BLM director: Fee system needed for increased onshore well inspections

A shortage of inspectors, reduced budgets, and a record number of wells on public lands make the US Bureau of Land Management’s budget request for a fee system to increase its oil and gas inspection capacity necessary, BLM Director Neil Kornze said.

“Over the last few years, BLM has significantly reduced the time it takes to process drilling permits,” he said in a July 17 keynote address to the Rocky Mountain Mineral Law Foundation’s 2014 annual meeting in Vail, Colo.

“Right now, nearly 7,000 permits have been approved, but are sitting unused,” he said. “That’s 2 years’ worth of drilling permits that are ready to go today. And while permitting efforts have improved, critical inspections are lagging, and we must do better.”

BLM is focused on a range of inspections, including those involving drilling and production, he told the group of mineral law experts. Kornze said the Government Accountability Office recently reported that BLM failed to inspect some 40% of high-priority drilling operations during 2009-12.

The US Department of the Interior agency similarly has not been able to complete 100% of its high-risk production inspections, which are critical for ensuring proper accounting of the billions of dollars of oil and gas produced from public lands, he said.

“Irregular and declining budgets have hindered our ability to move out aggressively in this area,” Kornze said. “Through the president’s 2015 budget proposal, we are now seeking to fund inspections through a fee system that will allow us to be much more responsive to the needs of industry and, importantly, to meet the foundational safety and accounting responsibilities of our oil and gas program.”

Congress recently authorized a similar fee system for the offshore oil and gas inspections conducted by BLM’s sister agency, the US Bureau of Safety and Environmental Enforcement. Kornze said it has been a major success both for BSEE and for offshore producers who now can count on regular and efficient inspections.

He said the fee system proposed in the federal government’s latest budget request would let BLM recruit more than 60 new inspectors throughout the country. Without additional resources to meet this critical need, Kornze said BLM may be forced to consider drawing scarce resources from other high priority efforts like permitting and leasing.

Contact Nick Snow at nicks@pennwell.com.

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