controlled lands, and this administration has substantially cut 
back on new energy leasing in these Federal lands and offshore 
areas, and while that may not be the only factor that has led 
to this difference of unemployment and economic growth, we hope 
this morning to find out how substantial a factor is it.
    Now, Alaska has been a great source of American oil. Since 
1970 16 billion barrels have made their way south on the Trans-
Alaska Pipeline. That is a lot of domestic oil and a lot of 
jobs associated with it, but Alaska's largest field in Prudhoe 
Bay is now declining, and despite vast untapped resources 
elsewhere in the State as well as offshore, new exploration and 
drilling have been greatly curtailed by policy decisions in 
Washington, DC, and it isn't just Alaska. For example, this 
administration has cut back on new leasing in the federally 
controlled Gulf of Mexico and has also been slow to issue the 
necessary permits for previously leased areas, and the red tape 
facing energy companies operating on Federal lands throughout 
the intermountain west has kept the region below its potential 
for energy production and jobs.
    In contrast, relatively little land in the energy-rich 
Bakken formation in North Dakota is federally owned. There the 
oil industry has been allowed to partner with private 
landowners to expand production. In the last decade alone, 
North Dakota has risen from the eighth largest producing State 
to the second largest. An estimated 35,000 new direct jobs and 
many more indirect ones are a big part of the reason why the 
State's unemployment rate is around 3 percent. In effect, North 
Dakota gives us a glimpse of what would be possible in many 
other parts of the country if only we could change some policy 
in Washington, DC. And I might add that gasoline prices 
unfortunately seem to be creeping up again. This should 
certainly serve as a reminder that increased production of 
domestic oil supply and demand still is an important factor. It 
is also worth noting that the oil industry in North Dakota is 
regulated by the State government, and the track record for 
safety and environmental protection is quite good. It is a 
model for reaping the many benefits from domestic oil 
production while keeping the risks at a minimum.
    We all know that oil production is up in the United States, 
and that is a good thing, but we also know that that 
production, the reason it is up is because of the increased 
production on private lands, and so as I said, we have two 
panels of witnesses this morning, all of whom are quite 
familiar with the policies and the ins and outs of the oil 
production industry, and so we look forward to their testimony.
    [The prepared statement of Mr. Whitfield follows:]

    [GRAPHIC] [TIFF OMITTED] T2689.001
    
    [GRAPHIC] [TIFF OMITTED] T2689.002
    
    Mr. Whitfield. At this time, I would like to recognize the 
ranking member from the great State of Illinois, Mr. Rush, for 
5 minutes.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. I want to thank you, Mr. Chairman. Mr. Chairman, 
while Democrats under President Obama's leadership have put 
forth a truly all-of-the-above energy agenda, it appears that 
my Republican colleagues are once again taking their cue from 
one of their most influential leaders, Sarah Palin, and 
reviving their simplistic ``drill, baby, drill'' energy agenda. 
Merely a few hours ago, after holding a partisan vote to do 
away with new projects under the DOE's loan guarantee program 
in the full committee yesterday, which would have invested 
Federal dollars into different types of renewable and clean 
energy projects to compete with the Republican Party favorite 
fossil fuel industry, the majority is here today holding a 
hearing on drilling on Federal versus private lands.
    Never mind the fact that the Energy Information 
Administration has confirmed that domestic oil production in 
the U.S. has increased every year since 2008, that we are 
importing less oil than anytime in the past 13 years, and that 
American demand is actually lower now than it was a year ago. 
And, Mr. Chairman, it appears that my Republican colleagues 
will continue to ignore the fact that the U.S. has set more 
than 40,000 hot temperature records this year alone, and that 
the last 12 months have been the hottest ever recorded in our 
Nation's history.
    Today, fully two-thirds of the country is experiencing 
drought, and 30 percent of the Nation's corn crop is in poor or 
very poor condition, while at the same time, water levels in 
four of the five Great Lakes have actually plummeted down to 
unprecedented levels due to high evaporation rates and 
insufficient rainfall. In fact, Mr. Chairman, just yesterday 
the Agriculture Department designated more than half of all 
U.S. counties as disaster areas in 2012. The main reason? 
Drought. And the Agriculture Secretary Vilsack signed a 
disaster designation for 218 counties in 12 States just 
yesterday morning, bringing the national percentages to 50.3 
percent.
    Mr. Chairman, might I remind you that today, more than 113 
million Americans are living under extreme heat advisories, and 
yet, despite repeated requests from myself and Ranking Member 
Waxman to hold hearings on the science behind all of the 
extreme weather events associated with climate change that the 
Nation has been experiencing, we have yet to examine this 
vitally important issue just one time, just once this year, one 
time before this subcommittee.
    Mr. Chairman, even former climate change skeptics such as 
Richard Muller, who penned in a July 28 New York Times 
editorial entitled ``The Conversion of a Climate Change 
Skeptic,'' even Mr. Muller has now come out on the record and 
joined the overwhelming consensus of scientists and researchers 
who have stated that global warming is indeed occurring, and 
that human causes are indeed behind it. Yet as America burns, 
this committee fiddles.
    Even as Congress prepares to vote on a bill, drought relief 
bill for farmers this morning, farmers who are suffering from 
record drought in the Midwest and beyond, even when you and I 
and the other members of this subcommittee, we will be casting 
votes sometime this morning, this very subcommittee refuses to 
hold one hearing, just one hearing on the causes behind these 
droughts, or what can be done for our Nation, for this Federal 
Government, for this Congress to lessen the impact of the heat 
on the American people.
    Mr. Chairman, I support President Obama's all-of-the-above 
energy approach, which encompasses increased oil and gas 
production here in the U.S., additional conservation and energy 
efficiency measures, and a move towards cleaner air, renewable 
energy sources for the future, and I urge you once again, Mr. 
Chairman, I plead with you, let us hold a hearing on the 
science behind climate change. This is a matter of critical 
importance to the American people and to the future of farmers 
in our Nation, American consumers. This is an important matter. 
It is so important, Mr. Chairman, we can no longer afford to 
ignore it. I yield back.
    Mr. Whitfield. Thank you very much, Mr. Rush.
    At this time we will recognize the chairman of the full 
committee, Mr. Upton of Michigan, for 5 minutes.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, thank you, Mr. Chairman. There is a tale 
of two energy policies to be told in this country. There are 
the States where domestic oil and natural gas production is 
growing, and there are the States where it is stagnating. In 
some States, oil and natural gas output is sharply increasing 
on private and State-owned lands, but in others where this 
administration calls the shots on federally controlled lands 
and offshore areas, the news is not nearly as good. In fact, a 
recent CRS study finds that 96 percent of the increase in 
domestic oil supply since 2007 has come from non-Federal lands. 
Where production on State and private lands is up, we see the 
energy industry creating thousands of high paying jobs, 
revitalizing local economies, but where most of the oil and gas 
remains untouched beneath the ground or under the sea floor due 
to Federal access restrictions, the job potential remains 
largely unrealized.
    Under one energy policy vision, we see State and local regs 
ensuring that energy production is done safely and that public 
health is protected. In the other, we see one excuse after 
another for preventing energy production entirely or subjecting 
it to years of unnecessary delays.
    Today we are going to view these two energy policies 
through the prism of two States. We can look at the success 
story of North Dakota, where growing oil production on private, 
State, and tribal lands should serve as a model for the Nation, 
and we will compare it to States like Alaska where Federal 
control of energy-rich onshore and offshore areas means that 
drilling often gets blocked by bureaucrats in DC.
    Alaska and other States are blessed with energy but cursed 
with Federal red tape, and that is why our committee has been a 
leader on measures like the Domestic Energy and Jobs Act that 
will reduce the red tape and allow these States to replicate 
North Dakota's success. If we take the lessons from this tale 
of two energy policies and allow States like Alaska to harness 
their resources as they do in States like North Dakota, it 
would benefit the national economy, jobs, gas prices, energy 
security. It is a powerful story, and I thank the witnesses for 
coming to share it with us. Yield back.
    [The prepared statement of Mr. Upton follows:]
    [GRAPHIC] [TIFF OMITTED] T2689.003
    
    Mr. Whitfield. Thank you very much. At this time, I 
recognize the gentleman from California, Mr. Waxman, for a 5-
minute opening statement.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you, Mr. Chairman. Today the subcommittee 
holds a hearing to compare oil and gas production on Federal 
lands to production on private lands. We will hear once again, 
as we just heard, that the Obama administration is hostile to 
oil and gas production, and we will hear once again that oil 
and gas production should be pursued at the expense of 
renewable energy and other goals.
    Well, that is the rhetoric. Now here are the facts. 
Domestic oil and gas production has increased each year of the 
Obama administration, and it is the highest it has ever been in 
8 years. America's dependence on foreign oil has gone down 
every single year for the last 3 years, and oil production from 
Federal lands is higher today than it was under the last 3 
years of the Bush administration. It is true that oil 
production on private lands has increased more than it has on 
Federal lands.
    Some Republicans have used this as evidence that the 
President must be disfavoring the oil industry, but the fact is 
that most of the increase in domestic oil production has 
occurred from developing shale formations. These formations 
happen to be on private lands. The Federal Government manages 
only a small portion of these areas.
    For instance, the Bakken shale has made North Dakota one of 
the country's top States in oil production, but Federal lands 
make up a small percentage of it. Even offshore oil production 
remains strong. In spite of one of the world's worst 
environmental disasters, oil production from the Outer 
Continental Shelf in 2011 was equal to or higher than any of 
the last 3 years of the Bush administration. The Obama 
administration has taken many steps to facilitate oil and gas 
production. The Bureau of Land Management has reformed its 
leasing process with a tracking system for applications that 
shortens wait times. It has implemented a more inclusive 
stakeholder engagement that has lowered lease protests and 
appeals. The Forest Service has sent officials to drill-
intensive areas to expedite the permitting process. Those are 
the facts, and they are completely contrary to the narrative 
that the Republican majority is trying to promote today.
    But we shouldn't lose sight of the fact that public lands 
are not solely for oil and gas production. Our public lands are 
held in trust for the American people, not the oil companies. 
Public lands are used for conservation, outdoor recreation, 
watershed protection, timber, and grazing. They can also be 
used for renewable forms of energy. In fact, the Obama 
administration recently completed an assessment that will 
expedite permitting for solar installations on public lands in 
the Southwest. This has the potential to produce enough 
electricity to power 7 million homes. The administration's job 
is to balance these competing demands and, notwithstanding all 
the rhetoric we will hear today, I believe it is doing a good 
job.
    But I want to refer my colleagues to a blog by Paul Krugman 
in The New York Times, a Nobel Prize winner, and he says in 
``When Scale Matters.'' ``Judging from comments on my North 
Dakota post, there is a lot of confusion about when and why 
differences in scale make comparisons between economies 
invalid.
    ``The crucial thing to get is that size, per se, isn't the 
issue. It is whether what is going on in the small economy 
could be replicated in the large economy.
    ``I mean, we all know that airplane designs can be tested 
with miniature models in wind tunnels, that tsunamis can be 
modeled in tanks that fit in a large room and so on. Small-
scale versions of big phenomena are perfectly OK. The baby-
sitting co-op teaches us a lot about the global economic slump.
    ``But when you are looking at, say, a resource boom--which 
is what North Dakota is all about--you have to ask whether a 
comparable resource boom is possible in a much more populous 
state, or the United States as a whole. One commentator 
declared that there is as much oil under California as there is 
under North Dakota; quite possibly. The question is, how big a 
deal would extracting that oil be in a state with 50 times 
North Dakota's population; how much difference would it make 
to, say, the state unemployment rate? And the answer, of 
course, is virtually none. To have a North Dakota-type boom in 
California, you would have to find 50 times as much oil; to 
have it nationally, you'd have to find 500 times as much. Not 
likely.
    ``And this is how you want to think about other examples. 
Is Iceland too small to be a useful model for other crisis 
countries? Well, it could be; Iceland's export sector is, 
thanks to its small size, not very diverse, and if the recovery 
had been all about fish, or aluminum, it wouldn't be much of a 
lesson to anyone else. As it happens, however, that is not what 
it is about.
    ``I guess the general point is that when trying to learn 
from some country or region's experience, you should always 
ask, `Is this place a reasonably good model for other places?' 
It's not a matter of head counts or acreage, it's about the 
story.''
    Mr. Chairman, this is our 27th hearing. You pointed out we 
are interested in energy production and the question of a 
struggling economy. Where are the hearings on global warming 
and climate change? They affect those two other issues as well, 
as many other matters that are affecting the American people. I 
yield back my time.
    Mr. Whitfield. Thank you very much. And that concludes 
today's opening statements, and so at this time, I would like 
to introduce the members of the first panel, and first of all, 
we have with us this morning Mr. Michael Nedd, who is the 
Assistant Director of Minerals and Realty Management at the 
Bureau of Land Management; we have Ms. Mary Wagner, who is the 
Associate Chief of the U.S. Forest Service; and we have Mr. 
Adam Sieminski, who is the administrator of the U.S. Energy 
Information Agency.
    I want to thank all of you for coming. We appreciate your 
being here very much, and we look forward to your testimony, 
and each one of you will be recognized for 5 minutes, and I 
know you have done this before, but there is a couple little 
boxes on the table, and when the time is up, the light will 
turn red, and while I won't cut you off immediately, at least 
when you see red, you will recognize that, hey, I think my time 
is getting close to being up.
    So, Mr. Nedd, we will recognize you first for a 5-minute 
opening statement.

