Rmoga told U.S. lands agencies ignore costs

Little relief is in sight for western U.S. oil operators on environmental and land use issues, speakers told a Rocky Mountain Oil & Gas Association meeting in Colorado Springs, Colo. Holly Fretwell, of the Political Economy Research Center, Bozeman, Mont., said federal land agencies need a stronger cost/benefit yardstick: "Our federal land agencies squander hundreds of millions of dollars in public resources every year.

Oct. 26, 1998

4 min read

Little relief is in sight for western U.S. oil operators on environmental and land use issues, speakers told a Rocky Mountain Oil & Gas Association meeting in Colorado Springs, Colo.

Holly Fretwell, of the Political Economy Research Center, Bozeman, Mont., said federal land agencies need a stronger cost/benefit yardstick: "Our federal land agencies squander hundreds of millions of dollars in public resources every year.

"The current system of funding Forest Service and Bureau of Land Management budgets by Congress and returning their earned revenues to the general treasury fails to foster fiscal responsibility.

These agencies have become a burden to every taxpayer, when they should be a rich source of revenues to benefit the public.

"State land management agencies have shown that fiscal responsibility is not an impossible goal for government. They consistently earn money from state trust lands while federal agencies lose money. Because the (state agencies') mission is to generate revenues for public education, their efforts are closely watched by interest groups, and they control costs and seek innovative ways to generate new revenues."

For instance, she said BLM returns 94¢ for every dollar of revenue spent and the Forest Service 30¢ for every dollar spent vs. $5.56:1 for state agencies in the West.

Washington issues

Cy Jamison, a Washington lobbyist and former Bureau of Land Management chief, said the November elections could significantly change the outlook for energy legislation in the next session of Congress. He said that Republicans may secure 60-61 seats in the Senate, enough to prevent filibusters, and may pick up 10-15 seats in the House.

He predicted the next Congress wouldn't attempt any wholesale overhauls of public lands bills and the Endangered Species Act, but would deal with smaller pieces of those bills.

Diemer True, a Casper, Wyo., independent who chairs the Independent Petroleum Association of America's land and royalty committee, discussed the Minerals Management Service's pending royalty reform rule.

He said, "MMS fundamentally does not believe there is a free market" in crude oil. He said the real problem is that the pending rule "would clearly value the crude downstream, not at the lease, and thus increase the value of the government's royalty."

True said MMS is banned from lobbying Congress, but nevertheless has done so with a 17-min. video produced to "brief' congressional staff on the royalty issue. He added, "As long as MMS believes they must have a command and control solution, we will never get away from the minutiae of the details. Royalty in kind is the only rational option to that."

Rep. Barbara Cubin (R-Wyo.) said that legislation to allow producers to pay federal royalties as royalty in kind would be pressed again next year. She said the next key step is for the Congressional Budget Office to score the bill's costs. "The numbers that industry representatives have put together indicate the bill will score positively."

Pollution tradeoff

Jerry Albertus, president of Ultra Petroleum Corp., briefed the meeting on his firm's efforts to offset nitrogen oxide emissions in southwestern Wyoming.

Last summer Ultra, a Vancouver, B.C., firm with offices in Englewood, Colo., struck a deal with PacifiCorp Inc., which operates the Naughton power plant at Kemmerer, Wyo.

PacifiCorp will install low-NOx burners by 1999 at its Naughton plant that will cut its emissions by at least 1,000 tons/year, and possibly 2,000 tons/year, from the current 16,000 tons/year, and Ultra will pay half the $5 million cost. Ultra said the action, which has yet to be approved by regulators, will provide a cushion to mitigate its future NOx emissions from its gas field activities in the Green River basin of Wyoming.

State and federal agencies have expressed concern about growing NOx emissions in southwestern Wyoming, and, at one point, BLM threatened to halt gas development when emissions reached 977 tons/year (OGJ, Nov. 11, 1996, p. 30).

Ultra hopes the voluntary emissions reduction will make it easier for it to get air quality permits for a natural gas development northwest of Pinedale.