Oil and Gas Lease Utilization – Onshore 

and Offshore

Report to the President

U.S. Department of the Interior

March, 2011
March, 2011 U.S. Department of the Interior Report to the President

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INTRODUCTION AND EXECUTIVE SUMMARY

On March 11, 2011, President Obama asked the Department of the Interior (Department) to 

determine the acreage of public lands (onshore and offshore) that have been leased to oil and 

gas companies and remain undeveloped, noting that companies should be encouraged to 

produce energy from leases that they are holding. 

In response to this request, the Department’s Office of Policy Analysis (PPA) collected data on oil 

and gas leasing and production for Federal onshore and offshore areas from the United States 

Geological Survey (USGS), Bureau of Land Management (BLM), and Bureau of Ocean Energy 

Management, Regulation and Enforcement (BOEMRE).

The information provided in this report indicates that the Department offered substantial 

acreage for potential oil and gas development in 2009 and 2010 that was not subsequently 

leased by bidding parties. In addition, for areas that are under lease, there are tens of millions 

of acres currently idle – that is, not undergoing exploration, development, or production.

The Department is currently evaluating policy options to provide companies with additional 

incentives for the more rapid development of oil and gas production from existing and future 

leases. 
March, 2011 U.S. Department of the Interior Report to the President

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OFFSHORE OIL AND GAS LEASES

Background

BOEMRE manages energy and mineral resources, including renewable energy resources, on the 

nation’s outer continental shelf (OCS) to help meet the energy demands and other needs of the 

Nation while balancing access with the protection of the human, marine, and coastal 

environments.

The areas of the OCS leased for offshore oil and gas development can be broadly categorized as:

• Total acres under lease; 

• “Active leases,” or leased areas that are subject to exploration or production; and

• “Inactive leases,” or leased areas that are not producing nor currently covered by an 

approved exploration or development plan. These areas may be subject to certain 

ancillary activities such as geophysical and geotechnical analysis, including seismic and 

other types of surveys.

The regulatory process governing offshore oil and gas exploration and development can be 

briefly summarized as follows:

• Leasing:

•

The Secretary must prepare a 5-year program consisting of a schedule of oil and 

gas lease sales indicating the size, timing, and location of proposed leasing activity the 

Secretary determines will best meet national energy needs. Preparing a 5-year program 

involves extensive public comment and requires the Secretary to balance the potential 

for the discovery of oil and natural gas, the potential for environmental damage, and the 

potential for adverse effects on the coastal zone. An area must be included in the 5-

year program in order to be offered for leasing. There is an additional public process for 

each lease sale to determine whether to hold the lease sale or modify the sale area, and 

what terms and conditions to apply to leases.

Exploration

•

: Exploration activities include geophysical exploration and exploratory 

drilling. Prior to conducting any exploratory drilling activity on a lease, an Exploration 

Plan (EP) must be submitted to BOEMRE for approval. The EP describes exploration 

activities planned by the operator for a specific lease(s), the timing of these activities, 

information concerning drilling rigs, the location of each well, and other relevant 

information. 

Development: Before an operator can begin development or production activities, a 

development and production plan and its supporting information must be submitted for 

approval to BOEMRE.1

 The development and production plan describes a schedule of 

development activities, platforms, or other facilities including environmental monitoring 

features and other relevant information. As with EPs, BOEMRE can require modification 

of a plan based on inadequate or inaccurate supporting information.2

 

 1 Leases in the Central and Western Gulf of Mexico Planning Areas require a “Development Operations 

Coordination Document (DOCD).” 2 Source: http://www.gomr.boemre.gov/homepg/regulate/regs/laws/postsale.html
March, 2011 U.S. Department of the Interior Report to the President

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Lease Information

Approximately 70% of the Undiscovered Technically Recoverable Resources currently under 

lease in all areas of the Federal Gulf of Mexico are not producing or not subject to approved or 

pending exploration or development plans.

3

 This includes an estimated 11.6 billion barrels of oil, and 59.2 trillion cubic feet of 

natural gas.

In the Gulf of Mexico, 34 million acres are under lease. However, only approximately 10 

million acres have approved exploration or development plans (see Table 1).

 6.3 million acres in the Gulf of Mexico are producing acres.

In the Central and Western Gulf of Mexico, approximately 53 million acres were offered for 

lease in 2009, of which 2.7 million acres were bid on and sold. In the Central Gulf,

approximately 37 million acres were offered in 2010, of which 2.4 million acres were bid on 

and sold (see Table 2).