STATEMENTS OF MICHAEL D. NEDD, ASSISTANT DIRECTOR, MINERALS AND 
REALTY MANAGEMENT, BUREAU OF LAND MANAGEMENT, DEPARTMENT OF THE 
  INTERIOR; MARY WAGNER, ASSOCIATE CHIEF, FOREST SERVICE; AND 
       ADAM SIEMINSKI, ADMINISTRATOR, ENERGY INFORMATION 
                         ADMINISTRATION

                  STATEMENT OF MICHAEL D. NEDD

    Mr. Nedd. Good morning, Mr. Chairman and ranking members 
and members of the subcommittee. Thank you for the opportunity 
to discuss the role of the Bureau of Land Management in 
facilitating responsible development of oil and gas resources 
from our Nation's public land. The BLM is responsible for 
protecting the resources and managing the use of our Nation's 
public land on over 245 million surface acres, approximately 
700 million acres of onshore subsurface mineral estate, and 56 
million acres of Indian trust land. We work closely with State 
governments and other Federal agencies in the management of 
this subsurface mineral estate.
    The BLM manages public lands on very complex, multiple use 
mandate from Congress, and consider a wide variety of factors 
in land management decisions, including industry interests, 
conservation value, as well as other potential use of the 
public lands.
    In addition to oil and gas production, the BLM's unique 
multiple use management of public lands also includes 
activities such as livestock grazing, outdoor recreation, solid 
minerals development, and the conservation of natural, 
historical, cultural, and other important resources.
    Secretary Salazar has emphasized that the development and 
production of conventional energy resources from BLM-managed 
public and Indian lands, are an important component of the new 
energy frontier and play a critical role in meeting the 
Nation's energy needs. In 2011, conventional energy development 
from public and Indian trust land produced 14 percent of the 
Nation's natural gas, 6 percent of its domestically-produced 
oil. In fiscal year 2011, onshore Federal oil and gas 
production resulted in nearly $2.9 billion in royalties, 
approximately half of which was paid directly to the States in 
which the development occurred.
    The geography of resource occurrence and the relative 
economic attractiveness of development are key factors 
impacting discoveries and production level on both Federal and 
non-Federal lands. Currently, there are more than 37 million 
acres of public lands that are leased for oil and gas 
development. Only about 12 million acres are under production. 
There are huge potential oil and natural gas plays in the 
Marcellus, Fayetteville, Barnett, Niobrara, and Bakken shale 
formation where there is an abundance of oil and gas. These 
geological formations exist largely on State and private 
minerals estate. The fact that only one-third of Federal leases 
are in production may be partly attributable to the abundance 
of oil and gas in these shale formations on the State and 
private land and to low natural gas prices relative to the 
price of oil.
    The BLM is working on a variety of fronts to ensure that 
development occurs efficiently and responsibly, including 
implementing leasing reform, implementing a new automated 
tracking system designed to expedite the review for a drilling 
permit, improving inspection, enforcement, and production, 
accountability, reviewing hydraulic fracturing policies and 
practices, and carefully planning for development in the 
National Petroleum Reserve in Alaska.
    Leasing reform is designed to provide greater 
predictability and certainty that those leases will ultimately 
be developed and produced. The leasing reform also provides 
more certainty to industry by enhancing the BLM's ability to 
resolve protests prior to lease sales. BLM's ongoing effort to 
ensure efficient processing of oil and gas permit applications 
on both Indian trusts and Federal lands, the BLM will implement 
a new automated tracking system that is expected to reduce the 
review period for drilling permits.
    The BLM continues to work to strengthen its oil and gas 
inspection, enforcement, and production accountability program. 
These inspections ensure that leases meet important 
environmental and safety requirements, and that the reported 
oil and gas volumes matches actual production. Increases in oil 
and gas production nationwide are the result of improved 
drilling and hydraulic fracturing technique. As part of the 
Department's effort to ensure that oil and gas development is 
taking place on public land in a responsible and 
environmentally sustainable manner, the BLM proposed measures 
to create a consistent framework to strengthen the requirements 
for hydraulic fracturing performed on Federal and Indian trust 
land and protect the health of communities.
    Mr. Chairman, thank you for the opportunity to testify. I 
will be happy to answer any questions you may have.
    Mr. Whitfield. Thank you, Mr. Nedd.
    [The prepared statement of Mr. Nedd follows:]

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    [GRAPHIC] [TIFF OMITTED] T2689.009
    
    Mr. Whitfield. And Ms. Wagner, you are recognized for a 5-
minute opening statement. I also want to just make a comment 
that I really appreciate the great job you all do managing the 
Land Between the Lakes and national forests, 170,000 acres. We 
appreciate the good job you do there.


                    STATEMENT OF MARY WAGNER

    Ms. Wagner. Thank you, Mr. Chairman. Good morning, and 
members of the committee as well. I appreciate the opportunity 
to offer just a few brief points this morning on oil and gas 
development on national forests.
    Congress entrusted the Secretary of Agriculture with broad 
powers to protect and administer the national forest system by 
passing laws such as the Organic Act, the Multiple Use 
Sustained Yield Act, and the National Forest Management Act. 
The Multiple Use Sustained Yield Management Act established 
multiple use as the foundation for management of national 
forest and grasslands, calling for management of various uses 
in a combination that best meets the needs of the American 
people.
    The people that we serve want many things from our forests: 
Clean air, clean water, timber, forage, fish and wildlife 
habitat, opportunities for outdoor recreation, and the topic of 
this hearing today, oil and gas resources. Congress also 
enacted laws giving us the basic framework for making 
decisions. The National Environmental Policy Act instructs 
agencies to assess environmental effects of proposed actions 
before we make decisions. NEPA's major purposes include 
disclosure of environmental effects, involvement of the public, 
and making informed decisions based on environmental analysis, 
which often includes mitigation for the proposed action of the 
project implementation.
    The Forest Service is committed to effectively managing 
mineral resources to facilitate energy transmission in a 
responsible manner and to sound development of renewable and 
nonrenewable energy. Currently, we have authorized almost 
20,000 active wells on national forest system lands in 19 
States, and there are over 7,000 oil and gas leases covering 
5.5 million acres on national forests and grasslands. While 
overall production of oil and gas from national forests is 
relatively small, it is an important economic and job-producing 
driver. The value of all energy and mineral production from 
national forests exceeds $6.5 billion per year, and mineral and 
energy development on national forests support an average of 
110,000 jobs. This employment is keenly important to local 
communities and the Nation.
    Oil and gas development is an important component of the 
Nation's energy portfolio, with potential to advance our 
Nation's energy security, improve air quality, and create jobs. 
The responsibility of the Forest Service is to safely and 
responsibly develop these resources in a way that ensures the 
well-being of surrounding communities and protects our 
landscapes and watersheds.
    I look forward to working together to ensure the 
stewardship of our Nation's forests and grasslands continues to 
meet the desires and expectations of the American people. I 
look forward to answering your questions.
    Mr. Whitfield. Thank you very much, Ms. Wagner.
    [The prepared statement of Ms. Wagner follows:]

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    Mr. Whitfield. And Mr. Sieminski, you are recognized for 5 
minutes.


                  STATEMENT OF ADAM SIEMINSKI

    Mr. Sieminski. Mr. Chairman, members of the subcommittee, I 
am really pleased to have the opportunity to appear before you 
today. Although I have testified here in the past, this is my 
first congressional hearing as EIA administrator. The Energy 
Information Administration is a statistical and analytical 
agency within the Department of Energy. By law, its data, 
analyses, and forecasts are independent of approval by any 
other officer or employee of the U.S. Government. Yesterday, 
EIA released its 2010 report on U.S. crude oil and natural gas 
reserves. The numbers are big.
    Net additions to oil and gas proved reserves were, by a 
large margin, the highest ever recorded since EIA began 
publishing proved reserve estimates in 1977. Oil proved 
reserves increased by 12.8 percent during 2010 to 25.2 billion 
barrels, led by Texas, North Dakota, and the Federal Gulf of 
Mexico. U.S. proved reserves of wet natural gas increased by 12 
percent, ending the year above 300 trillion cubic feet for the 
first time ever. Texas, Louisiana, and Pennsylvania had the 
largest increases. One observation worth noting in figure 5 of 
my testimony is that the Nation's shale resource basins, which 
have been mainly responsible for the increases, are largely 
located outside of Federal lands.
    Moving to current production, EIA estimates that oil 
production in the U.S. averaged 6.2 million barrels per day 
during the first 5 months of this year, the highest level since 
1998. The tight oil plays in North Dakota and Texas are leading 
the charge in this gain. EIA forecasts that 6.7 million barrels 
per day of oil output will be seen in 2013. Oil production on 
non-Federal lands increased by 385,000 barrels a day last year, 
again, largely because of the tight oil plays in North Dakota 
and Texas. This level of output currently stands at about 4 
million barrels a day. Oil production from Federal lands is 
dominated by the Outer Continental Shelf, which is driven by 
the timing of major deepwater development projects. After 
increasing for several years to reach 2 million barrels a day, 
production decreased in the aftermath of the 2010 Macondo 
blowout in the Gulf of Mexico, currently stands a bit under 2 
million barrels a day.
    U.S. natural gas production has been driven upward recently 
by shale gas, especially the liquids-rich production areas such 
as the Eagle Ford in Texas and the wet areas of the Marcellus 
shale formation in Pennsylvania. EIA expects continued growth 
in gas production in 2012 and 2013, though not as strong as the 
2010 to 2011 period because of lower natural gas prices. 
Current total U.S. gas production is over 68 billion cubic feet 
per day. Production of natural gas on non-Federal lands has 
increased steadily by over 16 billion cubic feet a day across 
the last 6 years, led by shale resources to surpass 50 bcf a 
day.
    Meanwhile, Federal offshore natural gas production has been 
on a downward trend for the last 9 years, falling by more than 
50 percent, as commercial development moved from the gas-prone 
shallow shelf areas in the Gulf of Mexico to the richer oil-
prone deep waters further out in the Gulf. Production from 
onshore Federal lands was generally growing over this period 
and actually exceeded the offshore production by 2008.
    EIA estimates for the non-Federal oil production are based 
on monthly data from State agencies and purchased third-party 
data. The lag from when the data are first reported to the time 
that they stop changing significantly varies from State to 
State. A few States, like North Dakota and Alaska, report 
relatively complete data within 2 months of the close of the 
production month. Other States with large numbers of producers, 
like Texas and Oklahoma, can take a year or two to report 
complete data. For the Federal offshore area, EIA relies on the 
metered data from the Department of the Interior.
    Unlike oil production, EIA collects data on natural gas 
production from about 240 operators each month. This EIA survey 
primarily covers five States and the Federal offshore Gulf of 
Mexico. Though more accurate than the oil production estimates, 
the current natural gas monthly production survey does not 
collect data on Federal lands or from some of the emerging 
shale States like Arkansas and Pennsylvania. In its Federal 
year, fiscal year 2013 budget, EIA has proposed a small 
increase in funding to improve the timeliness and accuracy of 
all of the oil and natural gas production data. This proposal 
would increase data quality as well as enable EIA to identify 
and report these trends affecting the Nation much sooner.
    Finally, Mr. Chairman, I want to highlight for the 
committee members the importance of technically recoverable 
resources, also known as TRR. This is a common measure of the 
long-term viability of U.S. domestic oil and natural gas as an 
energy source. These important estimates are a work in 
progress. They change with production experience as new 
production technologies are applied to these resources. The 
uncertainties and complications associated with these estimates 
are discussed in my written testimony. Thank you very much for 
the opportunity to testify before you today, and I look forward 
to your questions.
    Mr. Whitfield. Thank you, Mr. Sieminski.
    [The prepared statement of Mr. Sieminski follows:]

