DOI sees progress in Rockies permitting effort

July 3, 2006
Substantial progress is being made in improving oil and gas well permitting in the Rocky Mountains under a pilot program, two officials from the Department of the Interior told the US Senate Energy and Natural Resources Committee on June 27.

Substantial progress is being made in improving oil and gas well permitting in the Rocky Mountains under a pilot program, two officials from the Department of the Interior told the US Senate Energy and Natural Resources Committee on June 27. Bureau of Land Management Director Kathleen Clarke and Fish and Wildlife Service Director H. Dale Hall said the program, which was mandated in the 2005 Energy Policy Act, is working because of close working relationships with state governments and local communities.

“These pilot offices have a lot of potential, not only in moving forward in oil and gas permitting but also how to do it properly,” Hall said. “Good government, in our view, means working together. The Fish and Wildlife Service’s role should be to help the BLM accomplish its mission, but in a way that recognizes environmental needs. We’re working as a team to get the job done.”

Producers already are seeing an improvement, according to Duane Zavadil, vice-president for government and regulatory affairs at Bill Barrett Corp. in Denver and a vice-president of the Independent Petroleum Association of Mountain States. “We are seeing tangible benefits in increased production that will help offset impacts from production disruptions such as what we experienced last year,” he said.

The seven BLM pilot offices, with their expanded capacity, will aid the nomination and leasing process, he said. “Permitting remains the most immediate, and manageable, element controlling production of natural gas from public lands. The number of permits issued by BLM has increased 20% in the last 7 years. At the same time, the number of permit applications producers have submitted has increased by 27%. So BLM appears to be falling behind,” Zavadil said.

Clarke confirmed that drilling permit applications are arriving at a higher rate, but said that BLM offices are processing them at an increased pace. “We find ourselves constantly fighting an uphill battle to get on top of the work load. Clearly, as we watch this demand increase, it’s important we continue to improve our permit processing. But we also have to be sensitive to the impacts of this higher energy production and pay close attention to its higher environmental impacts,” she said.

Potential benefits

When Advance Resources International examined the pilot program’s potential benefits last fall at DOI’s request, the Arlington, Va. energy consulting firm determined that gas production would increase more than 1,000 bcfe/year, proved reserves would climb to 11,800 bcfe, and the federal share of royalties would increase by more than $2.1 billion over a 5-year period.

“The costs of the initiatives are negligible-less than 1¢/Mcf of added reserves,” noted Jeffrey Eppink, a senior vice-president at ARI.

The benefits will be greater if BLM successfully attacks the backlog of drilling permit applications that has increased nearly 50% from fiscal 2005 to more than 4,500 as of late May in the seven BLM offices with the pilot program, he added. But processing more drilling permit applications poses challenges including finding employees who know the required procedures, rig availability, possible pipeline constraints, and land access politics, Eppink said.

But other witnesses suggested that the pilot program won’t be fully effective until other aspects of oil and gas production on federal land in the Rockies get similar attention.

“Bottom line, an increase in permits is not the only element that will increase and maintain energy production,” said Mary Flanderka, state planning coordinator in the office of Wyoming Gov. Dave Freudenthal. “The entire development stream (planning, permitting, monitoring and reclamation) must be fully attended to if energy development is to occur efficiently and effectively.”

Flanderka said project environmental impact statements and resource management plans are overdue. “Three of the four BLM time-sensitive projects identified in a June 2004 priority list of Wyoming BLM land-use planning projects are yet to be finalized-2 years after their initial deadlines. The staffs at the state and local field offices find themselves multitasking to a remarkable degree and being torn between planning and permitting,” she said.

‘Intensive impacts’

Tom Reed, Wyoming field organizer for Trout Unlimited, a national recreational fishing organization, said Congress should recognize that intensive impacts are occurring, as the Rockies grow increasingly industrial.

“Funding for land management agencies such as the BLM needs to be secured specifically for scientists who deal with impacts on wildlife and fisheries,” Reed said. “State wildlife agencies like the Wyoming Game and Fish Department also need national funding so that biologists can be hired to deal specifically with oil and gas issues.”

Some Energy and Natural Resources Committee members also urged closer examination of issues besides drilling permit application processing through the pilot program.

Chief Minority Member Jeff Bingaman (D-NM) said more than 26 million acres of federal land is already leased but not being explored or developed. “The fact that we have so much land under federal lease and not being drilled needs to be better understood.”

Sen. Ken Salazar (D-Colo.) said, “As much as we appreciate the fact we have abundant oil and gas resources in Colorado, there are concerns about the potential impacts of developing them.”

Noting that several of these concerns have led to initiatives being placed on the ballot for November’s election, Salazar added, “These concerns are not going to go away. My only suggestion to you, Director Clarke, and to others is to involve communities from the outset so problems will be avoided further down the way.”

Committee chairman Pete V. Domenici (R-NM) emphasized the benefits of tapping the country’s largest remaining gas reserves in the Rockies. “Some assert that with the volume of natural gas in this region, this provision may do more to increase production than anything else in the energy bill. It’s been 10 months since the bill was signed, so we’re still early in the process,” he said.