Energy Producers Tell House Natural Resources Committee How BLM Delays Stifle Development
Energy producers applauded recent efforts by the Department of the Interior (DOI) to remove regulatory burdens that have stifled energy development on federal lands during an oversight hearing held by the House Subcommittee on Energy and Mineral Resources on Thursday.
“These delays we are seeing of uncertainties, inefficiencies and inconsistent application of roles are creating the unnecessary delays and disproportionately impact our small business,” said Jarred Kubat, Vice President of Land, Legal and Regulatory at Wold Energy Partners. “The 415-day delay average our company faces between parcel nomination and offering for sale is too long. This is contrasted with the 45-day period we see at state level,” he continued.
The hearing examined recommendations made in DOI’s October 2017 report, which outlined steps the department has taken to reduce the regulatory burden on energy producers and streamline the permitting process on federal lands. Some of the most tangible examples of actions taken by BLM include rescinding the 2016 venting and flaring rule and the 2015 rule on hydraulic fracturing, which never ended up going into effect.
This is welcome news for energy producers, who testified that excessive delays during the leasing and permitting process can lead to lost capital and impact investing decisions by businesses who may be deterred by the process and opt to invest elsewhere.
Currently, it takes the BLM an average of 257 days to issue a permit versus an average of 30 days in the states.
Shane Schulz, Director of Government Affairs at QEP Resources, echoed Kubat’s sentiments on the delays. He noted that while production growth has skyrocketed in recent years—thanks in part to new technologies like horizontal drilling and hydraulic fracturing—development on federal lands has not kept up, with 96 percent of growth since 2007 occurring on private lands. He added that the daunting BLM approval process is a major factor in business decisions and where to place investments.
“Where the regulatory landscape is ambiguous, many companies are leery that investment will only turn into stranded capital,” Schulz told the committee. “Experiencing significant delays on federal lands in the recent past dissuades companies from wanting to operate on federal lands today because the return on capital may be slower and the risks of delay are all but guaranteed.”
A BLM representative told the committee the agency made progress on permitting in 2017.
“Throughout 2017 the BLM [Bureau of Land Management] worked hard on building efficiencies into its leasing and permitting processes. The overall APD processing time for the BLM dropped to 93 days on average in FY2017 from 139 days the previous fiscal year,” Dr. Brian Sneed, Deputy Director of Programs and Policy at the Bureau of Land Management said.
Western leaders in particular have asserted that states are better equipped to regulate operations within their own borders. Utah State Sen. Kevin T. Van Tassell pointed to the success his state has had in protecting wildlife and the environment while also embracing energy development, calling his state’s efforts “progressive” and “aggressive.”
“Our state management plans have been very successful,” he told the committee.
The hearing coincided with a coalition of Western senators introducing their version of the “Opportunities for the Nation and States to Harness Onshore Resources for Energy” (ONSHORE) Act, which would delegate more power to the states when managing permitting and regulatory oversight on federal lands.
“Punishing regulations and permitting delays have plagued the federal oil and gas permitting process for years,” said Sen. John Barrasso (R-Wyo.), the bill’s main sponsor, in a statement. “Wyoming and other states have shown they are well-equipped to responsibly and effectively manage oil and gas development on federal land. The ONSHORE Act empowers them to do just that. Our bill also eliminates unnecessary regulations and increases mineral revenue for states. This will spur job creation and economic growth across the country by creating an environment where American energy can flourish.
Others said the effort to reduce costly and duplicative regulations is a priority for developing natural resources within their states.
“Duplicative regulations on federal lands are especially costly for western states, where federal ownership is mixed among state and private lands,” said Sen. John Hoeven (R-N.D.). “The inefficiencies and delays at BLM have needlessly impacted the rights of private mineral owners and reduced revenue to the states and federal government. Our legislation recognizes that states like North Dakota have long had effective regulatory systems in place and should take the lead in managing oil and gas development within their borders. This will help unlock our nation’s energy potential, creating good jobs for our citizens while also ensuring good environmental stewardship.”
Sen. Mike Lee (R-Utah) said the bill would encourage local community involvement and restore a balance between resource development and local economies. “The ONSHORE Act will make it easier for states to work with local communities and find the best way to protect the environment and promote economic growth,” said Lee.