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    Mr. Whitfield. And now we will recognize ourselves for 5 
minutes of questions, and I will begin with myself.
    So, Mr. Nedd, back in March, former BLM director Bob Abbey 
was testifying in a Senate Appropriations Committee, and he 
said that since energy companies face fewer costs and 
regulations when they operate on non-Federal lands, that many 
drilling rigs are moving away from Federal lands to non-Federal 
lands, and on the Outer Continental Shelf, many rigs are just 
leaving U.S. territorial waters and going elsewhere. Do you 
agree with that statement or not? With his statement?
    Mr. Nedd. Mr. Chairman, I can say that companies, where 
they develop, where they decide to seek development is 
economics and is based on their interests.
    Mr. Whitfield. Would you mind moving your microphone 
closer.
    Mr. Nedd. I am sorry, Mr. Chairman, the mic wasn't on. I 
would say that companies certainly make decisions based on 
economics and other type of factors as to where they will 
develop, and so whether companies are developing on Federal 
land or State land depends on their economic factors, on what 
they are trying to achieve, and the Bureau of Land Management 
tries to support based on the interest they express in our 
lands.
    Mr. Whitfield. I agree with you that they look at economic 
circumstances, a lot of different factors, but are you aware 
that there is a trend moving away from Federal lands to non-
Federal lands or not?
    Mr. Nedd. Well, Mr. Chairman, as we have heard here this 
morning, certainly industries are looking to see, they are 
moving to where development of oil or where gas, and most of 
the large plays are on private and State lands, and so 
therefore, industry are going where it is best for them to 
develop that energy.
    Mr. Whitfield. Secretary Salazar recently made the comment 
that he believed that hydraulic fracturing really needed to be 
regulated by the Federal Government because a lot of States do 
not regulate hydraulic fracturing. Could you tell us what 
States do not regulate hydraulic fracturing that you are aware 
of?
    Mr. Nedd. Mr. Chairman, I don't have that information 
directly at hand, and we will be glad to provide it.
    Mr. Whitfield. OK. So you are not aware of which States do 
not regulate?
    OK. Between 2008 and 2011, the number of drilling permits 
approved by Interior for drilling on Federal lands decreased 
significantly, about 37 percent decrease. Do you have any idea 
why it decreased by that amount? To be specific, in 2008, they 
approved over 6,000 drilling permits, and in 2011, approved a 
little over 4,000, and I was just curious, to what do you 
attribute that, the reason for that?
    Mr. Nedd. Yes, Mr. Chairman, certainly in 2008 industries, 
again, submit applications for drilling permits as they see 
fit, and what industries submit we will process, and so, again, 
there are many factors that go into why industries may or may 
not submit application permit to drill.
    Mr. Whitfield. Do you know how many applications were 
submitted in 2011?
    Mr. Nedd. Mr. Chairman, we indicate somewhere. I don't have 
that number right here. I will get it for you. I had it in the 
back of my mind.
    Mr. Whitfield. Do you know how many were submitted in 2010?
    Mr. Nedd. Yes. Applications received or that was submitted 
by industry was in 2011 was over 4700 and in 2010 was over 
4200.
    Mr. Whitfield. In 2010, of that 4200, how many did you all 
approve?
    Mr. Nedd. Mr. Chairman, we processed 5200 applications in 
2010.
    Mr. Whitfield. And how many were approved?
    Mr. Nedd. Over 4500 was approved.
    Mr. Whitfield. And from the time that an application is 
submitted to approval, normally how much time would that take?
    Mr. Nedd. Mr. Chairman, that depends on a variety of 
factors. Certainly from the time an application is submitted, 
our records show it takes an average of about 300 days, but 
some 200-plus days are spent waiting on industry to submit 
information. Once the BLM has a completed application, we 
estimate it takes--it varies, but it takes sometime up to about 
70 days to process, to approve an application.
    Mr. Whitfield. So from the time you get the data you need 
from the company, it takes 70 days on the average to approve a 
permit?
    Mr. Nedd. On an average.
    Mr. Whitfield. I see my time has expired, Mr. Rush, so I 
will recognize Mr. Rush for 5 minutes.
    Mr. Rush. I want to thank you, Mr. Chairman. Mr. Sieminski, 
my friends on the other side of the aisle continue to claim 
that the oil industry is a victim of the administration's 
policies on oil and gas development on public lands. However, 
you testified that domestic oil production is actually the 
highest it has been since 1998, and that the annual production 
of natural gas will continue to rise.
    Do you expect this trend to continue? And do you have 
anything to say about your forecast for energy, future energy 
production in the U.S.?
    Mr. Sieminski. Thank you, Mr. Rush. The EIA projects that 
U.S. oil production will continue to increase all the way out 
to the year 2035. The situation for natural gas is complicated 
by the fact that prices have fallen because of the tremendous 
productivity of the gas wells that have been drilled recently. 
That has caused a rig count, the number of drilling rigs for 
natural gas to fall to a very low level. That could begin to 
impact production several years out if we don't begin to see 
natural gas prices climb back up to levels that support 
continued development activity.
    I think it is fair to say that there are opportunities for 
further production of both oil and natural gas on Federal, 
State, and private lands and that some of the policy issues 
associated with how quickly those resources are developed drive 
the discussion of how high oil and gas production could go and 
over what time period. As you know, EIA is not a policy 
organization, and our forecasts are based on existing laws and 
technology and economics.
    Mr. Rush. Right. Well, am I right, or would you agree that 
there is a boom in the oil industry right now, that we are in 
boom times?
    Mr. Sieminski. There certainly is a tremendous rate of 
activity taking place, particularly in the shale resource-prone 
areas in the United States. Growth in those areas is being 
driven by the application of technology, 3D seismic activity, 
horizontal drilling, fracturing, hydraulic fracturing, multi-
stage fracturing, completions, multiple completions being done 
off of single drilling pad locations. In the offshore area, 
subsea completions have enabled development in deeper and 
deeper waters. So, yes, Mr. Rush, I agree with you that there 
is a boom going on in U.S. oil production.
    Mr. Rush. Well, thank you. It seems to me that especially 
as it relates to energy, good times are here again.
    I want to ask the other witnesses about the role of 
industry in oil and gas production. Of course, the government 
doesn't drill for oil or gas, the government just makes the 
land available to industry so that they can drill for oil and 
gas. We might benefit from a better understanding of how they 
decide where they would like to operate. Mr. Nedd, can you 
discuss the role industry plays, the factors that they consider 
when deciding whether to produce oil and gas on land managed by 
the BLM?
    Mr. Nedd. Yes, Mr. Ranking Member. Certainly industry began 
with expressing an interest, and from that expression of 
interest, the BLM will complete the required environmental 
order type of analysis. Once industry is given a lease, 
industry, it is then up to industry to submit an application 
for a permit to drill, and then looking at those actions, the 
BLM considers, again being a multiple use agency, what are the 
other values that may be impacted from that development and how 
best to mitigate it. The BLM looks at things such as 
conservation, recreation, all that type of factors, and in 
trying to strike an environmentally balanced approach to that 
development.
    Mr. Rush. Can the Federal Government order, force someone 
to drill or produce oil and gas to meet the requirements of the 
lease?
    Mr. Nedd. Absolutely not.
    Mr. Rush. So if no drilling occurs on leased lands and the 
lease expires, do we have any responsibility to the 
leaseholder?
    Mr. Nedd. Not if they expire, Mr. Ranking Member.
    Mr. Rush. Thank you, Mr. Chairman.
    Mr. Whitfield. The gentleman's time has expired. At this 
time, I recognize the gentleman from Michigan, Mr. Upton, for 5 
minutes.
    Mr. Upton. Well, thank you. Thank you, Mr. Chairman, and 
Mr. Sieminski, welcome in your new position as--I know you have 
been here before, and we are delighted that you are here, and 
we look forward to a very good relationship.
    Mr. Sieminski. Thank you, Mr. Upton.
    Mr. Upton. I have to say, for a long time, I have been an 
advocate for a North American energy independent plan. I think 
we can actually do it if you put all the pieces together, and I 
would like to get your comments on that, and I want to--before 
I do, I want to just roll through some numbers and see if you 
think that we are right on this.
    According to your estimates, we use about and have been 
using about 18 million barrels a day of liquid fuels for 
transportation, which is about the same volume in the future 
because of our auto efficiency standards, we have made great 
strides there. On the supply side our, my numbers show that we 
produce about half of that now. Oil production, as you said, is 
about 6.2 million barrels a day, natural gas liquids nearly 2 
\1/2\ million, biofuels account for about a million, so that is 
about 9 \1/2\ million. Our imports from Canada and Mexico, 
about 3 million barrels a day, I think. I know from Canada oil 
sands we get about a million barrels a day, so that leaves us 
about 6 million barrels a day that we have to get from 
someplace else, mostly overseas.
    So some of the outside estimates show that we could bring 
in from oil sands like Keystone--Keystone, I think, was about, 
what, 700,000 barrels a day in terms of that line? And I know 
as I have visited some refineries in the Midwest, the BP--or, 
excuse me, the Marathon refinery outside of Detroit just 
expanded by $2.2 billion to account for oil sands. I know the 
BP refinery over in Whiting, Indiana, they have spent more than 
$3 billion expanding their capacity trying to get ready for oil 
sands, not necessarily from Keystone. But the Canadian folks 
tell us that they are likely to get up to as much as 4 million 
barrels a day from Canada before the end of the decade if 
things proceed well.
    Your testimony cites the tremendous reserve increases with 
State and private land shale production, and I think there are 
some outside estimates that show that we could see an increase 
in production of about 4 million barrels per day before the end 
of the decade. I don't know that that is quite your estimates, 
but some outside interests show that. Alaska, I don't know that 
it is in their testimony today, but the TAPS pipeline capacity 
we know has declined, this was a pipeline that was built for as 
much as 2 million barrels per day.
    Today they are quite a bit less than that. I want to say 
600,000 barrels per day, and it has been declining by about 8 
percent a year, but if, in fact, we were able to increase 
production in Alaska, perhaps we could get back up to where we 
thought, and then, of course, as you indicated in your 
testimony, production in the Gulf has declined, I want to say 
by about 100 million barrels last year. But if, in fact, we 
could increase production, some outside estimates again 2 \1/2\ 
million barrels per day before the end of the decade, we are 
there, right? I mean, we are there in terms of what our needs 
are and what we can get from Canada, Mexico. Mexico has been 
declining, I know, but with the Gulf and Alaska, we really 
could get a North American energy independent plan. Is that 
right?
    Mr. Sieminski. The term that I think I would prefer to use 
is ``self-sufficiency.''
    Mr. Upton. Works for me.
    Mr. Sieminski. Let me try to put some numbers on this for 
you, Mr. Upton. I will speak first about just the U.S. Alone.
    So, total oil liquids production in the U.S. is running at 
about 10 million barrels a day. I mentioned in my testimony the 
phrase ``technically recoverable reserves,'' or TRR. Under our 
reference case assumptions in the EIA's Annual Energy Outlook, 
we believe that production will climb to about 12.5 million 
barrels a day by 2035. In the high-TRR case, so that is an 
optimistic view of the resource base, tight shale oil 
production could climb from a little over a half a million 
barrels a day now, maybe, you know, somewhere between a half a 
million to a million barrels a day, to well over 2.5 million 
barrels a day by 2035. So what that suggests is that there is a 
possibility that you could get U.S. oil production up to about 
15 million barrels a day by 2035.
    In the reference case, as you indicated, with oil demand in 
the U.S. running 18 million to 19 million barrels a day, with 
population growth and economic growth, EIA actually expects 
total oil demand will decline to about 20 million barrels a day 
by 2035. However, under a more aggressive efficiency scenario--
higher fuel efficiencies for cars, faster penetration of 
electric vehicles--that number could actually come down to 
about 18 million barrels a day.
    So in the EIA reference case, we have net imports in 2035 
falling from about 46 percent last year to 36 percent in 2035. 
It could get down to as low as 14 or 15 percent. We would still 
be importing oil in the U.S., but a lot of that would be coming 
from Canada. And that would lead back to your point.
    Mr. Upton. So, as a bottom line, with North America we 
could do it when you include Canada and Mexico.
    I know my time has expired, and I appreciate the chairman 
being generous. Thank you. I yield back.
    Mr. Whitfield. Thank you.
    At this time, I will recognize the gentleman from Illinois, 
Mr. Shimkus, for 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman.
    And it is great to have you here. You know, being on the 
Energy and Commerce Committee, we don't normally get BLM folks 
and Forest Service folks, so it is, for me, a pleasure to have 
you here.
    Mr. Sieminski, good to see you again. Appreciate it. And I 
am getting a greater appreciation for independent agencies 
within bureaucracies. We appreciate your work, the difficult 
balance you have to have. But, really, you are just calling the 
cards as they are laid out in front of you, and we don't always 
do that up here, so I think we--I, personally, appreciate this.
    You know, my first analysis as I was listening to the 
opening statements and some of the questions is, you know, 
there really is no reason we should have a recession currently 
if we release our energy companies to explore, identify, and 
recover our energy resources. There is really no reason we 
should be held captive to imported crude oil if we released our 
energy companies to explore, identify, and recover. There is no 
reason for us to continue to have a negative balance of trade 
and continue to be a borrowing country when we could have a 
positive balance of trade and we could turn into a lending 
company if we released our energy companies to explore, 
identify, and recover.
    And I think the analysis here--I think this is a great 
hearing. Even in my own district in southern Illinois, where is 
my oil and gas exploration and recovery going on? It is going 
on on State land and on private property. Our biggest oil well 
is under a State wildlife refuge, underneath the lake. It has 
been producing now for about 10 years. The fracking boom is 
coming to southern Illinois, and there are a lot of exciting 
opportunities there, especially for rural, small-town America.
    So this is a good comparison and contrast, and I am glad 
the chairman has brought it up. I also visited Tulsa, Oklahoma, 
and right outside their State capitol they have an oil derrick, 
I think it is Old Rosie or something they call it, because they 
produce oil right on State lands right next to the capitol. So, 
again, a good reason to have this hearing.
    Also, Ms. Wagner, I also have a national forest, the 
Shawnee National Forest. Allen Nicholas is the supervisor. One 
of the benefits--this gives me a chance to publicly proclaim 
what a great job he does. What has been beneficial is having a 
supervisor stay on site for many years. When I first got on 
site, they were swapping them out almost on a yearly basis. 
Relationships weren't made with all the exciting parties that 
get involved with forest issues.
    But I do like the fact that a national forest is for all 
citizens, for the recreators, for the conservationists. In your 
testimony, you talk about the productive possibilities. We are 
now going through a possible timber harvest, and its nonnative 
species. So it should be a win-win. Of course, it is not, with 
the fights that happen when you have to represent a national 
forest.
    But we hope that is something that can continue to move 
forward, which I do think is a win-win. We have horseback 
riders back in the forest with well-maintained trails. But it 
takes work, just like anything else. So I want to put that 
publicly on record and look forward to working with the Forest 
Service, hopefully, if the voters allow me to, for years to 
come.
    Quickly, I think, Mr. Nedd, I want to talk about the 5-year 
OCS leasing plan that is currently being proposed by Secretary 
Salazar. It has the fewest proposed number of lease sales ever 
submitted by an administration, going back to President Carter.
    Is the administration concerned about the possible economic 
impact of the fewer leases being available and the possible job 
impact that that could have? Do you know?
    Mr. Nedd. Congressman, I am sorry. I can take back that 
question and have an answer for you.
    Mr. Shimkus. Yes, because we always hear--I mean, we got 
involved with the rules and regulations, the environmental 
concerns, but we want to focus on jobs and the job impact, so 
that is why that question kind of comes out.
    And let me just follow up on this. There is always this 
debate on leases versus drilling. And I heard my colleague from 
Illinois mention that also. But just because a private sector 
has a lease and they are prepared to drill, they need 
permission to drill; is that correct?
    Mr. Nedd. Yes. Yes, Congressman.
    Mr. Shimkus. And who provides that permission?
    Mr. Nedd. If it is a BLM-managed orIndian trust land, 
permission to drill, if it is surface-managed by the BLM, will 
be BLM. If it is on a Federal surface agency, then it is a 
joint effort, where we work with those agencies to ensure the 
drilling plan is consistent with the surface use plan and----
    Mr. Shimkus. So just because there are numerous leases, no 
one should assume that that right to drill is automatically 
given to someone who has a lease.
    Mr. Nedd. Well, Congressman, I would like to frame--with a 
lease, the operator or the leaseholder can submit an 
application for drilling anytime. And until that application is 
submitted to drill, the agency has no action to take on that 
lease.
    Mr. Shimkus. Well, and I am not trying to get--but we are 
wordsmiths up here, and sometimes we try to leave out some of 
the truth in between our provided statements.
    The point is, a lease is an attempt for industry to figure 
out if there is something to recover. They do the search. Then 
they have to, if they find something--they may not find 
something, and so then they don't need to operate and continue 
forward on the lease. But then if they do, then they have to go 
through the process of an application to drill. It is a long 
process.
    Mr. Nedd. It is a long process. And a lease is issued, a 
Federal lease is issued for 10 years, and so there are a number 
of factors. And industry tends to look at where developments 
are going on and submit for a lease. And so, there are a number 
of factors, but, yes, once a lease is issued, it takes an 
action from the lessee.
    Mr. Shimkus. Thank you very much.
    Mr. Whitfield. The gentleman's time has expired.
    At this time, I will recognize the gentleman from Virginia, 
Mr. Griffith, for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. Appreciate it.
    Mr. Sieminski, I was listening to your answers to 
Congressman Rush, and I got the impression that you feel that 
it is likely that natural gas prices will go up because they 
are historically at all-time lows and the production will slack 
off if they don't go up. So, one way or another, you are going 
to have prices go up. They either go up because of natural 
economic forces or they go up because the supply starts to 
diminish because there is no exploration because the price is 
so low. Is that a fair statement?
    Mr. Sieminski. Yes, sir.
    Mr. Griffith. OK. And I appreciate that.
    And I am curious about the U.S. Geological Survey issues 
that you raised. It appears that you all rely on their data to 
develop resource estimates for oil and gas. And you mentioned 
that they have not yet developed resource estimates for 
formations that have recently gone into production.
    What formations has the United States Geological Service 
not yet developed estimates for?
    Mr. Sieminski. I think one of the most important ones is 
Utica. It covers Ohio and parts of Pennsylvania.
    Mr. Griffith. OK.
    Mr. Sieminski. They just finished their assessment of the 
Marcellus through Virginia, West Virginia, Pennsylvania. And 
even that assessment was based on a large sample of vertical 
wells and not as many of the horizontal wells which are 
typically being drilled by the industry.
    Mr. Griffith. Do you think that may have created an 
underestimate of the amount of gas that might be available 
there?
    Mr. Sieminski. I think it is possible that what we will 
find is that, as the production data begins to come in--and 
Pennsylvania is one of the States that has significant lags in 
its reporting of production data--that we will begin to see 
those numbers inching up. EIA would reflect that in its 
estimates of proved reserves and production potential. 
Typically, the Geologic Survey runs on a 5- to 10-year schedule 
before they would get back to looking at a formation after they 
have done an assessment.
    Mr. Griffith. OK.
    And are there any other areas that you all believe that the 
USGS needs to provide updated information on to better gauge 
oil and gas?
    Mr. Sieminski. There isn't any other area that comes to 
mind right now. I would be happy to come back to you if we 
could nail down additional places.
    Mr. Griffith. And I don't guess you can shift more of that 
Marcellus into Virginia.
    Mr. Sieminski. It would be--well, you know, this is 
actually a good time to say that the development that takes 
place, whether it is on Federal lands, private lands, State 
lands, there is a balancing that has to take place. And the 
