SEC, ‘Use It or Lose It’ Tops Agenda

The U.S. Securities and Exchange Commission (SEC) continues its march to modernize oil and gas reserves disclosure rules for companies traded on U.S. stock exchanges.

On June 26 the commission published a rule proposal on its Web site. The 172-page proposal suggests revisions to update and modernize oil and gas reporting requirements, and to “provide investors with a more meaningful and comprehensive understanding of oil and gas reserves.”

It’s been a long time coming, according to many industry veterans. The current requirements were adopted nearly three decades ago, and have not kept pace with industry practice and technological advances.

The proposed rule seeks to remedy that.

“We cannot overstate the importance of these developments, which will affect most AAPG members,” said past AAPG president Pete Rose. “These proposed rule changes represent a long sought-after and significant advancement, and AAPG members, together with their SPE colleagues, were instrumental in helping to catalyze and advance it.

“This is an excellent example of how AAPG can truly serve the interests of its membership,” he said.

Publication of the rule proposal opens a 60-day public comment period. The SEC solicits answers to specific questions in the document and invites other comments and suggestions on the proposed rule.

AAPG President Scott Tinker has asked the AAPG Ad Hoc Committee on SEC Response to evaluate the rule proposal and prepare a comment on behalf of the Association. Recognizing the important and historic opportunity to help improve and modernize the SEC reporting rules, each member of the committee has again volunteered their time and effort to make this contribution.

The AAPG Executive Committee will review and approve the comment prior to submission.

In addition, AAPG members should consider contributing their own expertise and perspectives on this topic with a personal comment.

The deadline is September 8, 2008.

The Responsible Federal Oil and Gas Lease Act (H.R. 6251), authored by Representative Nick Rahall (D-W.Va.), chairman of the Natural Resources Committee, was the focus of much GEO-DC activity in the weeks leading up to Congress’s July 4 recess.

Dubbed the “use it or lose it” bill, its intent was to stop oil and gas companies from “stockpiling” federal leases and “holding back domestic production” from those leases while “enjoy[ing] world record profits.”

Specifically, the bill:

  • Directed the Secretary of Interior to ensure that oil and gas companies were “diligently developing” any federal oil and gas leases they held.
  • Prohibited the secretary from leasing additional federal acreage to lessees that were not producing or “diligently developing” existing leases.
  • Shortened all lease terms (both on- and offshore) to five years with increasing rental rates for each additional one-year extension (if granted).

There were reports that the final bill extended the initial terms to 10 years, but that version of the legislation was not available for review at press time.

The origin of this legislation was two special reports prepared by staff for the House Committee on Natural Resources.  Among other points, these reports suggest that:

“… Combined, oil and gas companies hold leases to nearly 68 million acres of federal land and waters that they are not producing oil and gas … Oil and gas companies would not buy leases to this land without believing oil and gas can be produced there, yet these same companies are not producing oil or gas from these areas already under their control.

“If we extrapolate from today’s production rates on federal land and waters, we can estimate that the 68 million acres of leased but currently inactive federal land and waters could produce an additional 4.8 million barrels of oil and 44.7 billion cubic feet of natural gas each day.

“That would nearly double total U.S. oil production, and increase natural gas production by 75 percent ...”

Thus, the committee reasons, industry should produce these “extrapolated” reserves on acreage it already holds before receiving leases to additional federal lands.

While this makes for snappy political rhetoric, it doesn’t reflect geological reality or the process of finding oil and gas. Note also that none of the facts presented in these reports are referenced, and the committee held no hearings to formally gather information and publicly assess the situation.

Seeking to provide lawmakers with some basic information about how we go about finding oil and natural gas, then-AAPG President Will Green sent a letter to Speaker Nancy Pelosi (D-Calif.), Majority Leader Steny Hoyer (D-Md.) and Minority Leader John Boehner (R-Ohio) on June 23, 2008.

In the letter Green talked about the geological and engineering work that must be done long before a drill rig shows up on site. 

He concluded the letter, “… Policies that increase exploration costs, decrease the available time to properly evaluate leases and restrict access to federal lands and the Outer Continental Shelf do not provide the American people with short-term relief from high prices and undermine the goal of increasing stable long-term supplies.”

The letter was published as an Op-Ed commentary and was quoted by USA Today.

The letter represents the type of science-based, factual information and understanding that organizations like AAPG can uniquely provide. And the favorable response by the policy community confirmed the importance of making this contribution to society.

In order to act on several energy bills before leaving for the July 4 recess, House leaders rushed the “use it or lose it” bill to the floor on June 26, under a parliamentary procedure known as suspension of the rules. This limited time for debate to 40 minutes and prohibited amendments to the legislation – but in return the bill had to receive a two-thirds majority, rather than simple majority, for passage.

