Interior gives more time for comments on frac rule proposal

The story was updated on June 6.

Oil and gas producers will have another 60 days to comment on the US Bureau of Land Management’s latest proposed regulations for hydraulic fracturing operations on onshore public lands, US Interior Secretary Sally Jewell announced.

“Thousands of comments have been made on the proposed hydraulic fracturing rule,” she told the US Senate Energy and Natural Resources Committee. “Many which responded to the original proposal led us to revise it and issue a second one. I’m announcing now that we’re going to give people an extra 60 days to comment on the latest proposal.”

The secretary said improving federal oil and gas permit application processing remains a top priority, but progress will be limited because of ongoing federal budget sequestration impacts.

“We want to bring the lessons we learned offshore onshore,” Jewell said. “There’s a need to streamline the permitting process. These formations cross state lines. Unfortunately, sequestration is forcing us to limit activity in offices where there’s the greatest need. We are trying to address this.”

Sequestration also is preventing DOI from sharing onshore federal oil and gas revenue with states where such activity is located, she continued. “We appreciate the importance of this to the states, but we are required to comply with the law,” she said.

Cites progress

In her written testimony, Jewell cited efforts during her predecessor Ken Salazar’s tenure to improve BLM’s permit processing operations, including moving to an electronic system that will automate and streamline the applications process.

“From fiscal 2006 to 2012, the amount of time it took for all BLM field offices to process and approve complete drilling applications fell by 40%, and the number of inspections completed by all BLM offices rose 73%,” she said.

Jewell said the Obama administration has proposed extending and expanding the interagency permitting pilot office authority under the 2005 Energy Policy Act to allow BLM to focus pilot office resources in areas of highest demand. “We are headed in the right direction and will continue to look at procedures, processes, and the regulatory framework,” she told the committee.

Offshore, Jewell said the US Bureau of Ocean Energy Management also has significantly reduced the time for reviewing exploration and development plans for deepwater drilling in the Gulf of Mexico, with time from submission to approval down almost 35% from October 2010 to October 2011.

The US Bureau of Safety and Environmental Enforcement, meanwhile, has reduced the average time it takes to review deepwater oil and gas permits by about 37% from 2011 to 2012, she continued. “This has contributed to the approval by BSEE of 112 new deepwater well permits, higher than in either of the 2 years preceding the Deepwater Horizon oil spill,” Jewell said.

Industry response

In response to Jewell’s announcement, Kathleen Sgamma, vice-president of government and public affairs at the Western Energy Alliance in Denver, said the regional independent producers association appreciated the comment period’s extension to 90 days.

“We had hoped for 120 days, because the rule is highly complex and the state variance provisions are completely new, but we appreciate that the secretary has granted a reasonable amount of time,” she told OGJ by e-mail.

“Industry will need the time to effectively review and comment on all of the existing various state and federal agency regulatory activities that overlap with much of what BLM is proposing,” observed Erik Milito, the American Petroleum Institute’s upstream operations director, in a separate response.

“Many questions still remain as this new rule has the potential to significantly slow domestic energy production, as well as damage national, state, and local economies,” he continued. “An additional layer of regulation must be carefully scrutinized and the last thing we need are rules that create confusion in the regulatory process.”

Committee members from producing states also commented. John Barrasso (R-Wyo.) said the new federal fracing regulation proposal allows variances for states with more stringent requirements, but added that uncertainty remains because BLM has the option to rescind such variances.

Mary L. Landrieu (D-La.) expressed concern that Gulf Coast states also are not receiving shares of federal offshore oil and gas revenue for their land restoration programs. “I also plan to watch the permitting process more closely,” she said. “Onshore and offshore, we’re not doing as good a job as we could if permitting was more efficient. This is seriously affecting revenue.”

Contact Nick Snow at nicks@pennwell.com.

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