The U.S. Forest Service has relaxed its proposed rule governing oil and gas leasing on national forest land.
The 1987 Federal Onshore Oil and Gas Leasing Reform Act gave the Forest Service authority to issue its own leasing rules, formerly exercised by the Bureau of Land Management.
The Forest Service said its final rule establishes a process similar to that used by BLM.
It also said its first draft of the rule prompted small oil operators to complain they would prevent all but the largest of companies from participating in leasing because of the risk associated with approval of operations and added costs of bonding.
Alice Benitez, Rocky Mountain Oil and Gas Association land director, called the revision "somewhat of an improvement" over an earlier proposal. "However, we are looking at a number of areas that could pose some problems," she said.
Rmoga is concerned about the two step process to determine if forest land is suitable for leasing, whether the Forest Service has reserved the right to require additional bonding, and other provisions.
MAJOR CHANGES
The revised rule drops the Forest Service's earlier proposal that would have enabled the agency to void leases already issued if it determined that oil operations would threaten the environment.
The Forest Service said, "Much of the criticism of the proposed rule by the oil and gas industry was that lessees were being called upon to invest sums for leases on which operations might never be authorized."
The agency agreed that leases issued for national forest land should vest the lessee with the right to conduct oil and gas operations somewhere on the lease.
It said industry warned the plan would create uncertainty as to whether leases convey any rights to drill wells. Industry believed the stipulation would devalue leases to the point that no one would bid for leases involving national forest land.
The final rule also dropped a provision which would establish procedures to determine the suitability of national forest land for leasing.
The Forest Service said oil groups expressed concern that unless areas were considered to have potential for leasing they would not be analyzed and could not be leased. Therefore, exploration would not occur in areas of unknown potential for oil and gas.
The agency said its revised rule focuses on the process and decision criteria it will use to decide whether to authorize BLM to lease the lands. The rule prescribes a two stage leasing process. First, the Forest Service will analyze which forest land should be made available for leasing. Then it will decide which land it will permit BLM to lease.
OTHER PROVISIONS
The Forest Service also revised rules requiring operators to submit a surface use plan of operations after the oil industry cited many deficiencies in the proposed requirements.
And it decided to adopt BLM's bonding requirements rather than develop its own. The agency checked 500 wells drilled on Forest Service land and found it had not attached a bond on any of them.
"Having two agencies administer bonds for a single operation does not serve the interests of the public or the oil and gas industry," the Forest Service said.
The final rule tightened one provision.
At first the Forest Service proposed that, if it determines drilling operations are not in compliance with its reclamation requirements or other standards, it would ask the operator to make a voluntary correction.
In the final rule, the agency decided to give operators formal, written deadlines for correction of noncompliance.
But the Forest Service stressed it is committed to working with operators and lessees in administering surface use plans of operations to avoid the likelihood of noncompliance and the need to start noncompliance proceedings.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.