balancing is the economic considerations against environmental 
considerations, national security, and lots of other factors 
that have to be considered, as have been brought up by my 
colleagues from BLM and the Forest Service.
    Mr. Griffith. Thank you very much.
    Mr. Chairman, with that, I will yield back.
    Mr. Whitfield. The gentleman yields back.
    At this time, I will recognize the gentleman from Colorado, 
Mr. Gardner, for 5 minutes.
    Mr. Gardner. Thank you, Mr. Chairman.
    And thank you to the panel for joining us today for this 
discussion.
    And I just wanted to read some statistics that I have 
before me from the Western Energy Alliance, who we will hear 
from in a few minutes. And their statistics show that, between 
2008 and 2011, the Bureau of Land Management offered 81 percent 
less acreage, which has resulted in a 44 percent drop in 
leasing revenue, and that, nationwide, royalty and leasing 
revenue has declined by 12 percent.
    In my district, the Niobrara Formation, Denver-Julesburg 
Basin, we have seen one county in particular in northern 
Colorado, one county, Weld County, has 31 oil and gas operators 
in that county. Two of the oil and gas operators recently made 
their property tax payments, I believe for 2011. One of the 
operators paid $52 million in property taxes. Another operator 
paid $57 million in property taxes. This is a county with a 
budget of about $200 million, and they paid $109 million. Just 
2 out of the 31 paid $109 million in property taxes--money that 
goes to the schools, money that goes to the community college, 
money that goes to the county.
    And so I am very concerned when we talk about 81 percent 
less acreage available, a 44 percent drop in leasing, and 12 
percent drop in revenue. In Colorado alone, BLM has issued 97 
percent fewer leases, just offering four parcels in 2011--a 98 
percent decrease in the leases that have been made available in 
Colorado. Seventy-one percent of the leases offered have been 
protested.
    And so I want to clarify, if I could, Mr. Sieminski, a 
little bit about something in your opening statement and a 
little clarification. You had said that since development is 
taking place on non-Federal land--let me rephrase that. You 
make a statement in your statement that the fact that 
development is taking place on non-Federal land, it is simply 
because geology favors non-Federal land. But doesn't that 
statement ignore research by other Federal agencies like GAO, 
the Government Accountability Office, that has testified that 
the Green River Formation, which lies beneath Colorado, 
Wyoming, Utah, contains over a trillion barrels of recoverable 
oil?
    Mr. Sieminski. I think that it is going to vary from State 
to State. And as more experience is gained with shale 
formations, I think we might discover that there are, indeed, 
places on Federal lands that are suitable for development.
    Just as another example, in the Annual Energy Outlook that 
EIA published last month, we did point out that the trans-
Alaska oil pipeline throughputs are beginning to diminish and 
that that could result in flow problems up there. And, 
obviously, there are Federal lands in Alaska that could be 
developed that would potentially add to oil production.
    Mr. Gardner. But it is not entirely true that geology is 
vastly different on Federal land and private land. I mean, that 
is not entirely true. We have seen reports here.
    Mr. Sieminski. Well, it would just depend on where the that 
geology happened to fall.
    Mr. Gardner. Right. It is going to vary across the--I would 
agree with you there. It varies.
    To Mr. Nedd and Ms. Wagner: Governor Hickenlooper of 
Colorado stated, and I quote, ``There have been tens of 
thousands of wells in Colorado that have used hydraulic 
fracturing to increase their productivity, and we can't find 
anywhere in Colorado a single example of the actual process of 
fracturing that has polluted groundwater.''
    Mr. Nedd, would you agree with that statement that Governor 
Hickenlooper has made?
    Mr. Nedd. Congressman, what I can say is, within the 
Federal lands that BLM manages, we have nodocumented case of 
that. I can speak from the Federal lands.
    Mr. Gardner. Thank you.
    Ms. Wagner, would you agree with that statement?
    Ms. Wagner. That is true for activity on national forests.
    Mr. Gardner. And to Mr. Nedd, you are currently undergoing 
a rulemaking on hydraulic fracturing. How much will these rules 
add to the cost of drilling?
    Mr. Nedd. I am sorry, what is the question?
    Mr. Gardner. BLM is currently undergoing a rulemaking on 
hydraulic infrastructure. Do you know how much these rules will 
add to the cost of drilling?
    Mr. Nedd. Congressman, based on the assumptions in our 
economic analysis, I believe we said it would increase an 
average of somewhere around $10,000 to $13,000. I would have to 
get that exact figure. But that economic analysis was based on 
some assumptions that were made.
    Mr. Gardner. And according to some experts, they believe 
that the cost will actually be around $250,000 to each new 
well, not to mention permitting delays and others. Do you 
dispute those numbers, and why?
    Mr. Nedd. Well, again, Congressman, I don't know what is 
making up those numbers, so I cannot speak to them.
    Mr. Gardner. And I have a number of other questions, Mr. 
Chairman, but I see my time has expired. If I could be allowed 
to submit questions for the record, I would truly appreciate 
it.
    Mr. Whitfield. Absolutely.
    The gentleman's time has expired.
    At this time, I will recognize the gentleman from 
California, Mr. Bilbray, for 5 minutes.
    Mr. Bilbray. Thanks. I appreciate it, Mr. Chairman.
    Mr. Nedd, we had an interesting situation in California. 
With all the talk of the Interior Department trying to 
cooperate on wind and solar projects, how long has it taken to 
permit the land for solar or wind in the Mojave Desert? I mean, 
how long have we been working on this?
    Mr. Nedd. Well, Congressman, I don't have the exact numbers 
here. I know we have been working on that process for a little 
while. I just don't have the exact--and I will be glad to get 
back to you.
    Mr. Bilbray. Here is a problem we--my scientists came--in 
San Diego, our University of California scientists developed an 
algae strain to develop true gasoline, true diesel. When they, 
as State employees, when they looked to go to production in the 
State of California, they found out that they could not get the 
permits to go into production for 7 years. So they literally 
packed up and left the State because government regulations 
made it impossible to implement a green strategy.
    What is the possibility of the Federal Government being 
proactive on our lands, such as the area in Imperial Valley, 
which scientists have identified as being, they said, quote/
unquote, pristine, perfect for the generation of green fuels 
based on slope and sunshine and everything else--what would it 
take for us to create a Federal green zone to encourage the 
production of algae production on Federal property rather than 
these scientists having to leave town and go thousands of miles 
to the east?
    Mr. Nedd. Congressman, while I can't speak to the specific, 
again, issue raised, what I can say is that the BLM is 
certainly proactive in trying promote the development and 
production of energy--hence, leasing reform. The BLM 
implemented that leasing reform to bring more certainty to----
    Mr. Bilbray. But you admit that even with a Federal mandate 
on--and, in fact, I remember, it was Feinstein who worked this 
out--even with a Federal mandate, it has taken years to be able 
to permit the siting of green technologies on our Federal land. 
That is fair to say, isn't it?
    Mr. Nedd. Again, Congressman, I don't have the information 
to speak specifically to that. And I would----
    Mr. Bilbray. OK. Well, I am just telling from you 
observation, it has taken years and years.
    My question is, would the administration have opposition to 
this Congress setting aside specific locations on Federal 
property to be pre-permitted under the Clean Water, Clean Air, 
Endangered Species Act for the production of green fuels, so 
that when the next group of scientists need to look for a site, 
they know they can come to the Federal Government, they won't 
have to wait 7 years, and they know where they could go to go 
into production? Would the administration support the pre-
permitting of sites on Federal property for the development of 
green fuels?
    Mr. Nedd. Congressman, that is certainly an interesting 
proposition, and I would be glad to take it back and respond to 
your question.
    Mr. Bilbray. OK. Well, let me just say this, Mr. Nedd. My 
concern is that we have spent billions of dollars talking about 
green technology, but we have spent such little time talking 
about how the government can change our regulations so that the 
implementation of a green strategy is actually legal, let alone 
more feasible. And it is sad that we haven't talked about the 
obstructions that the government regulations have made to 
appropriate green technology. We have always talked about how 
much money we can give away, rather than talking about how much 
we can change our operations.
    And, Mr. Chairman, I think that we need to focus more on 
that. And I think that is someplace that Democrats and 
Republicans ought to agree on, is the fact that, what isn't the 
Federal Government, in our regulatory oversight, doing 
appropriately to allow appropriate technology to be moved 
forward? It is not just about oil and gas. The obstruction of 
Federal regulation stands in the way of all kinds of stuff.
    And I will give you an example. I have a bill that I have 
introduced with the gentleman from Tennessee to streamline the 
permitting process for putting solar panels on top of houses. 
When the industry comes to me--and I would ask my Democratic 
colleague to understand this--when the industry that puts solar 
panels on the house says it costs as much to get a government 
permit, a license, to put the panels on as it does to make the 
panels per kilowatt, that should be something that both sides 
can say, if you want to talk about energy independence and if 
you want to talk about clean energy, then you have a 
responsibility to straighten out the regulatory morass that is 
blocking the implementation.
    You can talk all you want, you can write as many checks and 
give all the grants, but if you are not going to make it legal 
to do the right thing from the green fuel technology, I don't 
think anyone has a right to stand up and talk about it.
    I yield back, Mr. Chairman. Thank you.
    Mr. Whitfield. Thank you very much.
    At this time, I will recognize the gentleman from Nebraska, 
Mr. Terry, for 5 minutes.
    Mr. Terry. Well, thank you, Mr. Chairman, for another good, 
interesting hearing on an important issue.
    Mr. Nedd, I will ask you, the 5-year OCS leasing plan that 
Secretary Salazar recently unveiled I believe would reinstate 
by regulatory policy the moratorium in the gulf that was lifted 
in 2008 when we experienced that incredibly high spike in 
prices and people rose up and demanded action. And under a 
Harry Reid-run Senate and Nancy Pelosi-run House, there was a 
very bipartisan vote and effort to lift the moratorium. That 
seems to have been put back in place now, at least for 2012 to 
2017, and remove the possibility of even drilling off Virginia 
coast, and delays for years any drilling off of the Alaska 
coast.
    So doesn't this leasing plan encourage energy companies to 
move away from Federal lands, even to other countries like 
Brazil, which seems to be now part of our DOE policy, and to 
develop resources in other areas than Federal lands? Has your 
department reviewed whether that is a disincentive to 
investment in the United States?
    Mr. Nedd. Congressman, I am not aware of whether that has 
been analyzed or not. And, again, with respect to that, I would 
love to take that question back and provide you with an answer.
    Mr. Terry. But everyone is in agreement that this new 5-
year plan from 2012 to 2017, this new 5-year plan reinstates 
that moratorium within its rules and regulations as it is 
drafted. Is that a fair statement? I think it is fairly 
obvious.
    Mr. Nedd. Well, again, Congressman, you know, BLM's role is 
on onshore. And, certainly, I would be happy to take back this 
kind of question and ensure you get an answer.
    Mr. Terry. All right. Thank you, Mr. Nedd.
    Mr. Sieminski, what do you think? Does this new order from 
Interior impact investments in the United States?
    Mr. Sieminski. The policy issues surrounding Outer 
Continental Shelf leasing is something that EIA would take into 
consideration in its forecast, but it is not something that we 
would comment on.
    Mr. Terry. OK. I appreciate that.
    Back to you, Mr. Nedd. I may anticipate the answer to your 
question, though, but on the second panel there is a group 
called Trout Unlimited. And as a trout fisherman, we have a 
family cabin that has been in Rocky Mountains, had it in the 
family since the late 1800s, and there is a nice little trout 
stream. So I am sympathetic with trout fishing. But they have 
consistently opposed any oil and gas operations on Federal 
lands.
    Now, are you aware of how many lawsuits that Trout 
Unlimited has been involved with, or appeals, against Interior 
over oil and gas productions in the last 10 years?
    Mr. Nedd. Yes, Congressman, I do not have that data, and so 
I certainly would be glad to try and get that answer to you.
    Mr. Terry. All right. Now, are you aware of--I will ask you 
if you are aware of--any conversations between the BLM and 
Trout Unlimited to encourage lawsuits to be brought to block 
any oil and gas development on Federal lands?
    Mr. Nedd. Congressman, I am not aware of any such 
conversation.
    Mr. Terry. OK. I appreciate that.
    I will yield back.
    Mr. Whitfield. The gentleman yields back.
    At this time, I will recognize the gentleman from 
Louisiana, Mr. Scalise, for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman. Appreciate you 
continuing the series of hearings that we have been having on 
energy policy, you know, especially the American Energy 
Initiative, as we try to go through and look at all of the 
different things that are holding our country back from being 
energy-independent and ways that we can create more jobs and 
also generate billions of dollars more to the Federal 
Government. And I think it is not a complex answer; the answer 
is pretty basic if you look at American energy.
    And I think the focus that you have been doing, Mr. 
Chairman, has been important, because it has highlighted so 
many of the things that are really impediments to American 
energy production, things that are making us more reliant on 
Middle Eastern oil and oil from countries that maybe are less 
favorable to us.
    I know on the second panel I am looking forward to hearing 
Mr. Clements, who is from our area in southeast Louisiana. We 
have been experiencing a number of different problems. Mr. 
Terry touched on a few of those.
    But if I can ask, Mr. Sieminski, because I know your agency 
puts out a lot of good data to, you know, try to show maybe 
where we are, what is out there: When you look at both leases, 
where we were before Macondo, where we are now, you know, the 
administration has been touting that there is no moratorium in 
place now, that permitting is back up. I know Mr. Clements, in 
his testimony, talks about the pace of permitting still being 
slow, much slower than before the moratorium, highlighting some 
of the problems that we have seen. There have been a number of 
independent studies in the New Orleans region, as well as 
throughout the Gulf of Mexico, highlighting the problems with 
getting energy production back on line at its pace that we 
should be at, and then the 5-year lease plan that closed off 
about 85 percent of the areas that were getting ready to come 
open for exploration.
    I don't know if you have looked at the testimony of Mr. 
Clements, but he does give some, kind of, on-the-ground 
experience of what the problems are and the slowdowns that 
still are holding back our ability to go and explore safely for 
the things that we know are out there. You know, have you 
looked at that? And what is your comment on it?
    Mr. Sieminski. EIA has not looked at that.
    Just from my general understanding of the industry, I think 
that there are concerns about the pace of leasing and 
resumption activity in the Gulf of Mexico. Companies are saying 
that things are getting better.
    Largely, I think that a number of the companies are simply 
focusing on the onshore possibilities, with all of the activity 
in the Eagle Ford in Texas, for example, that has moved 
forward. In Louisiana, there is still a great deal of activity 
taking place in the Haynesville Shale and other----
    Mr. Scalise. Well, we have seen a lot of that in 
Haynesville. I have been up there to north Louisiana, the 
Shreveport area, which has been just a phenomenal area of 
growth with natural gas. And we have seen that in other States, 
too. Of course, the irony is that those are areas on private 
lands. The Haynesville, the Bakken, the areas where you have 
seen tremendous growth in jobs, as well as in energy 
production, its been on areas that are private, where the 
Federal Government does not currently have the ability--now, 
the Obama administration is, through a number of different 
agencies, DOI and EPA, even trying to shut some of that down.
    But on Federal Government lands, where the Federal 
Government actually does have a say, that is where we have seen 
the problem. That is where I think Mr. Clements is alluding to 
the slow pace of permitting, you know, where the Federal 
Government actually does have the ability to control it.
    And the President said a lot of times that the United 
States only has 2 percent of the world's known reserves. Now, 
that is a false number, because I think anybody that knows--I 
mean, the Bakken, you wouldn't have known that was out there if 
you didn't go and explore for it. And before the exploration 
happened, they would have said there is probably nothing down 
there. Well, now you go to North Dakota, I think they have 3.5 
percent unemployment because you can't even find a place to 
live right now because so many people are moving there to work 
because they are finding all this energy that wouldn't have 
ever shown up on those metrics.
    And so I don't know if you all have looked at that, but, 
you know, when the President says we have only 2 percent of the 
world's known reserves, does he include, for example, what is 
very likely out off the coast of Virginia, which right now you 
can't even go and look at because of Federalprohibitions? Would 
that statement include, you know, what is a known reserve, 
would that include what is off the coast of Virginia, for 
example?
    Mr. Sieminski. The probable reserves would be in there 
because the U.S. Geologic Service would have taken some of that 
into consideration. I think that----
    Mr. Scalise. Well, when he says the world's ``known 
reserves''----
    Mr. Sieminski. Right.
    Mr. Scalise [continuing]. Because they nuance the words. I 
mean, what you know is out there and what industry knows is out 
there is one thing. But what the administration is saying is 
that we only have only 2 percent of the world's known reserves. 
Again, it is a misleading number, because we know there is a 
lot more out there.
    And I just wanted to see if you, you know--make sure that 
what I am projecting is accurate in terms of how they describe 
it versus what really could be out there if you let them go 
look.
    Mr. Sieminski. I think what you were speaking to, 
Congressman, is the difference between the level of known 
reserves and the pace at which they are being developed. And I 
understand that some of your constituents are probably wishing 
that that development could move along faster. There are 
balancing issues that I spoke to earlier, and the 
administration has to look at all of those factors in order to 
come to a conclusion.
    Mr. Scalise. Thanks.
    I see I am out of time, Mr. Chairman. I yield back the 
balance.
    Mr. Whitfield. The gentleman's time has expired.
    Does the gentleman from Oregon seek recognition?
    I believe we have completed this round of questions with 
this panel. I do have one other question, though, I would like 
to ask of Mr. Nedd.
    I had read some of the testimony of one of the other 
witnesses that will be on the second panel, and there was some 
discussion about a Shell Oil application off the coast of 
Alaska in which they had spent $5 billion asking for a permit 
to do an exploratory drilling, and it has already taken 5 or 6 
years to obtain this permit; it still is not issued.
    And I understand that, while there is split jurisdiction--
EPA has jurisdiction over Clean Air; Department of Interior is 
involved in that permit, as well--it is my understanding that 
the Department of Interior intends to issue its decision 
sometime this month. Is that correct, Mr. Nedd?
    Mr. Nedd. Mr. Chairman, I do not have information on that 
issue, and so I will be glad to take back that question and see 
if we can----
    Mr. Whitfield. Are you aware of the issue at all?
    Mr. Nedd. Vaguely, but not enough to speak to it, Mr. 
Chairman.
    Mr. Whitfield. OK. Well, then I will dismiss the first 
panel. Once again, thank you very much for being with us and 
offering your testimony.
    At this time, I would like to call up the second panel.
    And on the second panel we have with us this morning Mr. 
Lynn Helms, who is the director of the North Dakota Department 
of Mineral Resources. We have Mr. Thomas Clements, who is the 
owner of the Oilfield CNC Machining company. We have Mr. Reed 
Williams, who is the president of WillSource Enterprise. We 
have Ms. Christy Goldfuss, who is the director of the Public 
Lands Project for the Center for American Progress Action Fund. 
We have the Honorable Dan Sullivan, commissioner of the Alaska 
Department of Natural Resources; Ms. Kathleen Sgamma, vice 
president, Government and Public Affairs, Western Energy 
Alliance; and Mr. Corey Fisher, who is the assistant energy 
director for Trout Unlimited.
    So I want to welcome all of you panel members here this 
morning. We appreciate your being with us. We look forward to 
your testimony.
    And as you know, each one of you will be given 5 minutes to 
give your opening statement. And as I said before, there is a 
box on the table, two small boxes, and they have red, green, 
and yellow. And when it turns red, that means your time is up, 
but we will go on and let you complete your testimony.
    So, once again, welcome. Thank you for being here.
    And, Mr. Helms, we will begin with you for your opening 
statement, and you will be recognized for 5 minutes.
    And I would ask each one of you, when you give your opening 
statement, make sure the microphone is close and it is turned 
on. Thank you.

