Maureen Lorenzetti
Washington Editor
WASHINGTON, DC, Jan. 17 -- Producers face few restrictions on most energy-rich federal lands in five western basins, US officials said Thursday.
"At the leasing stage, 60% of the oil and gas resources are available at a least-restrictive or nonrestrictive basis," said Department of the Interior Assistant Secretary for Land and Minerals Management Rebecca Watson. She called the results "somewhat unexpected," given earlier Bush administration assertions that as much as 40% of the natural gas resources on federal lands in the Rocky Mountain region is off-limits to producers.
She stressed, however, that the report's emphasis was "narrow", focusing only on leasing restrictions, and that industry looks at a "broader perspective" that often includes other constraints, such as permitting delays.
The departments of Interior, Agriculture, and Energy prepared the interagency report to comply with the provisions of the 2000 Energy Policy and Conservation Act. Congress's intent was for regulators to inventory all oil and gas reserves beneath federal lands. The resulting report examines energy resources in five major geologic basins in the onshore Lower 48 West and includes lands managed by all federal agencies, such as the Bureau of Land Management, Fish and Wildlife Service, Forest Service and National Park Service. The report also includes reserves estimates from privately owned lands where the federal government owns the subsurface minerals. The assessment did not include Indian lands.
Oil and gas estimates were based on the US Geological Survey's undiscovered recoverable-resource estimates and the Energy Information Admimistration's proved-reserve numbers. The report evaluated the Paradox and San Juan basins in Colorado, Utah, and New Mexico; the Uinta-Piceance basin in Colorado and Utah; the Greater Green River basin in Wyoming, Colorado, and Utah; the Powder River basin in Montana and Wyoming; and the Montana thrust belt in Montana.
The report found that overall an estimated 57% of oil and 63% of gas are available under standard stipulations, and only 15% of oil and 12% of gas are totally unavailable. The remaining oil and gas are available with increasing restrictions on development.
Highlights of study
Among the five study areas, the Uinta and Piceance basins have the highest percentage of oil (85%) available under standard leasing terms. Interior officials said this is partly because most of the oil (63%) is proved reserves. Compared with the other four areas in the inventory, this areas has the highest percentage of federal lands (9%) as well as the biggest share of natural gas resources (15%) designated within the "no surface occupancy" leasing category.
The area that contains the smallest volume of resources (348 million bbl and 8.6 tcf of natural gas) is the Montana thrust belt. A high percentage of the federal land (82%), which includes 88% of the area's oil and 91% of its natural gas, is currently closed to leasing, the report said. The US Forest Service is the primary federal land manager in the area, responsible for 69% of the area, of which almost half is currently closed to leasing while undergoing new land use planning.
In the Powder River basin, almost all undiscovered natural gas is coalbed methane. Most of the federal land (52%) and 63% of the oil and 59% of the natural gas in this area are available under standard lease terms. Among the five inventory areas, this region has the highest proportion of split-estate lands (60%). It also has the highest proportion of federal land (10%), with oil and gas leases available under controlled surface use restrictions (12% of the oil and 11% of the natural gas available).
In the Greater Green River basin, Interior officials said that the land ownership is "highly complex" due to a checkerboard pattern of ownership resulting from railroad grants. A relatively large portion of the federal land (29% of the surface area) and 27% of the oil and 25% of the natural gas are under timing limitations of 3-9 months. Among the five areas, this region has the greatest volume of oil (2.1 billion bbl) and natural gas (72 tcf) under federal lands.
The area with the greatest proportion of proved natural gas reserves (28%) relative to undiscovered resources is located in the Paradox and San Juan basins.
Industry reaction
The Independent Petroleum Association of America said the new study was useful for land planning purposes but stressed that companies still face too many regulatory hurdles.
"This report is an important tool for showing us where some of our nation's greatest oil and natural reserves are located and what limitations are placed on accessing these resources," said Diemer True, chairman of IPAA "However, while a slight majority of land should be available for responsible development, we must still recognize that regulatory barriers and bureaucracy often prevent development of these resources. Now we know that these resources in the intermountain West should be available for leasing. We need to make sure it happens."
True listed among the impediments to oil and gas exploration: federal agencies delaying permits while revising environmental impact statements, litigation on Resource Management Plans designed to delay access, and unreasonable permit requirements that prevent production.
IPAA said that, in some cases, oil and gas producers are paying the costs of environmental impact statements—costs that are supposed to be incurred by the government but can also hit producers for hundreds of thousands of dollars.
"We need to address the additional impediments to exploration and production that exist on lands available for leasing, while examining the reasons all other lands are restricted from leasing," said True. "On the lands that are not currently open, our policymakers and interested communities should determine if needed natural gas can be obtained while ensuring the protection of sensitive areas." Producers are also hoping that a National Petroleum Council study due this September will help bolster their argument better. That report will update a 1999 study that forecast that demand for natural gas would reach 29 tcf in 2010 and exceed 31 tcf in 2015. The 1999 NPC study estimated that about 40% of the potential supply in the Rocky Mountain area was unavailable for leasing or was subject to surface-use access restrictions because of competing uses or environmental considerations. The new report is expected to also address economic constraints and other access issues associated with federal land.
Other views
Meanwhile, environmental groups said the new interagency report helps make their case that more areas, not less, need to be protected from development.
"What the report demonstrates is that the vast majority of federally owned oil and reserves in these basins are in fact available for leasing and development, and comparatively little is off-limits due to environmental protection," said David Alberswerth, BLM program director for the Wilderness Society. "It really raises the question: Have we protected enough land in the West, and have we gone overboard in making land available to the oil and gas industry," he said. Alberswerth said many existing leasing restrictions are waived, further emphasizing his group's point that producers do not need more access. He also found fault with the report's use of "technically recoverable" resources, saying that exaggerates how much oil is realistically available at market prices.
Interior officials said they did not analyze economically recoverable oil for two reasons: Congress did not ask them to under the report guidelines, and relying on economically recoverable resources only reflects a "snapshot in time" that is pegged to a fluctuating market price.
Pending budget considerations, US officials hope to publish inventories of other domestic resource areas, including northern Alaska, central and southern Alaska, the Western Gulf of Mexico, Permian basin, Williston basin, Eastern Great Basin, Big Horn, Wyoming thrust belt, eastern Oregon-western Washington, and Appalachia.
Interior officials say it is still unclear whether Congress wants to fund these additional inventory studies.
