Maureen Lorenzetti
Washington Editor
WASHINGTON, DC, Apr. 18 --The Department of Interior's Bureau of Land Management told a congressional hearing Apr. 18 that it believes it can increase access to oil and gas reserves on federal lands without compromising existing environmental laws.
An interagency task force identified five basins within the Rocky Mountain region as "priority geographic areas" for study: the Powder River, Green River, Uinta-Piceance, and San Juan-Paradox basins and the Montana thrust belt.
BLM said the selection of these priority basin areas was based on industry interest, resource potential ranking by the US Geological Survey, Energy Information Administration reserves ranking, and the BLM and US Forest Service oil and gas needs analysis.
Over a quarter of President George W. Bush's energy policy recommendations specifically relate to one or more of BLM's energy, mineral, and planning-related responsibilities, according to BLM Director Kathleen Clarke.
"To systematically carry out the president's policy and goals, the BLM has identified more than 40 tasks to facilitate domestic production and transmission of both renewable and nonrenewable energy resources while ensuring environmental protection," she said.
Since enactment of the Energy Policy and Conservation Act Reauthorization (EPCA) of 2000, the Department of the Interior has been working expeditiously to complete the study requirements of that law and comply with a congressional directive to inventory oil gas resources and reserves on federal lands, Clarke said.
Interagency inventory
BLM, as lead agency of the effort, said it is working closely with USGS, USFS, the Department of Energy, and EIA to produce the inventory and to identify the extent and nature of any restrictions or impediments to development.
"It should be emphasized that, as the BLM works on reviewing the EPCA information and considers potential land-use planning modifications, we will continue to abide by the Federal Land Management and Policy Act's principles of multiple-use, sustained yield, and environmental protection. These are standards to which the BLM is completely committed. The BLM will only consider opportunities to increase access to oil and gas resources while still maintaining multiple-use values, including surface and subsurface resource values (such as aquifers and other minerals), and appropriate environmental protection," Clarke said.
Clarke's remarks were at a House Subcommittee on Resources hearing on how to best evaluate the oil and gas potential on federal lands. A recent controversial report by the Santa Monica, Calif.-based think tank RAND Corp. report called for a new approach to the way the federal government assesses oil and gas potential. An interim report found, for example, that current oil and gas supply scenarios for the US Rocky Mountain region are "too narrow," because they focus mainly on availability of resources on federal lands (OGJ, Mar. 25, 2002, p. 33). The study, which was funded under an energy initiative by the Hewlett Foundation, also highlighted the deficiencies RAND cited in current oil and gas supply assessments and offered a new approach for measuring "viable" energy resources in certain areas of the Rocky Mountain region.
Green groups view
Environmental groups have praised the RAND study, saying it reflects real-life conditions instead of theoretical estimates. "Much of the potentially restricted oil and gas resources would never be developed because they are inaccessible for other reasons," said Peter Morton, resource economist, ecology and economics research, for the Wilderness Society.
"The oil and gas leasing stipulations that dictate where, how, and when exploratory drilling may be conducted in order to protect wildlife and the environment are not, in many cases, binding constraints on energy production," Morton said. "Economics, terrain, and technology may in fact play more important roles in determining the economically viable resource," he said.
Morton said his group strongly agrees with RAND's recommendations that assessments of oil and gas that is economically recoverable take into consideration not only reserves potential but also private lands access, accounting for stipulations waived, directional drilling, pipeline access, and multiseason drilling.
"As the RAND report noted, including wellhead cost, infrastructure costs, and environmental costs in the assessment of viable resource will likely have the greatest impact on the amount of oil and gas estimated to be economically viable. Accurately assessing these costs is the key, and these proposed methods will make an important contribution to the debate."
AAPG speaks out
Speaking on behalf of the American Association of Petroleum Geologists, Charles J. Mankin, director of the Oklahoma Geological Survey,
and the Sarkey Energy Institute of the University of Oklahoma, said AAPG believes the US still has a large energy resource remaining to be tapped.
"We believe the techniques and scientific methods used by both the Minerals Management Service and USGS are sound and provide a good basis for discussion of a national energy policy," he said. Studies by the USGS and National Petroleum Council have concluded that the most prospective areas for major new discoveries, particularly natural gas, are on public lands in the Rocky Mountain sedimentary basins, in the Gulf of Mexico, including the eastern gulf, and on the Atlantic and Pacific Outer Continental Shelf. AAPG concurs with this assessment.
RAND's white paper essentially argues for "proving" that a given area contains technically recoverable, economically profitable, and environmentally suitable resource before access issues can be decided. However, without access to the area in the first place, its potential cannot be tested or realized, Mankin said.
"RAND Corp.'s own statement of research principles describes that any research should be well-designed for the problem, that it should be based on sound information, that it should be balanced and independent, and should be relevant to a client's interest and needs. It also states that it should take into account the relevance of previous work," he said.
"We believe that the clients, the citizens of the United States, deserve a sound energy policy that maximizes domestic production with utmost care for the environment. However, the clients' needs are ill-served by insisting that we have ample sources of energy while putting restrictions on its supply, that we use more natural gas while shutting areas from where the gas might come, by insisting that we use alternative energy sources while having no viable alternative source in the near future, and by insisting that oil and gas development by definition spoils the environment while the facts are otherwise."
RAND defends study
RAND officials stressed that their proposed approach is not meant to replace industry's detailed, site-specific economic evaluations or federal land managers' existing environmental assessment and permitting processes.
"Rather, it is meant to provide decision-makers with a more comprehensive assessment of bounding ranges of resource viability at the regional and subregional scale," said Debra Knopman, associate director of RAND's science and technology program. "We believe our proposed methodology would enhance current efforts by the BLM and other federal land managers to communicate more effectively and clearly the economics and environmental implications of their actions. We are simply arguing for more comprehensive information in the policy process."
Producer view
However, an independent who spoke at the hearing took issue with the RAND analysis. Ray Seegmiller, Chairman and CEO, Cabot Oil & Gas Corp. and past chairman and director of the Domestic Petroleum Council, said that "statements to the effect that a large percentage of public lands are open to oil and natural gas leasing and development continually ignore the fact that only a portion of the most prospective areas may be available.
"Those who claim that we should not be concerned about access until we are sure that resource exploration and production will be economic will only stifle development. Likewise, those who claim that issues regarding capital infrastructure, such as development of pipeline and gathering system capacity, should come before resolving access issues turn the decision-making process totally upside-down."