Give states primacy to manage federal oil and gas, Utah official says

A Utah official recommended that Congress develop a process to give states primacy in managing federal oil and gas resources within their borders that are willing to assume the responsibility.

The 2005 Energy Policy Act mandates that the US Bureau of Land Management approve drilling permit applications within 30 days, “yet the average permit time is 220 days,” Laura Nelson, energy advisor to Gov. Gary R. Herbert (R), told a US House subcommittee on June 29. “In fact,” she said, “depending on the field office, it is not uncommon for [the process] to take years.”

She said, “We are not alone in making this recommendation,” speaking during the House Natural Resources Committee’s Energy and Mineral Resources Subcommittee’s hearing on access to federally managed onshore oil and gas resources. The Interstate Oil & Gas Compact Commission passed Resolution 17.051, which calls for Congress to take such a step at its 2017 business meeting in Oklahoma City, Nelson testified.

Utah’s Division of Oil, Gas & Mining has a performance goal of granting at least 80% of state or fee drilling permit applications within 60 days, Nelson said. Targets may not always be achieved because of factors that can prolong the process, as in 2016 when the average approval time for drilling permits on state land was 131 days and for fee land wells was 81 days, she said.

“However, in the 8 years prior to 2016, average approval time ranged from 66 to 121 days for state lands and 81 to 108 days for fee lands,” Nelson said. “Our understanding is that this is significantly more timely than BLM, which we have heard has an approval time in Utah ranging from 150 to 240 days.”

More leasing as a result?

Committee Republicans were receptive to the idea. “If a state was held to federal standards, but was responsible for the actual administration, could there be more federal onshore oil and gas leasing?” asked Rep. Rob Bishop (R-Utah), the full committee’s chairman. Rep. Steve Pearce (R-NM) noted that the average time BLM takes to process federal onshore drilling permits in his home state has increased to 410 days from 200.

New Mexico Oil & Gas Association Executive Director Ryan Flynn said in his written testimony that operators working through BLM’s Farmington field office, which regulates San Juan basin production, have seen drilling permit delays approach 500 days, with an average wait of nearly a year for a decision on a standard permit without applications.

“By contrast, New Mexico’s Oil Conservation Division, which handles drilling permits, approves applications in 10 days or less. Better management practices are required to remedy a lack of procedural uniformity, which often leads to multiple, differing interpretations of policies, and protocols for document review,” Flynn said.

BLM could begin to improve its oil and gas operations in New Mexico, Flynn said, by dedicating more of its employees, especially in its Carlsbad field office, to processing drilling applications; making more use of existing laws, such as categorical exclusions, which allow for expedited permit reviews; and reaching agreements with state authorities to let the state take on some of the more tedious permit processing work.

A third witness said BLM plans to establish an Energy and Minerals Task Force to help the agency and its field offices expedite leasing and permitting. “In order to decrease backlogs, BLM intends to expedite the completion of planning efforts, collaborate with other bureaus within the [US Department of the Interior] as well as external surface management agencies, and coordinate resource needs among BLM offices,” DOI’s Deputy Asst. Sec. for Lands and Minerals Management Katharine McGregor told the subcommittee.

Working better with stakeholders

“The taskforce will monitor significant actions and resource needs in the field, identify trouble spots, and resolve resource challenges,” she said. BLM also is focused on restoring full collaboration and coordination with state and local governments, tribes, individuals, and other stakeholders to resolve issues, develop productive relationships, and build consensus, McGregor said.

“We believe harnessing the internet to process drilling permit applications will improve the process,” McGregor said. “Congress authorized BLM to do this, and we are seeing an uptick in participation because of the internet feature.”

The time between leasing and production still can be long, she said. “A project in North Dakota that began to produce thousands of barrels a day in 2015 was leased 14 years earlier,” McGregor said. “We’re prioritizing areas which would have good returns for taxpayers. That includes starting to process drilling permit applications more efficiently.”

She also pointed out that BLM already has held more oil and gas lease sales in 2017 than it had the previous year. Nelson suggested that interest may have fallen recently because producers try to combine blocks so they can be operated more efficiently since prices fell.

A fourth witness, Mark Squillace, a natural resource law professor at the University of Colorado at Boulder, said the major US oil and gas plays in the past decade have been on state and private land, except in the Permian basin. “Fossil fuels are going to decline because of market conditions,” he said. “The federal government’s challenge will be to manage that decline so oil and gas employees won’t be displaced as badly as their coal industry counterparts.”

Contact Nick Snow at nicks@pennwell.com.

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