STATEMENTS OF LYNN D. HELMS, DIRECTOR, NORTH DAKOTA INDUSTRIAL 
  COMMISSION, DEPARTMENT OF MINERAL RESOURCES; DAN SULLIVAN, 
 COMMISSIONER, ALASKA DEPARTMENT OF NATURAL RESOURCES; THOMAS 
CLEMENTS, OWNER, OILFIELD CNC MACHINING, LLC; KATHLEEN SGAMMA, 
 VICE PRESIDENT, GOVERNMENT AND PUBLIC AFFAIRS, WESTERN ENERGY 
ALLIANCE; REED WILLIAMS, PRESIDENT, WILLSOURCE ENTERPRISE, LLC; 
 CHRISTY GOLDFUSS, DIRECTOR, PUBLIC LANDS PROJECT, CENTER FOR 
 AMERICAN PROGRESS ACTION FUND; COREY FISHER, ASSISTANT ENERGY 
  DIRECTOR, SPORTSMEN'S CONSERVATION PROJECT, TROUT UNLIMITED

                   STATEMENT OF LYNN D. HELMS

    Mr. Helms. Well, thank you, Mr. Chairman.
    Chairman Whitfield and members of the committee, I am 
delighted to have this opportunity to discuss with you the 
renaissance that is occurring in the State of North Dakota due 
to oil and gas production and energy production.
    As you have heard before, the Bakken Formation is the 
largest continuous resource that the USGS has assessed in the 
lower 48 States. We place the oil in place in this resource at 
approximately 300 billion barrels. We currently think we can 
recover, with today's technology, somewhere between 7 billion 
and 15 billion barrels of that. I think the exciting thing is 
that a 1 percent increase in recovery from that represents 5 
months' energy supply or oil supply for the entire United 
States.
    North Dakota is growing in all energy sources. Rather than 
contrast renewable versus fossil fuels and that sort of thing, 
North Dakota has had a policy of looking for synergies. And one 
of our synergies is, we have the only place where anthropogenic 
CO2 is being captured, and it is sent to Canada, to 
Saskatchewan, for enhanced oil recovery. We are looking forward 
to using CO2 from our coal-fired generation as well as our 
ethanol plants for enhanced recovery in the Bakken.
    This has created growing employment in the State of North 
Dakota, rapidly growing employment. We have moved from number 
eight, as you stated, to number two in the States among daily 
oil production. It has brought investments in pipelines and gas 
processing, electric generation. And we are looking at a long-
term sustained employment growth of well in excess of 65,000 
jobs in North Dakota.
    I know it has been brought into question as to whether that 
is scalable. I believe it is 100 percent scalable, both upward 
and downward. I have looked at the Fort Berthold Reservation, 
in particular, where Bakken development has taken place, and 
their unemployment has gone from 40-plus percent to less than 5 
percent, with tremendous growth in job opportunities and 
economics on that reservation. And I think if you look at 
Texas, it is a larger economy than North Dakota, but it is 
experiencing the same kind of growth as a result of oil and gas 
development in the Eagle Ford shale.
    North Dakota's geology is perfect for 21st-century 
technology application. We have the entire stratographic 
column; each basin is unique. Not all States have that. That is 
why oil and gas should be and is currently regulated at the 
State level, because it isn't consistent across the entire 
United States. It varies from basin to basin and State to 
State.
    Our geography, too, is perfect. As you stated, 82 percent 
of the minerals in North Dakota are owned by private parties; 
89 percent of the surface is owned by private parties. And it 
is that connection, those private contracts and their 
protection under North Dakota State constitution that has 
allowed the Bakken boom to take place.
    If you look at the map that I presented in my written 
testimony, on page 3 you will see a couple of large holes in 
the development. Those holes are where the Federal Government 
controls the surface and the minerals, and they are being 
delayed by Federal policies in terms of development.
    Our drilling rig count mirrors that ownership. And, you 
know, I sort of bristle at the fact that the Federal Government 
makes a big deal out of multiple use of its lands. Private 
owners engage themselves in multiple use, as well. It is just 
that they don't look at just a single use for each tract of 
land, but they are willing to farm the land and have an oil 
well on it at the same time. Or they are willing to have an oil 
well on their land and have an elk farm or a wildlife refuge.
    North Dakota has worked hard to create a stable tax and 
regulatory environment that promotes capital investment. Our 
oil and gas rules are modified every 2 years. Just this April, 
we upped our rules to include banning reserve pits, increasing 
bond requirements, and strengthening our hydraulic fracturing 
requirements. And had Mr. Mufson of The Washington Post 
contacted us, he would have been informed about that, and I 
think the Washington Post article would have been very 
different.
    We have submitted our comments to the Bureau of Land 
Management and the EPA on their hydraulic fracturing policies 
and guidance. We are opposed to these in many areas. I have 
identified the six primary areas, but the main one that I want 
to identify is, this really is a States' rights issue. Geology 
varies from State to State, and it should be regulated at the 
State level. And when you look at the BLM rules, they go way 
beyond their jurisdiction into things like the source that the 
water is going to come from and the path that it is going to 
take from source to fracturing well.
    That concludes my prepared remarks, and I will be happy to 
answer questions when the time comes.
    Mr. Whitfield. Well, Mr. Helms, thank you very much.
    [The prepared statement of Mr. Helms follows:]

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    Mr. Whitfield. And, Mr. Sullivan, you are recognized for 5 
minutes.