During the ensuing debate on the House floor, members of Congress repeatedly referred to AAPG and quoted from Green’s letter.

The outcome was uncertain as the vote began. But at 5:44 p.m., as the Speaker’s gavel banged the vote to a close, the final tally was 223 to 195. The bill failed to reach a two-thirds majority.

Comments (0)


Washington Watch

Washington Watch - David Curtiss

David Curtiss served as the Director of AAPG’s Geoscience and Energy Office in Washington, D.C. from 2008-11.

Policy Watch

Policy Watch is a monthly column of the EXPLORER written by the director of AAPG's  Geoscience and Energy Office in Washington, D.C. *The first article appeared in February 2006 under the name "Washington Watch" and the column name was changed to "Policy Watch" in January 2013 to broaden the subject matter to a more global view.

View column archives

Members Invited to Be Part of CVD

This year’s Geo-Congressional Visit Days (geoCVD) will be held Sept. 8-10 in Washington, D.C., and interested AAPG members are invited to participate.

Deborah Sacrey
Deborah Sacrey

Deborah Sacrey, chair of AAPG’s Washington Advocacy Group, said geoCVD is an effort by the American Geological Institute, working with AAPG and several other member societies, to bring members to Washington to tell Congress about the importance of the geosciences.

She said the event consists of two-and-a-half days of geoscience briefings, which includes meeting with the respective congressional delegations and possibly one or two key federal agencies.

Sacrey noted that AAPG does not provide funding for members’ participation at geoCVD, but divisions and Sections can consider sponsoring one or more of their members to ensure representation.

A limited number of spaces are available. To register, contact David Curtiss at (202) 684-8225, or by email

See Also: Book

Desktop /Portals/0/images/_site/AAPG-newlogo-vertical-morepadding.jpg?width=50&h=50&mode=crop&anchor=middlecenter&quality=90amp;encoder=freeimage&progressive=true 4345 Book

See Also: Bulletin Article

We present a method of using fault displacement-distance profiles to distinguish fault-bend, shear fault-bend, and fault-propagation folds, and use these insights to guide balanced and retrodeformable interpretations of these structures. We first describe the displacement profiles associated with different end-member fault-related folding models, then provide examples of structures that are consistent with these model-based predictions. Natural examples are imaged in high-resolution two- and three dimensional seismic reflection data sets from the Niger Delta, Sichuan Basin, Sierras Pampeanas, and Cascadia to record variations in displacement with distance updip along faults (termed displacement-distance profiles). Fault-bend folds exhibit constant displacement along fault segments and changes in displacement associated with bends in faults, shear fault-bend folds demonstrate an increase in displacement through the shearing interval, and fault-propagation folds exhibit decreasing displacement toward the fault tip. More complex structures are then investigated using this method, demonstrating that displacement-distance profiles can be used to provide insight into structures that involve multiple fault-related folding processes or have changed kinematic behavior over time. These interpretations are supported by comparison with the kinematics inferred from the geometry of growth strata overlying these structures. Collectively, these analyses illustrate that the displacement-distance approach can provide valuable insights into the styles of fault-related folding.

Desktop /Portals/0/PackFlashItemImages/WebReady/fault-displacement-distance-relationships-as-indicators.jpg?width=50&h=50&mode=crop&anchor=middlecenter&quality=90amp;encoder=freeimage&progressive=true 5770 Bulletin Article

See Also: CD DVD

Desktop /Portals/0/images/_site/AAPG-newlogo-vertical-morepadding.jpg?width=50&h=50&mode=crop&anchor=middlecenter&quality=90amp;encoder=freeimage&progressive=true 4467 CD-DVD

See Also: DL Abstract

Shale gas and associated hydraulic fracturing or “fracking” has become a hot-button environmental issue in the United States and around the world. The purpose of this talk is to provide some background geological and engineering information on the issue and to take a more in-depth look at some of the environmental pros and cons of shale gas development.

Desktop /Portals/0/images/_site/AAPG-newlogo-vertical-morepadding.jpg?width=50&h=50&mode=crop&anchor=middlecenter&quality=90amp;encoder=freeimage&progressive=true 11669 DL Abstract

See Also: Learn! Blog

Mexico has six basins that produce oil and gas, and tremendous offshore, deep Gulf of Mexico resources. There is also shale potential in formations that extend south from the South Texas Eagle Ford. Still, according to statistics released by Pemex, Mexico’s oil and gas production has declined 25% since the 1980s. The problem has stemmed partially from a lack of investment, and difficulties in implementing new technologies to explore for and develop resources.

Desktop /Portals/0/PackFlashItemImages/WebReady/blog-learn-mexico-energy-reform-golden-lane.jpg?width=50&h=50&mode=crop&anchor=middlecenter&quality=90amp;encoder=freeimage&progressive=true 11333 Learn! Blog