Regulatory changes are not slowing U.S. oil and gas production on federal lands, Barclays said on Wednesday, even as energy companies say the White House’s policies have hindered the energy industry amid calls to ramp up output to plug potential supply shortfalls following Russia’s invasion of Ukraine.
While the Biden administration early in its tenure temporarily limited federal leasing, it has shifted to pushing for more oil and gas development in the short-term to offset an expected drop in exports from Russia after its invasion of Ukraine.
U.S. President Joe Biden froze new drilling lease auctions in January 2021, paving the way for a formal review of the federal drilling program to weigh its value to taxpayers against its environmental costs in part to transition away from fossil fuels.
Barclays, noting the criticism from energy companies, said the industry’s efforts are also part of the reason activity on federal lands has stagnated.
Oil and gas production on federal lands “is a relatively small (but meaningful) piece of overall U.S. output,” the bank noted.
“While output on federal lands is trending below the pre-COVID-19 level, its share of the total U.S. output is largely unchanged,” Barclays said, adding fewer leases being issued was a trend prior to Biden’s administration.
“The industry has drilled more wells on federal lands, but also completed fewer wells, in part contributing to lower production,” it said.
U.S. oil production is currently running at about 11.6 million barrels per day, off its record high 12.3 million bpd in 2019.
Even though the U.S. oil and rig count has climbed for a record 19 months in a row, the increases have small and production was still far from pre-pandemic record levels as many companies focus more on returning money to investors rather than boosting output.
Activity in the oil and gas sector accelerated in the first quarter as company outlooks improved, according to a survey of oil executives released on Wednesday by the Federal Reserve Bank of Dallas, yet a major concern seems to be the lack of qualified rig personnel available in the market.