                   STATEMENT OF DAN SULLIVAN

    Mr. Sullivan. Thank you, Mr. Chairman. And I have a 
PowerPoint slide. I don't know if it is going to be brought up, 
but I think some of you have that before you, in addition to my 
written testimony.
    And what I would like to do very quickly--I appreciate the 
opportunity, Ranking Member Rush, to testify in front of the 
committee today.
    I would first like to start, if you will go to the next 
slide, just a little bit of background on Alaska. It is hard to 
see here, but obviously the numbers of the State, quite large. 
I am sure the members of the committee from Texas have seen 
that first bullet under ``Land Base'' a couple times, but more 
than twice the size of Texas, of course. But a lot of Federal 
land in Alaska, State land, native land.
    Next slide, please.
    With regard to the estimates, we have huge estimates of 
both conventional oil and gas. The USGS did a survey 2 years 
ago. In terms of the arctic, estimates are the largest amount 
of oil of any arctic nation, including Russia. And we are just 
scratching the surface because the unconventionals in Alaska, 
again, are off the charts.
    But very little, a tiny fraction of production in Alaska is 
from Federal lands. It is actually, in terms of the North Slope 
oil, it is less than half of a percentage point. So everything 
else is from State lands.
    Next slide.
    Also, very large amounts of strategic and critical 
minerals, including rare earth elements, we believe. And that 
slide shows that if Alaska were its own country, we would rank 
in the top 10 in many of those categories.
    Next slide.
    As Congressman Barton noted, States--in Alaska, we 
certainly take pride in this--love, deeply care about our 
environment. The next few slides touch on what we think are 
some of the highest environmental protection standards that are 
based on State regs and State law literally in the world. So if 
you look at this slide, the next slide.
    And then we have also been the jurisdiction that has 
spurred many of the industry's most sustainable and 
environmentally responsible technological innovations. So if 
you look at that slide there, it shows the number of 
innovations that have occurred in Alaska.
    Next slide, please.
    But this next slide is really the point, supports the 
broader main point of my testimony today, Mr. Chairman, which 
is: The U.S. is on the verge of a sustainable energy 
renaissance that will have dramatic positive benefits for 
America and its citizens. And it is based on three strengths 
that we have as a country that pretty much no other country 
has. And those are listed, the strengths are listed there: an 
enormous natural resource base; leaders in environmental high 
standards; and then a financial and legal system that 
encourages entrepreneurship, private-sector investment.
    So this sustainable energy renaissance could have very 
broad-based benefits. In slides 9 and 10, I mentioned these. I 
would be glad to talk about them during the Q&A. But everything 
from energy security, economic growth, jobs, U.S. trade 
deficit, Federal budget deficit, foreign policy and national 
security implications, and even global environmental 
protection.
    But on that resource base point, I know PFC Energy and many 
others--Mr. Sieminski today also named some numbers. But there 
are estimates that the U.S. could be the largest hydrocarbon 
producer by 2020, larger than Saudi Arabia, larger than Russia.
    Next slide, please.
    But what we think is critical in order to seize this 
strategic opportunity, we must focus on regulatory reform and 
modernization and increase access to Federal lands, 
particularly in Alaska.
    Last year, Mr. Chairman, I had the honor of testifying 
before this committee and highlighted several areas where delay 
and new policies by the Federal Government were undermining 
responsible resource development in Alaska. Many of these are 
listed in the appendix to my current written testimony. And as 
you have mentioned, alluded to, one of the most egregious ones 
we have seen in Alaska is the on-again-off-again long delays in 
the permitting for Shell to explore exploration wells in the 
Outer Continental Shelf of Alaska. Those wells have been 
drilled before out there; that is often overlooked in the 
debate. Numerous OCS wells in Alaska have been drilled.
    Finally, Mr. Chairman, I just want to conclude that on the 
regulatory reform and modernization front, I know the House has 
taken up many bills. Many States are enacting this kind of 
efficient, more certain, more timely permitting reforms. 
Canada, as a country, is undertaking a top-to-bottom review. 
And that doesn't mean cutting corners on environmental 
protection, but it is important to fully realize our potential.
    In Alaska, we have a goal, a comprehensive goal, of 
achieving a million barrels a day within 10 years through the 
trans-Alaska pipeline system. We have undertaken a 
comprehensive tax reform, permitting reform, infrastructure, 
marketing. Mr. Helms is now number two in production. We want 
to get back to number two and eventually get back to number 
one. We think we certainly have the resource base to do that, 
but we need the Federal Government as a partner in achieving 
that million-barrels-a-day goal, not as an obstacle.
    Thank you very much, Mr. Chairman.
    Mr. Whitfield. Thank you, Mr. Sullivan.
    [The prepared statement of Mr. Sullivan follows:]

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    Mr. Whitfield. And our next witness is a small-business 
man, still creating a lot of jobs in America, Mr. Clements.
    You are recognized for 5 minutes.

                  STATEMENT OF THOMAS CLEMENTS

    Mr. Clements. My name is Thomas Clements. I live in 
Lafayette, Louisiana, with my wife, Melissa. We are owners of 
Oilfield CNC Machining, LLC. It is a machine shop in Broussard, 
Louisiana. We have been married for over 7 \1/2\ years and have 
three grown children and four grandchildren.
    My wife and I really did build our business. We both agree 
that I wouldn't be here if the private sector wasn't doing 
fine. I would be home, working hard building our business. 
Maybe today with my testimony this committee can focus and help 
small-business owners, like my wife and I, to continue to build 
our business by opening all offshore and Federal land for 
energy production.
    Energy prices are at an all-time record high in all 
sectors. This record-setting pace has to stop. The committee 
needs to understand that there is no such thing as bad energy. 
All natural energy is good.
    For us, everything has changed. That is the first time I 
ever heard the President utter the word ``moratorium.'' On May 
27th, 2010, the President spoke of a moratorium that would last 
6 months. That shocked us all. Two days later, I received an 
email stating that all our orders for the remainder of the year 
were cancelled. By the first week of June 2010, we were out of 
work, and everyone we knew in the industry was also out of 
work.
    In October 2010, the President announced the moratorium was 
lifted. We were relieved, to say the least. We were eager to 
get back to work, but no orders came in. For us, no one has 
been accountable for their actions in the oil spill. BP said 
they would make it right, and the President pretended that a 
misguided moratorium was good.
    What an outrage when the administration comes out with a 
2012-2017 energy plan that does nothing for this country. The 
pace of permitting is slow--much slower than before the 
moratorium. Second, the 2012-2017 leasing plan fails--fails to 
offer access to any new areas offshore. This includes offshore 
Virginia, that now must wait until 2017 due to the 
administration's plan.
    Their plan closes the majority of the Outer Continental 
Shelf to new energy production, only allowing lease sales in 
areas that were already open to drilling in the Gulf of Mexico 
and Alaska, but with delays in sales in the Beaufort and 
Chukchi Seas until 2016 and 2017.
    Just look at what is happening in the private lands with 
shale oil and gas in the Bakken and Marcellus. In the Bakken 
and Marcellus, they are using technologies that didn't exist 
when old estimates were made. In 2008, after the impact of 
active exploration and development with technologies that 
enable hydraulic fracturing and directional drilling, estimates 
of recoverable oil in the Bakken jumped 25-fold, and estimates 
of natural gas supplies in the Marcellus have increased 42-
fold, and liquids 343-fold. This sounds like energy security to 
me.
    More resources mean more opportunity for people like me to 
help produce energy domestically. One study found that opening 
up offshore areas could create 1.2 million jobs and produce $70 
billion in new wages. It isn't just that large companies will 
hire more people; small-business owners like me would have more 
work and would be able to employ more workers to produce more 
energy in America.
    Owning our business and working to produce American-made 
energy in the oil field industry is our American Dream. We 
believe that the government role is to protect our country and 
encourage American workers to develop our natural resources. 
But instead, our government seems to be doing more to support 
foreign workers to develop energy sources abroad--Brazil, 
Mexico.
    I am here today because our Nation needs energy, and 
thousands of energy workers like me are willing and able to 
help produce the energy right here at home. Mr. Chairman and 
members of this committee, please let us go back to work.
    Let me close with this. How can you have a 5-year leasing 
plan with no economic data in the plan? And, by the way, the 
President's plan has not worked. I believe that we have 
thousands of years of natural good energy here in America. How 
will we ever know unless exploration is allowed in our country?
    Thank you.
    Mr. Whitfield. Thank you, Mr. Clements.
    [The prepared statement of Mr. Clements follows:]

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    Mr. Whitfield. And, Ms. Sgamma, you are recognized for 5 
minutes.

                  STATEMENT OF KATHLEEN SGAMMA

    Ms. Sgamma. Thank you, Mr. Chairman, Ranking Member Rush, 
and members of the committee. I am Kathleen Sgamma with the 
Western Energy Alliance. We represent 400 countries engaged in 
all aspects of environmentally responsible exploration and 
production of natural gas and oil in the West. Our alliance 
members are mostly small, independent companies and mainly 
small businesses.
    Because of the huge proportion of public lands in the 
American West, my members are particularly affected by 
government policies that reduce access to energy that all 
Americans own on those public lands. Our Members are proud to 
produce 26 percent of the Nation's natural gas and 18 percent 
of the oil production, while disturbing less than a tenth of a 
percentage of all Federal acreage. So we provide that balance. 
And American producers operate under the most stringent 
environmental standards in the world, both self-imposed and 
those imposed on us as one of the most heavily regulated 
industries in the country.
    Across America, my industry has been significantly 
increasing production of oil and natural gas over the last 
several years in spite of, not because of, the Federal 
Government. The huge increase in production is the result of 
private-sector investment in technology and improved techniques 
applied largely on private lands.
    Where the government has the most control, on Federal 
lands, production is simply not keeping pace with the overall 
growth across the Nation. For example, in the West, natural gas 
production is down 4 percent since 2008 on Federal lands, while 
it is up 29 percent on State and private lands. And we have 
heard today from a number of folks that it is because these 
shale plays are all on private lands. Well, my number here 
compares apples to apples, in that we are looking at those same 
unconventional plays, a combination of shales and tight sands 
that we have in the West. So it is comparing the same types of 
reserves in the West.
    If you look at the Bakken, because of the Bakken in North 
Dakota, oil production is up 54 percent in the West, but only 
26 percent on Federal lands. So it is clearly not keeping pace 
on Federal lands. Nationwide, Federal oil production is down 1 
percent.
    So why this disparity on Federal lands compared to private 
lands? The reason is simple: The Federal Government policies 
make it extremely difficult to operate on public lands. There 
is virtually no certainty of overcoming the bureaucratic 
hurdles.
    A Federal lease is really a ``definite maybe.'' Maybe you 
will get through all the environmental analysis and regulatory 
burdens. Maybe you will get permission to drill. Maybe you 
won't be sued by an environmental group. And maybe you will 
find oil or natural gas. It is really a classic catch-22 
situation, where the government has thrown up all these 
regulatory hurdles and then turns around and blames companies 
for not producing on their Federal leases, with the added 
Orwellian twist this year that now the Federal Government is 
claiming credit for that increased production.
    Whereas on State and private lands production can be 
realized in a matter of months to a year or so, on Federal 
lands 3 years is the basic minimum. And we have seen projects 
stretching 5 to 10 years, and Reed Williams will tell us about 
a project that is now in the 16th year.
    Policies include obstacles in the leasing process, new 
obstacles created since 2010; environmental analysis that is 
stretching over 7 years and preventing nearly 65,000 jobs a 
year and $15 billion in annual economic impact; ad hoc demands 
with no basis in regulation; and settling with environmental 
groups on litigation that stops economic growth and job 
creation.
    On top of all those delays, BLM is undergoing rulemaking on 
hydraulic fracturing despite budget for it, manpower, and, more 
importantly, expertise. Besides being extremely costly and 
time-consuming, these new regulations will add a quarter of a 
million dollars onto the cost of every new well. And that just 
means less money for job creation, energy production, and 
economic activity.
    The new requirements are redundant, with State regulations 
such as North Dakota--Mr. Helms doing a great job regulating--
and will further drive up permitting times so that--Mr. Nedd 
couldn't answer the question today, but it is an average of 298 
days. Secretary Salazar and BLM Director Abbey admitted to that 
on April 3rd, 2012. And if they add on this new BLM regulation, 
it is going to add another 100 days on top of that, I think 
minimum.
    So, I have provided examples in my written testimony of 
other small businesses, like Mr. Clements' and Mr. Williams'. 
These regulations are stopping job creation and economic 
activity from small businesses. And I look forward to 
questions.
    Thank you.
    Mr. Whitfield. Thank you, Ms. Sgamma.
    [The prepared statement of Ms. Sgamma follows:]

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    Mr. Whitfield. Mr. Williams, you are recognized for 5 
minutes.


                   STATEMENT OF REED WILLIAMS

    Mr. Williams. Chairman Whitfield and Ranking Member Rush 
and the rest of the committee members, thank you for allowing 
me to be here today to make this presentation. I think I am 
here because my specific small oil and gas company is embroiled 
in the middle of a vortex of many of these issues that we are 
talking about.
    Back in 1996, a group of us leased some lands in the White 
River National Forest on the western slope of Colorado. Those 
lands fit right in the middle of a lot of existing oil and gas 
activity. There are more than 50 wells within a few miles of my 
exact leases, there are pipelines to those, and there even is a 
storage facility for natural gas contiguous with my leases. So 
it was a very well-established oil and gas area, and we were 
encouraged to go in and lease it. Things change across time, 
and we kept working with it and working with it. We believe in 
the reserves that exist there.
    Over time, some of our offsetting competitors have drilled 
some deeper wells, and we believe that our little 8,000 acre 
position there will produce, oh, a tcf of gas. Even at $3 a 
unit, which hopefully will be greater than that, that is $3 
billion worth of gross revenue, and just at 12 \1/2\ percent 
royalty flowing just out of that off the top of it, it is over 
$350 million of revenue that would flow to the Federal 
Government as an asset of the government's, and then it gets 
shared back with the States, which would be great for the State 
of Colorado.
    We have made an effort from day one to be an environmental 
steward, we assumed that that would be the only way we would be 
able to work on the White River National Forest, and I think 
you would find in the record that we have accomplished that one 
step at a time. We have invested as private investors, and our 
personal accounts. Mostly my company is owned by family members 
and myself, some friends of my family. We have invested over 
$10 million to date getting ready to produce that reserve off 
of that acreage. All along the way, if we have accomplished one 
set of regulations from the Forest Service or BLM or EPA, it 
seems like the next day a new one comes down that falls in our 
path to try to finish getting on to production and develop 
those reserves. As an example, and I think this is a clear, 
simple one to make: About a year and a half ago, there was a 
new onshore order issued that required, according to our 
friends at the Forest Service and the local ranger district 
there, which is a joint office between the BLM and the Forest, 
hopefully working close together, we were told there is a new 
rule about the construction and road design on the Forest road 
that we use to access our wells. That order came down and said 
now all of a sudden you have to stop doing what we told you to 
do, and you have to start doing what a civil engineer tells us 
we have to tell you to do, and they took away our use for that 
road to put drilling rigs on it to earn the leases that are in 
question all the time, and for a year and a half, we have been 
working with the contracted people to make sure that we get it 
done exactly by the new rules, and yet within the last few 
weeks, the Bureau of Land Management has been pushed to 
consider taking away our leases for failure to perform.
    Well, when you are in a situation where one agency's set of 
rules make it impossible for you to accomplish another agency's 
set of rules, we have got some kind of a trick going on or some 
kind of a problem, and we still believe in the project, we 
believe these assets are tremendously valuable, and I want to 
talk some more about the shales that we are talking about 
producing on State lands, they absolutely exist throughout the 
Rocky Mountain region on Federal lands. We just haven't yet 
been able to start developing them. We have proved it, we will 
bring it to the marketplace when we are allowed to, and it will 
be a tremendous economic help to our Federal budget. Thank you 
very much for the opportunity, and I look forward to answering 
your questions.
    Mr. Whitfield. Thank you, Mr. Williams.
    [The prepared statement of Mr. Williams follows:]

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    Mr. Whitfield. Ms. Goldfuss, you are recognized for 5 
minutes.


