BLM drilling permit bill attracts broad support at Senate hearing

Witnesses and committee members argued over the extent of oil and gas drilling permit delays at US Bureau of Land Management field offices. But they strongly supported a bill that would make permanent a pilot program enacted in 2005 to begin relieving the problem at a July 29 US Senate Energy and Natural Resources Committee hearing.

“For years, federal policies have put federal lands at a competitive disadvantage with the state lands and private lands. This is especially true when it comes to oil and natural gas production,” said Sen. John A. Barrasso (R-Wyo.), who cosponsored the June 5 measure with US Sen. Tom Udall (D-NM). “We should stop making it harder to produce energy on federal lands. S. 2440 is one way to do that,” he said.

Barrasso continued, “This bill will give local BLM offices the financial resources necessary to process oil and gas permits in a timely manner. It will also give BLM the ability to anticipate where permitting backlogs may develop in the future and take steps to prevent them from occurring.”

Program’s history

Asked if allowing the pilot program to expire in 2015 would affect the US Department of the Interior agency’s hiring, BLM Director Neil Kornze said, “The short answer is yes. With that authorization expiring, we aren’t able to offer certainty.”

Kornze noted in his written testimony that the pilot program was established under Section 365 of the 2005 Energy Policy Act (EPACT) in seven BLM field offices in Miles City, Mont.; Buffalo and Rawlins, Wyo.; Grand Junction/Glenwood Springs, Colo.; Vernal, Utah; and Farmington and Carlsbad, NM. US President Barrack Obama expanded the boundaries of two of the project offices—Miles City, to include the growing Bakken shale development, and Buffalo—in response to changing demand for federal oil and gas resource development on Dec. 26, 2013, Kornze said.

The provision also established the Permit Processing Improvement Fund, an account that has varied from $18 million to $25 million annually, to support the pilot project for 10 years. It also authorized the US Interior Secretary to transfer money when necessary from the fund to other federal agencies involved in permit coordination and processing to other federal agencies, including the US Forest Service, Bureau of Indian Affairs, Environmental Protection Agency, and Army Corps of Engineers, as well as the 5 states.

EPACT Section 365 prohibits BLM from establishing drilling permit fees to recover processing costs, although Congress has implemented permit fees through annual appropriations language since 2007, Kornze said. The White House’s proposed fiscal 2015 federal budget calls for repealing the prohibition, he added.

“The agencies involved in the pilot project have made significant progress in a number of areas,” he told the committee. “Additional resources, such as personnel devoted to processing oil and gas use authorizations, have enabled [them] to increase the pace of permitting and completing environmental reviews, particularly given the complex resource issues we face.”

Improved communications and program streamlining efforts have helped reduce time necessary for interagency consultations for many projects and permits, Kornze said. “The increased staffing in the pilot project offices has also allowed BLM to help new industry permitting specialists understand BLM’s requirements for obtaining an oil and gas use authorization,” he said.

Bill’s key provisions

S. 2440 would make the program permanent, extend it to BLM field offices in other states, and require the agency to report to Congress by Feb. 1 each year on the program’s allocation of funds and each field office’s oil and gas permit processing accomplishments.

It also would amend Section 35 of the Mineral Leasing Act to collect a $9,500 processing fee, indexed for inflation, for each new permit application. From fiscal 2016 through 2019, 15% of those collections would go to the offices which collected them to process leases, permits, and protests, and 85% would go into the agency’s permit processing improvement fund. That fund would receive all the fees from fiscal 2020 through 2026.

“BLM supports the expanded geographic scope provided by the bill, which will allow BLM to better allocate resources based on current permitting demands and new exploration and development of oil and gas fields and plays,” Kornze said. “This flexibility would be especially useful in the future for allocating funds to coordinate and process use authorizations in those offices where industry forecasts increased development of oil and gas resources and BLM offices had not previously been identified as project offices.”

