WATCHING GOVERNMENT

Patrick Crow
Washington, D.C.
[email protected]

The Interior Department seems to have rejected a proposal that industry says would facilitate development of oil fields in the West.

Last March, the Bureau of Land Management's Green River Basin Advisory Committee reported on ways to resolve oil development/environmental conflicts.

The panel sent a number of recommendations to the Interior Department, including suggestions to streamline the National Environmental Policy Act (NEPA) process from 26 to 16 months, to require road standards consistent with the ultimate use of the road, and such.

All of the ideas were approved but one. It was for a 5-year pilot project granting eco-royalty relief (ERR, aslo known as "eco-credits") in the Green River basin.

Under the proposal, Wyoming producers could take a royalty reduction of up to $4 million/year on money they spent for environmental monitoring studies and mitigation measures above and beyond standard operating procedures and required stipulations.

Need cited

The ERR issue arose at a recent House energy and mineral resources subcommittee hearing in Casper, chaired by Rep. Barbara Cubin (R-Wyo.).

Jim Magagna, Wyoming's director of federal land policy, said, "It has become a standard practice for BLM to require a project proponent to assume the full costs of any required NEPA document preparation. As EIS's have grown in length and time of preparation, these costs have become burdensome to, and uncontrollable by, the applicant.

"There is currently no stable source of funding for environmental mitigation measures that may be beneficial but not mandated. ERR is designed to enhance mitigation, reduce delays in development, and reduce developer costs."

Robin Smith, a Chevron USA Production Co. environmental specialist, discussed the problems of permitting a gas development project in Wyoming.

"The operators have funded nearly $750,000 of NEPA analyses at Waltman/Bullfrog/Cave Gulch. Approximately 21/2 years have been expended compiling these studies. The $750,000 does not include the salaries or expenses of the numerous oil and gas company employees, BLM employees, Wyoming state employees, and others." He said the actual cost could be $3 million.

"The cost of complying with NEPA, the permitting process, and operating on federal lands in general, is very high, compared to operations on state and private surface. These costs are potentially increasing as new fees are proposed, and from delays because of under-staffing of BLM offices."

Inaction hit

Although BLM and environmentalists are enthusiastic about ERR, Interior's solicitor's office still has the proposal "under review."

Terry Belton, with Texaco North America Production, representing the Rocky Mountain Oil & Gas Association, said, "The revenue-positive ERR concept was essentially killed by the solicitor's office. We are convinced Interior Secretary Babbitt has the authority to implement ERR but are extremely disappointed that Interior has failed to adopt ERR or even to assume leadership in finding ways to implement the recommendation."

A lobbyist said, "The solicitor's office has made a policy call, not a legal call. It seems to be trying its darndest to kill this thing."