                 STATEMENT OF CHRISTY GOLDFUSS

    Ms. Goldfuss. Chairman Whitfield, Ranking Member Rush, and 
members of the committee, thank you so much for inviting me 
today. It is a real honor to be here. My name is Christy 
Goldfuss. I am director of the Public Lands Project at the 
Center for American Progress Action Fund. We are a nonprofit 
organization that is dedicated to transforming Americans' lives 
by putting progressive value into policy.
    I would like to make three major points in my testimony 
today about the current state of play between oil and gas 
drilling on public lands and private lands. First, simply put, 
there is a lot of production happening on public lands and 
waters; second, the oil and gas industry has access to an 
extensive inventory of leases and permits; and third, although 
there is tremendous oil and gas drilling happening on public 
lands, market factors have pushed the industry to be more 
interested in private lands, and there is a demand problem, not 
a supply problem.
    Before I go a little deeper into each of those points, let 
me start where most of us agree, oil and gas development is an 
appropriate use of our Federal lands. It is essential for our 
national security to reduce our dependence on foreign sources 
of oil, and we are making significant strides in that 
direction, but we should also agree that these lands, owned by 
all Americans, are inherently different than private lands. In 
many cases, by law, the land management agencies are required 
to manage for multiple uses, and that includes hunting, 
fishing, grazing, hiking, recreation, and not just energy 
production.
    In other words, an all-of-the-above energy strategy does 
not mean an all-of-the-acres strategy or oil above all. If 
managed wisely, our public lands and waters can serve multiple 
national purposes. Among them, addressing our current energy 
needs, ensuring clean air and water for our Nation, providing 
places for hunting and recreation, and protecting American 
treasures for future generations.
    When it comes to this first challenge on the list, 
addressing our current energy needs, America's public lands and 
waters are doing their fair share. As President Barack Obama 
said last March, we are drilling all over the place, and here 
is a major point: Oil production from the Federal lands and 
waters in fiscal year 2011 was higher than in the last 3 years 
of the Bush administration. There has been a 12 percent 
increase in production since 2008, and the Bureau of Land 
Management held three of the top five largest lease sales in 
the agency's history in calendar year 2011. With this level of 
activity on public lands, it is clear why The New York Times 
said in their recent article about oil and gas drilling on 
public lands, the scorecard shows that the industry is winning.
    All of these efforts have come while the industry still 
holds extensive inventory of idle leases. The DOI found that 56 
percent of the leased acres in the lower 48 States and 72 
percent of the leased acres offshore are not in production or 
exploration. Simply put, the industry currently holds the keys 
to vast amounts of publicly owned resources and has decided not 
to develop them at this time. And there are many reasons for 
that, some of which include the current price of natural gas 
and the location of the best quality resources, which are 
predominantly on private lands. We even have companies right 
now shedding in their wells because they need to increase the 
price of natural gas to make it economic for them to continue 
to develop.
    The extensive natural gas boom does not have everyone 
happy, and early in July, I had the opportunity to see for 
myself why. I traveled to northeast Utah to one of the most 
beautiful places in this country, Desolation Canyon. After 
driving through miles of pump jacks on public lands, I felt 
like I was in more of an oil and gas city, rather than a 
gateway to a natural wonder, and as the pumps finally faded in 
the distance, I realized we were driving through the future 
site of 1300 new oil and gas wells, just approved by the Obama 
administration, which rejected calls from environmentalists to 
choose smaller alternatives.
    I find myself asking, will the receiving line of pump jacks 
impact people's desire to travel to this place to escape it 
all? Could the extensive drilling damage the Green River and 
the amazing wildlife that people want to see? Just up the road 
from that spot in Vernal, Utah, population 9,000, they have 
experienced ozone levels that rival those of Los Angeles 
because of the increased drilling, much of it on public lands.
    We know that sportsmen in Wyoming say that similar 
environmental conditions have a negative impact on antelope and 
mule deer there, which means less hunting, and that is bad news 
for the outdoor industry, which just released a new report 
showing that it creates 6.1 million American jobs nationwide, 
20 percent of those in manufacturing, and that is about 3-to-1 
the number of jobs created by the oil and gas industry.
    The very idea that oil and gas drilling on public lands 
should track with development on private lands implies that oil 
and gas development is the single most important use of these 
lands. If we were to take that myopic approach to managing an 
asset that belongs to all Americans, we endanger the other 
uses. Instead, we need to insert balance into any development 
scenario, such as analyzing loss to hunting and fishing habitat 
when proposing new acres to be leased for oil and gas.
    As President Teddy Roosevelt said, America's great natural 
resources must be used for the benefit of all our people and 
not monopolized for the benefit of the few. Thank you so much 
for inviting me today, and I look forward to questions.
    Mr. Whitfield. Thank you very much.
    [The prepared statement of Ms. Goldfuss follows:]

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    Mr. Whitfield. Mr. Fisher, you are recognized for 5 
minutes.


                   STATEMENT OF COREY FISHER

    Mr. Fisher. Mr. Chairman, members of the subcommittee, 
thank you for the opportunity to testify today. My name is 
Corey Fisher, and I am the assistant energy director for Trout 
Unlimited, a national nonprofit conservation organization with 
140,000 members and a mission to conserve, protect, and restore 
North America's cold water fisheries and their watersheds. I am 
also here today on behalf of Sportsmen for Responsible Energy 
Development, a coalition of nearly 500 organizations and 
businesses. The organizations that I represent support 
responsible energy development. We work with numerous 
stakeholders, including agencies, industry, and other 
sportsmen's organizations to find ways that energy development 
can move forward in ways that conserve wildlife and our hunting 
and fishing heritage.
    I would like to emphasize that Federal public lands are of 
great importance to hunting, fishing, and the economy. In my 
home State of Montana, 75 percent of hunters, myself included, 
hunt on public lands, and in 2010 more than 229 million people 
visited Forest Service and BLM lands, with an economic impact 
of $21.9 billion. Because public lands are managed for multiple 
uses, not only do they provide benefits for sportsmen and the 
economy, but they also allow opportunities for energy 
development and numerous other uses. This isn't always the case 
for private lands and State lands, however. In some cases, they 
are not managed primarily for energy development. However, the 
vast majority of public lands require a balance where no one 
use is allowed to trump another.
    Due to the multiple stakeholders on public land, early 
collaboration and input from diverse interests is essential to 
ensure sound, balanced decisions. This early coordination is a 
key component of the Interior Department's 2010 leasing 
reforms.
    Here is a personal example of the reforms at work. Every 
year I camp along Cottonwood Creek, a stream in central 
Montana. Cottonwood Creek has been restored with a population 
of cutthroat trout. It was also proposed last year for a lease 
by the BLM. So when I saw that, I took notice. Working with the 
new leasing reforms, Trout Unlimited was able to comment on the 
environmental assessment before the lease sale, draw attention 
to the trout restoration efforts. The result was that the BLM 
applied appropriate stipulations and was able to offer the 
lease for sale without any objection from Trout Unlimited. This 
is just one example where we have found the BLM to 
constructively seek input from stakeholders, allowing them to 
sell leases while conserving habitat and preventing future 
conflicts.
    I believe that smart planning will also prevent negative 
impacts to fish and wildlife, impacts that can be difficult or 
impossible to fix. For example, in the Pinedale Anticline in 
western Wyoming, studies have shown that the sublette mule deer 
herd has decreased by 60 percent, and it is no coincidence that 
the winter range that these deer depend on to survive has been 
extensively developed for oil and natural gas. This population 
decline has resulted in a shorter hunting season and a 44 
percent decrease in the number of hunters who are allowed to 
hunt that deer herd. This loss in hunting opportunities raises 
an important point. As valuable as winter range is for mule 
deer and clean streams are for trout, this issue cuts much 
deeper. It is personal for hunters and anglers in the West. 
Public lands are the places where family and friends make 
memories on crisp fall mornings spent hunting and where we go 
to spend our summers fishing. They are the places where we shot 
our first deer and landed our first trout, and it is these 
places and experiences that we hope to be able to pass on to 
future generations of hunters and anglers.
    For us, this is really the core of the issue. These are not 
just places on maps, these are places in our hearts, and that 
is an important reason why sportsmen and women have a stake in 
land use decisions. I believe that collaborating with hunters, 
anglers, and other stakeholders is not undue regulation, it is 
just good policy. We are not proponents of excess regulation, 
but we are proponents of collaboration and seeking early input. 
Like energy companies and developers, we deserve a say and a 
fair shake, and that is what these leasing reforms and front-
end collaboration have given us.
    In closing, public lands are vitally important to hunters 
and anglers and our way of life. We also recognize the 
importance of energy development on those lands. Through 
transparency and opportunities for public input, we can both 
develop energy resources and ensure that our public lands 
remain a great place to hunt and fish. Thank you for the 
opportunity to share my thoughts, and I would be happy to 
answer any questions.
    Mr. Whitfield. Thank you, Mr. Fisher.
    [The prepared statement of Mr. Fisher follows:]

