Increasingly restrictive federal land policies are reducing activity in the Rocky Mountains, the Independent Petroleum Association of Mountain States said. A recent survey of its members shows how, and by how much.
Of the 35 respondents, 73% said their company has reduced its capital spending plans in the region, IPAMS says. The responses indicate that the Rockies have lost $1.1 billion of expenditures that were either cut or moved to Arkansas, Kansas, Louisiana, Pennsylvania, Texas, Canada, and elsewhere. Respondents also said they would be spending another $2.8 billion if federal constraints were absent in the Rockies.
The survey also found that 73% of the respondents moved investments from federal to private land in the region, including more than $708 million in 2010; 71% said dissatisfaction with the federal permitting process was the main reason why; and 89% said their company would continue diverting outlays until the regulatory process improves.
The causes are obvious, according to IPAMS Government Affairs Director Kathleen Sgamma.
Delays, constraints
"We still have $100 million of unissued leases in Colorado, Wyoming, and Utah," Sgamma said during an Apr. 22 webinar hosted by the Western Business Roundtable. "We've had sales constrained in Wyoming and Utah, and postponed in Montana and South Dakota. We saw a 33% decrease in drilling permits last year. The [US Bureau of Land Management] still isn't using categorical exclusions as mandated by the 2005 Energy Policy Act."
Stewart Petroleum Corp. Pres. Daryl Stewart, who also participated in the webinar, said the Engelwood, Colo., independent acquired its eastern Utah lease in 2006. It's still trying to complete a required environment assessment against a backdrop of changing conditions and Southern Utah Wilderness Alliance lawsuits.
In fourth year
Stewart said the White House Council on Environmental Quality's environmental assessment guidelines say that small projects such as his company's should be able to complete their EAs in 2-3 months. "Mine is in its fourth year. I calculate that about 120 jobs in Uintah County have not materialized because I haven't been able to drill my wells and access 150-200 bcf of gas that's left in the ground," he said.
"We spent $9 million to acquire the unit and drill the initial well, and should have drilled 7-9 wells by now. We haven't spent another $16 million. We estimate that $350,000 of government revenue per well has not been realized," Stewart said.
A third webinar participant, Uintah County Commissioner Mark Raymond, said 50% of the jobs there are oil and gas-related and account for 60% of the total wages.
Raymond said, "Each active rig creates 120 direct and indirect jobs and $250,000 of government revenue. Over the last 2 years, we've lost 19.4% of our jobs, compared to 5.3% in Utah and 4.7% nationwide. For the oil and gas industry specifically, we've had a...44% loss of jobs."
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