Table 1. U.S. Offshore Lease Activity (As of March 1, 2011)

Inactive Leases Active Leases

Region

Acres Under 

Lease

Acres with Inactive 

Leases

Acres with 

Approved 

Exploration 

Plans

Acres with Approved

Development Plans

(% producing acres)

1

Gulf of 

Mexico

34,009,660

[6,342 leases]

23,834,317

[4,251 leases]

2,983,667

[488 leases]

7,191,676 (87%)

[1,603 leases]

Pacific 241,023

[49 leases]

23,354

[6 leases]

03 217,669 (100%)

[43 leases]

Alaska 3,723,4652

[670 leases]

3,650,974

[656 leases]

51,237

[9 leases]

21,254 (49%)

[5 leases]

Total 37,974,148

[7,061 leases]

27,508,645

[4,913 leases]

3,034,904

[497 leases]

7,430,599 (87%)

[1,651 leases] 1

Producing acreage is a subset of the acreage subject to approved development plans/DOCDs.

2

Approximately three-quarters of Alaska acreage (issued in Chukchi Sea Lease Sale 193 in 2008) is 

subject to litigation. 3 No lease sales have been held in the Pacific region since 1984. 

 3 Source: BOEMRE, Resource Evaluation Division
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Table 2. Outer Continental Shelf Acreage Offered and Leased

2009 2010

Acres Offered Acres Leased Acres Offered Acres Leased

Central Gulf 34,594,940 1,784,242 36,957,957 2,369,101

Western Gulf 18,393,357 884,167 0 0

Total Gulf 52,988,2971 2,668,409 36,957,957 2,369,101 1

Central Gulf of Mexico lease sales offer virtually all unleased acreage. Many of the acres shown for 

the 2009 Central Gulf sales were also offered in 2010. 2 Seven leases from the 2010 sale are still pending; these pending acres are included in the leased 

total.
March, 2011 U.S. Department of the Interior Report to the President

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ONSHORE OIL AND GAS LEASES

Background

BLM is the leasing agent for all energy minerals on approximately 700 million acres of Federal 

lands and supervises operational activities on leases on Indian lands held in trust by the United 

States.

4

 The lands that are leased by BLM for oil and gas development can be broadly 

categorized as:

• Total acres under lease

• “Active leases,” or areas with ongoing exploration or production activities. Exploration 

activities include exploratory and geophysical exploration. 

• “Inactive leases,” or areas with no ongoing exploration or production activities

The regulatory process for onshore oil and gas exploration and development includes:

• Leasing

•

: Unlike the offshore process, BLM accepts “expressions of interest” from 

industry for lands to be placed on future oil and gas lease sales. “Expression of interest” 

areas are then evaluated by BLM to determine their eligibility for leasing and the 

conditions to lease. Lease sales are then held that allow potential developers to bid on 

areas they are interested in for exploration and development.

Exploration and Development: Operators are required to submit an “Application for 

Permit to Drill” (APD) that includes details such as the well plat, drilling plan, evidence of 

bond coverage, and operator certification. The APD must also include a Surface Use 

Plan of Operations. The Surface Use Plan of Operations must describe the proposed 

project in a narrative, as well as on maps and diagrams.

Lease Information

Approximately 57% of total onshore acres under lease are not conducting production or 

exploration activities, as of March 14, 2011 (see Table 3).5

 This represents 21.6 million acres of onshore public lands.

Roughly 57% of the onshore acres offered for lease between January 1, 2009 and March 1, 

2011 have been leased for oil and gas activities (see Table 4).

 Acreage not leased during a lease sale remains available “over-the-counter.” 

 4 Onshore Oil and Gas Order Number 1 – commonly known as “Onshore Order #1” – contains the 

requirements necessary for the approval of all proposed oil and gas exploratory, development, or service 

wells on all Federal and Indian onshore oil and gas leases. BLM activities with regard to Indian lands do 

not include issuance of leases and determining their length, rental or royalty, approval of suspensions or 

units. These functions are undertaken by the Bureau of Indian Affairs. 5 Onshore leases vary widely in terms of the number of acres per lease, in contrast to offshore leases 

which have more uniform size.
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The annual ratio of onshore APDs received to APDs processed has remained within a 

consistent range over the past 10 years (see Figure 1 and Table 5).

Producing acres as a percentage of leased acres have averaged about 30% over the past ten 

years (see Figure 2).

