BLM would impose onshore inspection fees under proposed 2015 budget

The US Bureau of Land Management would impose inspection fees for onshore oil and gas producers operating on lands under its jurisdiction under the Obama administration’s proposed fiscal 2015 budget. The fees would be similar to those the US Bureau of Safety and Environmental Enforcement charges offshore producers, BLM said.

An official at the Western Energy Alliance in Denver criticized the idea. “This latest budget again tries for the fourth or fifth year to impose new inspection and nonproducing acreage fees,” said Kathleen Sgamma, the organization’s vice-president of government and public affairs.

“The oil and gas industry more than pays for the cost of all leasing, permitting, monitoring, and inspecting activities by returning $88.76 for every dollar BLM spends administering the onshore program,” she said, adding, “New fees are akin to charging taxpayers for filing their income tax returns.”

But the proposal apparently is integral to reaching an onshore oil and gas “priority goal” outlined in the US Department of the Interior’s portion of the White House’s fiscal 2015 budget. That goal is to “improve production accountability, safety, and environmental protection of oil and gas operations through increased inspection of high-risk oil and gas production cases.”

It includes a metric of BLM increasing completion of inspections of federal and Indian high-risk oil and gas cases by 9% over 2011 levels, which Interior said is equal to covering as much as 95% of such high-risk cases.

Requested amounts

BLM’s oil and gas program would receive an additional $20.3 million, or 17.9% more than the $113.4 million it received as the fiscal 2014 enacted level. The request includes both direct appropriations and funding fees for services provided to oil and gas producers on federal lands.

It includes $5.2 million more for staffing, training, and other resources, and $4.6 million for BLM to strengthen core oversight, leasing and permitting capabilities. “Among other things, the increase will enable BLM to fill vacancies and expand staff in key locations, as well as continue implementing leasing reforms instituted in May 2010 by supporting enhanced environmental analysis and planning for future lease sales,” the agency said.

Inspection fees would help BLM “fully implement a risk-based inspection strategy to improve production accountability, safety, and environmental protection of oil and gas operations,” it continued.

BLM said the fees would generate an estimated $48 million of offsetting collections, allowing a proposed reduction of $38 million in appropriated funds while providing another $10 million to enhance its inspection capability.

In her statement, Sgamma said WEA shares BLM’s goal of introducing flexibility into the pilot office program specified under Section 365 of the 2005 Energy Policy Act “though we do believe the Permit Processing Improvement Fund should be likewise extended.”

Contact Nick Snow at nicks@pennwell.com.

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