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    Mr. Whitfield. Thank all of you for your statements. We 
have two votes on the House floor. There is like 4 minutes left 
in the first vote, and then there will be a second vote. So 
rather than rush, what I am going to do, I am going to adjourn 
this hearing. We intend to be back here at 11:30, and I will 
ask my questions, and Mr. Rush will ask his questions, and then 
any of the other members will ask their questions.
    So I apologize to you all. You have already been very 
patient. But we will hopefully be back in about 15 minutes. So 
the hearing is recessed until 11:30.
    [Recess.]
    Mr. Whitfield. We will reconvene this hearing, and I, once 
again, apologize for the delay. Mr. Rush is on his way, and I 
know he has some questions, and I know Mr. Gardner has some 
questions, and there may be others that come in, but at this 
point, I will recognize myself for 5 minutes of questions and 
thank you again for your testimony.
    Mr. Williams, I read everyone's testimony, and I am hoping 
I am getting some of this correct in my memory, but I believe 
your company in Colorado had invested somewhere in the 
neighborhood of maybe $10 million. Is that right?
    Mr. Williams. That is correct.
    Mr. Whitfield. OK. And I don't know the exact number of 
years, but I know that this is a process that has been going on 
for a number of years, and the regulations have been changed 
and demands have been changed. That generally is correct, 
right?
    Mr. Williams. Correct.
    Mr. Whitfield. Now, on this lease or leases that you have 
from the Federal Government, if you do not produce by a certain 
time, do you lose those leases?
    Mr. Williams. Yes, you have certain performance criteria. 
Drilling is generally the word they use, that you need to have 
drilled within this amount of time or your leases will go away.
    Mr. Whitfield. Does that mean drilling for production or 
drilling for exploration?
    Mr. Williams. We are in an exploration phase, have been in 
an exploration phase for different horizons that have showed up 
in the last few years, particularly.
    Mr. Whitfield. The reason I ask the question, we have had 
like 27 hearings on energy, and I hear the President talk about 
this a lot and others, and there is a comment, actually Ms. 
Goldfuss referenced it to a degree, and that is, that we have a 
lot of these companies out here that have a multitude of 
leases, and they are not doing anything on them, and when I 
hear the President talk about it, the impression that he leaves 
is we have these entities that have all these leases, and they 
are complaining they want more leases, and yet they are not 
even utilizing what they have, and maybe Mr. Helms and Mr. 
Sullivan can comment on this because you all are on the 
regulatory side as well, and Ms. Sgamma as well, but my 
impression is, and you all can correct me if I am wrong, that 
one of the primary reasons the drilling is not taking place is 
just the multitude of regulations and the obstacles that you 
have to go through in obtaining a permit.
    Now, I referenced the Shell example off the coast of Alaska 
where they spent 5 or 6 billion dollars, and they still don't 
even have a permit for exploration, so am I correct in assuming 
that the reason a lot of these leases have not been utilized is 
the regulatory side of it? Would you agree with that, Mr. 
Helms?
    Mr. Helms. Chairman Whitfield, let me start by saying yes, 
I believe you are absolutely correct. Prior to 2008, we had 
this exact problem on the Fort Berthold reservation in North 
Dakota. We had a period of time there from 1986 through 2007 
where only one well got drilled on the Fort Berthold 
reservation. We were drilling all around it, and the tribe 
there appealed to Congress and they also appealed to us to step 
in and straighten out the regulatory and tax situation so that 
they could develop their resources.
    Two things happened. The State of North Dakota signed a 
regulatory and tax agreement with the tribe which stabilized 
taxation and put in place State regulations until the tribe 
could write its own regulations. The second thing----
    Mr. Whitfield. OK. Forgive me, I have a minute and 20 
seconds left.
    Mr. Helms. OK.
    Mr. Whitfield. Do you agree theoretically with what I said, 
Mr. Sullivan, that a lot of this has to do with regulatory?
    Mr. Sullivan. Mr. Chairman, I do, particularly as you 
mentioned before, the situation with Shell, which is an example 
of not only delays in permits, but then at one point the 
moratorium that was the Gulf moratorium was slapped on to 
Alaska as well.
    Mr. Whitfield. Ms. Sgamma?
    Ms. Sgamma. The Department of Interior looks at it as if a 
switch is flipped, so they don't take into account any of the 
work, the environmental analysis, all of that is going on 
background.
    Mr. Whitfield. Mr. Williams, I think you have already 
indicated that you agree generally with that?
    Mr. Williams. Correct.
    Mr. Whitfield. I have 36 seconds left now. Mr. Helms, the 
reason I was moving so quickly, I read this article in The 
Washington Post written by Steve Mufson, and it was entitled 
``In North Dakota, The Gritty Side of an Oil Boom.'' While most 
of the people I have talked to in North Dakota are quite 
excited about the economic boom and the unemployment rate being 
3 percent, as I read this article, I noticed that in this 
article he talks about the problem of the oversize and 
overweight trucks, he talks about the need for additional 
schools because of all the children that are coming in, he 
talks about the increase in the felonies that are being 
committed in the State, he talks about the State's 
infrastructure needs has been quadrupled since this thing 
began, and he also talks about the pollution problems are 
totally out of control, and he also talks about--Mr. Schafer of 
the Sierra Club says that this thing is like a steamroller 
coming toward us, and we have got to change these regulations, 
we have got to make it more difficult to do business up here.
    So here we have a State with an economic growth needed 
production of fuels, domestic fuels. Would you have any comment 
on this article? Have you read this article?
    Mr. Helms. Yes, Mr. Chairman, and thank you for asking 
about it. The article is filled with inaccuracies. For example, 
the statement that our regulations are not as strict as many 
States or that we don't have enough inspectors to keep up, we 
increased staff by 20 percent, and we are increasing by another 
10 percent in the first half of this year. Our regulations, our 
waste regulations all comply with the EPA class II regulations, 
so they meet all standards and exceed all the standards, and in 
fact, when it comes to flaring, flaring is down, and natural 
gas infrastructure is being built. The quotes from the World 
Bank are inaccurate. If you use our actual measured numbers for 
flared gas, we wouldn't even make the list of 20 countries, and 
yet he puts us at fifth, and then he quotes such problems as no 
pool cues for the pool table and a broken--let's see, I think 
it is a broken treadmill, and the problem of some folks that 
own a restaurant, and they are making more money but working 
less hours.
    Mr. Whitfield. That is horrible.
    Mr. Helms. It is riddled with inaccuracies and 
misstatements.
    Mr. Whitfield. Thank you. I am not going to belabor the 
point. Mr. Rush, I know you have got another engagement, too, 
so you are recognized for 5 minutes.
    Mr. Rush. I want to thank you, Mr. Chairman, and Ms. 
Goldfuss, let me get right to it, in the interest of time. Can 
you tell us about opportunities for other resource development 
on Federal lands other than gas and oil development?
    Ms. Goldfuss. Yes, definitely. When it comes to renewable 
development specifically, the Department of Interior has been 
trying different approaches, I think to address some of the 
concerns and some of the issues that have come up through oil 
and gas development to try and make it easier and faster for 
solar development. For example, just last week, they released a 
new process to speed up development in solar zones, and in the 
coming months, we expect they are going to reach the 10,000 
target that was laid out for the agency in terms of numbers of 
permits released for renewables, and that is nonhydro, so we 
are talking about solar, wind, and geothermal projects that 
would be on public lands.
    So it is a new approach. It is different, it is easier in 
some cases, because we know where the sun is, we know where the 
transmission is, versus oil which is underground, but it is a 
process and an approach that we hope will reduce litigation and 
get more solar online faster.
    Mr. Rush. Mr. Fisher, I was listening to a lot of 
interesting terms in your testimony, and you mentioned a number 
of benefits of balancing multiple uses on public lands, but you 
didn't put a lot of attention to significant economic benefits 
to outdoor recreational activities on Federal lands. Can you 
speak briefly to those benefits, those economic benefits?
    Mr. Fisher. I can. You know, I mentioned in my testimony 
that, you know, Forest Service and BLM lands have an economic 
impact from visitors of $21.9 billion, and I know that in my 
home State of Montana, you know, during hunting season, it is 
hard not to see a blaze orange sign on restaurants, motels, all 
across the State, small businesses that says Welcome Hunters. 
It is certainly an extremely valuable economic impact for our 
rural communities in places like Montana. As far as specific 
numbers, you know, I can certainly get back to you with figures 
from the U.S. Fish and Wildlife Service's survey.
    Mr. Rush. Would you say that recreational use on Federal 
lands, that would be a vibrant part of the economy that we 
should take into consideration as we consider how Federal lands 
are being utilized?
    Mr. Fisher. Yes, I would agree with that statement.
    Mr. Rush. Ms. Goldfuss, do you have some specific numbers?
    Ms. Goldfuss. I can expand a little bit on that. The 
Outdoor Industry Association released a report in conjunction 
with the Western Governors Association earlier in the summer, 
and it had brand new data looking at the outdoor industry as a 
whole, and their numbers show 6.1 million direct American jobs, 
$646 billion in outdoor recreation spending each year, $39.9 
billion in Federal tax revenue, and $39.7 billion in State and 
local tax revenue, and frequently, we hear complaints that 
these jobs are just in hotels or chambermaids, but they 
released an actual breakdown of where these jobs are located, 
and 20 percent are in the manufacturing industries, and you 
have 12 percent in accommodation and food service, and then a 
mix between many other industries.
    So it is a huge economic industry, and it is a big driver, 
and we are talking about all across many sectors. So the boom/
bust concerns that you sometimes have with fossil fuels you 
certainly don't have with outdoor industry, and it has been 
growing even despite the great recession. It is one of the few 
industries that had growth throughout.
    Mr. Rush. Thank you. Thank you very much. I yield back, Mr. 
Chairman.
    Mr. Whitfield. Thank you, Mr. Rush. At this time I 
recognize the gentleman from Colorado, Mr. Gardner, for 5 
minutes.
    Mr. Gardner. Thank you, Mr. Chairman, and thank you to the 
witnesses for joining us today. I would like to, in particular, 
welcome Mr. Williams and Ms. Sgamma from Colorado for joining 
us today.
    Just a couple of questions. Ms. Sgamma, I have seen 
statistics, I have seen other numbers out there that talk about 
the number of permits that have been denied, delayed over the 
past several years by this administration. Do you know how many 
jobs are currently being held up as a result of those permit 
delays?
    Ms. Sgamma. Well, it is a three-pronged approach on Federal 
lands. If you can get through the leasing phase and the 
environmental analysis phase, and then the permitting phase, 
then you can finally drill a well. So right now, we are seeing 
a huge backlog in the environmental analysis phase, and from 
just 20 projects that are proposed, we could create over 
121,000 jobs. That is just from 3,100 wells drilled a year. If 
we look at those projects and see which ones have been delayed 
over 3 years, we find that the Federal Government is preventing 
about 65,000 jobs and $15 billion in economic activity every 
year.
    So those are long-term jobs over the life of the project 
and those projects. So some of those projects are delayed even 
over 7 years. So that is a clear example where the Federal 
Government is preventing companies from operating on those 
leases and creating jobs.
    Mr. Gardner. So 65,000 jobs that we could have hired that 
could be people back to work, good-paying jobs for their 
families, and yet we hear claims from this administration that 
it is doing everything, bending over backwards to make things 
easier, less red tape. Do you agree that this administration is 
making it easier for energy development?
    Ms. Sgamma. They have been making it easier for wind and 
solar, but certainly not for oil and gas. They have added new 
layers of analysis on top of existing layers of analysis on the 
leasing phase, they have let very few projects be approved, and 
they have--permitting times have increased to 298 days.
    Mr. Gardner. Do you believe the Department of Interior has 
taken into account your concerns when it comes to rules and 
regulations that they are currently issuing or considering?
    Ms. Sgamma. No, I don't think they have adequately taken 
into account industry information. For example, on the 
hydraulic fracturing rule, Mr. Nedd this morning couldn't 
answer how much that cost is. We have provided lots of 
information on the fact that that well and new wells will have 
an added cost of a quarter-million dollars. That is a quarter 
of a million dollars to Reed Williams and other small producers 
as well as other companies, and that just means that that is 
$250,000 less available per well, and in the aggregate about 
$1.6 billion annually just from these new BLM fracking rules, 
and that just means less money invested in the West in public 
land States.
    Mr. Gardner. And I hear a lot of concern from opponents of 
oil and gas that there are leases that aren't being utilized or 
are being underutilized, and Ms. Sgamma, I guess my question to 
you, isn't it a little bit like a business with their inventory 
where you actually need to have more inventory on hand than you 
are going to sell that day because you need to have the 
inventory to make your business work, and so if you could 
address that a little bit?
    Ms. Sgamma. Certainly, appreciate it. Well, right now we 
are operating on 49 percent of active leases. That is a huge 
number, that is a high utilization rate, and it is up from 
about 28 percent in the 1980s. So we were leasing less acreage 
and were utilizing more. But the fact of the matter is, the 
Federal Government doesn't give us any credit for all the 
background work. They don't give us credit for the fact that 
they are holding up over 7 years' projects. So those leases to 
them look like they are nonproducing, even though the Federal 
Government itself is the one holding that up. It is a total 
catch-22 situation.
    And then there is always going to be a portion of the 
inventory that is not developed because an operator goes out, 
does some work, determines there is not enough oil and gas or, 
you know, it just isn't going to work out, so there is always 
going to be an inventory because it is a dynamic industry, we 
are going out, discovering, exploring, and sometimes it works 
out, sometimes it doesn't. So a lease is just a definite maybe.
    Mr. Gardner. And you mentioned 65,000 jobs that number, I 
think, about 20 projects. What revenue would that equate to the 
Federal Government if they were to go forward?
    Ms. Sgamma. You know, I don't remember off the top of my 
head. I think it was $139 million a year.
    Mr. Gardner. $139 million a year.
    Mr. Williams, we have heard a lot of discussion about 
debate on whether or not operators are leaving Federal lands 
for non-Federal lands. I am wondering if you could talk about 
some of the challenges that you faced and heard of from your 
colleagues in the industry when it comes to that.
    Mr. Williams. Certainly, thank you. Yes, the environment is 
tremendously important. Private dollars are supposed to come in 
to be an investment in my company's drilling wells, and all of 
the difficulties that in the regulatory environment starts 
being talked about out there in the world of dollar bills, they 
just stop being interested in investing on Federal lands, and 
they wait and say, well, go get some lands in east Texas where, 
you know, when you lease land there, the guy, the private owner 
that owns it will say, Mr. Williams, you want to come drill a 
well? You can drill it in my kitchen, you know.
    So that whole environment changes everything of our ability 
to fund moving projects forward. So regulatory things then pile 
up on each other, and they cross each other. We had a situation 
where we had an EA done, an environmental assessment, and there 
was one well pad that the forest rangers came to us and said, 
we have decided we don't like the drainage pattern in that 
area, and we would like for you to move that well. So you say 
fine, let's go out there together and pick the replacement 
site, and we do it, and then we get a call that says, oh, you 
have got a new site, and it means you have got to do a new EA, 
and it can take 2 more years, another $100,000 of consulting 
fees.
    Mr. Gardner. The bottom line is people who would say that 
you are moving to non-Federal lands because it is just better 
there, the fact is that there is a bias, a prejudice when you 
do business with the Federal Government on Federal leases?
    Mr. Williams. Correct.
    Mr. Gardner. Making it difficult, so difficult it is 
forcing people out.
    Mr. Williams. Very difficult. And it is unnecessary. We are 
able to as an industry now drill horizontally and not do damage 
to the surface, all goals that were brought to us, and there is 
tremendous reserves owned by the Federal Government. You have 
got to remember that the whole Louisiana Purchase expands up 
right through the Rocky Mountains, and it happens to be where 
the Great Cretaceous Seaway was, and it is where all of our oil 
and gas reserves are, including off the coast of Texas in 
private lands, and we have a choice to drill on them or not. 
Thank you for the question.
    Mr. Whitfield. The time has expired. I just have one other 
question, Mr. Clements, I would like to ask you. You made 
reference in your testimony that the President's 2012-2017 
energy plan really didn't do anything for the country from your 
personal experience and from your company's perspective. Could 
you just summarize why you think that is the case?
    Mr. Clements. Basically I didn't see any kind of economic 
data to where, you know, it didn't seem like it was a great big 
announcement. They come out and say we are going to do a 
thousand leases and create a million jobs. I didn't see any of 
that information in the leasing plan, and then when you look at 
it, we are still drilling in the same area for the last decade, 
and how can you----
    Mr. Whitfield. So no new areas?
    Mr. Clements. Yes, there is no new areas.
    Mr. Whitfield. OK, thank you.
    Did you have anything else, Mr. Rush?
    Mr. Rush. No, no thank you.
    Mr. Whitfield. OK. Well, first of all, I want you to know 
it is kind of rushed this afternoon, but we do have all of your 
testimony, and we have read all of the testimony, and it is 
part of the record, and I genuinely appreciate all of you 
taking time to come and express your views on these important 
issues, and those of us in the committee look forward to 
working with all of you as we move forward to try to become 
more energy independent and stimulate our economy. So thank you 
very much.
    Mr. Rush. Mr. Chairman, before we conclude this hearing of 
the committee, I ask unanimous consent to enter into the record 
an article that I mentioned in my opening statement, an article 
by Mr. Richard A. Muller, written by Mr. Richard A. Muller that 
appeared in The New York Times on July 28, 2012.
    Mr. Whitfield. Without objection, we will enter it into the 
record.
    [The information follows:]

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    Mr. Whitfield. Thank you very much. So that concludes 
today's hearing and thank you all once again. We will leave the 
record open for 10 days.
    [Whereupon, at 12:04 p.m. the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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