Table 3. Onshore Oil and Gas Lease Activity (Whole U.S., as of 3/14/11)

Table 4. Onshore Oil and Gas Leases (Whole U.S., 1/1/09 to 3/14/2011)

Acres 

Offered Acres Leased Parcels Offered Parcels Leased 

6,447,942 3,669,779 4,260 2,492

In this table only, “leased” acres and parcels represent acres and parcels that have received winning bids –

the best measure of current leasing activity. Most winning bidders eventually receive the lease.

Table 5. Onshore Drilling Permits (2001-2010)

Year

APDs Received

(During Fiscal Year)

APDs Processed

(During Fiscal Year)

APDs Pending

(At End of Fiscal Year)

2001 4,819 4,266 5,638

2002 4,585 5,830 4,393

2003 5,063 5,143 4,313

2004 6,979 7,351 3,941

2005 8,351 7,736 4,556

2006 10,492 8,854 6,194

2007 8,370 8,964 5,600

2008 7,884 7,846 5,638

2009 5,257 5,306 5,589

2010 4,251 5,237 4,603

Lease Category

Acres Under 

Lease

Percent of 

Total Acres

Number of 

Leases

Percent of 

Total Leases

Production & Exploration 16,641,078 43% 27,640 55%

Not in Production or Exploration 21,645,058 57% 22,663 45%

Total 38,286,136 100% 50,303 100%
March, 2011 U.S. Department of the Interior Report to the President

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Figure 1. Onshore APDs Received and Processed (FY2001-FY2010)

Note: Given potential backlogs, the number of APDs processed might exceed the number of APDs 

received for any given year.

Figure 2. Onshore Producing Acres as a Percentage of Leased Acres, FY2001 – FY2010

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

0

2,000

4,000

6,000

8,000

10,000

12,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

APDs Processed APDs Received Ratio (Processed/Received)

0%

10%

20%

30%

40%

50%

0

5

10

15

20

25

30

35

40

45

50

Millions

Acres Under Lease

Producing Acres

Producing Acres / Acres Under Lease
March, 2011 U.S. Department of the Interior Report to the President

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LIST OF APPENDICES

APPENDIX 1: BOEMRE – Development Incentives Included in the March 2010 Lease Sale

APPENDIX 2: Maps 
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APPENDIX 1: BOEMRE – Development Incentives Included in the March 2010 Lease Sale.

Lease terms

The primary term of the lease is the principal diligence tool for OCS leases. A lease expires at 

the end of the primary term unless it is producing, or approved drilling operations are being 

conducted.

In March 2010, Secretary Salazar shortened the primary term for future leases in certain 

categories of leases to the length shown in Table 6. Leases in 400 to 1,600 meters of water can 

obtain a three-year extension if the operator has spudded a well and submitted the information 

for BOEMRE District Manager confirmation. BOEMRE lease analysis indicated that, for leases in 

800 to 1,600 meters of water, a seven-year lease term would be sufficient for an operator to 

evaluate seismic data and to commence drilling.

Table 6. Offshore Lease Terms

Water Depth (in meters) Primary Lease Term Extensions for Wells 

Spudded

< 400 5 years n/a

400 to < 800 5 years 3 years

800 to < 1600 7 years 3 years

1600+ 10 years n/a

Rental Rates

Rental rates are per-acre payments for leases that are paid annually until the start of royaltybearing production. Prior to March 2009, BOEMRE’s standard rental rates were $6.25 per acre 

in water less than 200 meters deep, and $9.50 per acre in water depths of 200 meters or more. 

In March 2009, Secretary Salazar increased the base rental rates for new leases offered in Gulf 

of Mexico lease sales, and established escalating rentals as an incentive for early exploration. 

These new rental rates are shown in Table 7.

Table 7. Off and Onshore Lease Rental Rates (per acre or fraction of an acre) 

Year 1 through Year 5 Year 6 Year 7 Year 8 

and Onward

Onshore 1.50 2.00 2.00 2.00

Offshore

Water Depth 

(in meters)

< 200 $7 $14 $21 $28

200 to < 400 $11 $22 $33 $44

400+ $11 $16 $16 $16

Note: Leases in <400 meters of water where an ultra-deep well (>25,000 feet) is 

spudded within the initial 5-year lease term may be extended to 8 years. Escalating 

rental rates apply during this extended period (MMS news release April 11, 2007).
March, 2011 U.S. Department of the Interior Report to the President

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APPENDIX 2: Maps

Figure 3. Gulf of Mexico OCS Leases (as of March 2011)
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Figure 4. Percentage of Federal Lease Acres Producing Oil and/or Gas, by State (March 2011)