Kornze said continuing the program also would allow other federal agencies and appropriate state government offices to devote staff to the increased workload in these areas, which BLM considers crucial to its continued success.

The bill’s proposed drilling permit processing fee would be $3,000 more than what Congress has authorized annually since 2007, and more closely reflects the actual cost of processing applications on the federal and Indian Trust mineral estate, he continued. BLM opposes the provision barring the Interior Secretary from implementing a rulemaking to increase fees, and would rather maintain the option to design a fee system which reflects varying costs associated with different drilling permit applications, Kornze said.

Others back bill

Three other witnesses expressed their support for S. 2440. It would improve funding, and let money flow to the BLM offices which need it most, said Kathleen Sgamma, vice-president, government and public affairs, Western Energy Alliance, Denver. “We think the bill needs to be put in place,” she said, adding, “Without that long-term ability to plan and provide assurance to employees coming on, BLM certainly could be hesitant about hiring when funding runs out in 2015.”

WEA members would be willing to accept the proposed higher drilling permit application fee because it would not increase over 10 years, except with inflation, she said. “We don’t believe new fees should be enacted, but are willing to support the ones in S. 2440.”

Scott M. Kidwell, government affairs director at Concho Resources Inc., said the Midland, Tex., independent, which has extensive Permian basin holdings, considers the bill “a balanced piece of legislation that brings appropriate modifications to the management of the drilling permit pilot program at a cost which industry can accept.”

Its proposed processing fee is a fair compromise with its guarantee that 75% of the fees generated would go to the office which collected them, Kidwell said in his written testimony. “That trade-off assures producers that they will see a direct benefit from paying the increased fee through having more BLM staff reviewers and a more responsive review process in the local BLM office for their projects,” he said. “In bringing more timeliness and predictability to getting their permit applications reviewed, the compromise also will provide greater incentive to invest in developments on federal lands.”

Directing resources back to states and field offices that will generate significant revenue for the federal government is sound fiscal policy, and also sound energy and environmental policy, said Mark A. Christensen, who chairs the Campbell County Board of Commissioners in northeastern Wyoming. Returning a portion of what’s collected will help generate more timely permits, which in turn will generate more royalties for the US Treasury at a time when nontax revenue is highly coveted, he said in his written testimony.

Site visits are critical to the process, Christensen said. “In Wyoming, these often require driving for several hours, often on gravel roads,” he told the committee. “When grouped together as they often are, these visits are long and remove the BLM employee from the office for days at a time. Those are days not spent doing the necessary analysis and work to ensure that permits are completed accurately…. Added staff capacity made possible by the bill before you today means more teams covering site visits, allowing for a much more efficient process.”

Contact Nick Snow at

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

BHI: US oil rig count rises for first time in 30 weeks

07/02/2015 A sudden 12-unit jump in oil-directed rigs during the abbreviated week ended July 2 represented their first rise since Dec. 5, 2014, and helped lif...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

Shell makes FID on Appomattox deepwater development in Gulf of Mexico

07/01/2015 Royal Dutch Shell PLC has taken a final investment decision (FID) on the Appomattox deepwater development, authorizing construction and installatio...
White Papers

Definitive Guide to Cybersecurity for the Oil & Gas Industry

In the Oil and Gas industry, there is no single adversary and no single threat to the information tech...

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by
Available Webcasts

Better Data, Better Analytics, Better Decisions

When Tue, Oct 27, 2015

The Oil & Gas industry has large amounts of data stored in multiple systems which are purpose built for certain tasks. However, good decisions require insights based upon the data in all of these systems. These systems in turn do not talk to each other. So the process of analyzing data, gaining insights, and making decisions is a slow one and often a flawed one. Good decisions require accurate analytics and accurate analytics require superior/sustainable data quality and governance. This webinar focuses on:

  • The importance of data quality and governance
  • How technological advances are making data quality and governance sustainable in order to get the accurate analytics to make solid decisions.

Please join us for this webcast sponsored by Seven Lakes Technologies and Noah Consulting.


Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected