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Energy Stimulus Bill Draws Supporters, Critics in House Hearing

A House bill to remove duplicative regulations about how federal lands are developed, including for oil and gas development, drew broad support Tuesday from a state regulator, academia and industry and consumers groups.

Rep. Paul Gosar (R-AZ), who chairs the House subcommittee on Energy and Mineral Resources, oversaw testimony regarding part of the draft Secure Americans Energy Act, which has two components, one offshore and one onshore. Four witnesses addressed the onshore proposal, the Opportunities for the Nation and States to Harness Onshore Resources for Energy Act, or the Onshore Act.

The bill as proposed is designed to correct issues and reduce redundancies between state and rules for land managed by BLM, Gosar said. He said delays and mismanagement have "discouraged oil and gas development resulting in less revenue to taxpayers."

Ranking Rep. Alan Lowenthal (D-CA) said when it comes to oil and gas development on federal lands there are some "fundamental disagreements" over how the issue should be handled. Environmental issues related to surface impacts governed under the National Environmental Protection Act must take precedent, he said.

"Companies now hold nearly 80,000 permits that they are not using,” said Lowenthal. He also noted that “the number of paying permits is as low as it has been since BLM began keeping data 12 years ago. “Oil production on federal lands was up 78% under the Obama administration, and we're exporting nearly 2 million b/d because we, frankly, have a glut."

In his testimony, Lynn Helms, who directs the North Dakota Department of Mineral Resources, urged that states be given more oversight authority on federally managed lands.

“This legislation gives us a rare opportunity to create better government instead of bigger government,” he said. “Delegating the permitting of all down-hole permit elements to states like North Dakota will allow BLM to focus its limited state office resources on efficient and effective management of the federal surface estate.”

Helms noted that North Dakota has “more than 2,800 oil and gas spacing units that contain federal minerals with each spacing unit typically comprised of 1,280 acres. Thirty-two percent of all North Dakota spacing units contain federal minerals and will have at least one well impacted by the Bureau of Land Management permitting and sundry notice process.”

Helms said it generally takes nearly nine months to obtain a permit to develop federal lands, while in North Dakota it take less than 20 days. "The legislation would eliminate duplicative permitting.”

Many western states contain “large blocks of unified federal surface and mineral interest ownership,” but in North Dakota, the surface and mineral estates “were at one time more than 97% private and state-owned as a result of the railroad and homestead acts of the late 1800s," said Helms. He said he has spent near 20 years as a regulator to resolve duplicative state/federal oversight.

The situation creates uncertainty for operators, which tend to "file all the permits that they can imagine for the next four years, and the result is a massive permitting backlog and a lack of prioritization by the operators and BLM,” Helms said. North Dakota, the center of Bakken Shale activity, has ended up with permits that are never used.

Given the slower federal permit processing, Helms said 20 operators in North Dakota are “shifting capital to nonfederal lands, and our estimation is that adds up to more than 1,000 jobs that are not active in the state.”

Other operators have moved their investments to other states, including Texas and Oklahoma. "The result has been less jobs and less royalties for the state, counties and local communities," Helms said.

North Dakota’s share of oil production from federal lands has dropped from 36% to 21%, although absolute volumes have increased to 450,000 b/d from 290,000 b/d.

More timely permitting is needed, said Consumer Energy Alliance President David Holt, who testified in support of the bill. He was joined in pushing for the measure by Tulane University’s Eric Smith, a professor in the school’s Energy Institute.

In response, the Independent Petroleum Association of America (IPAA) said it welcomed the legislation, noting that the group recently signed a letter along with seven other industry trade associations in support of the Secure American Energy Act.

“This bipartisan legislation expands access to natural resources on federal lands and provides commonsense reforms to create certainty for producers and a fair return to American taxpayers,” said IPAA’s Dan Naatz, senior vice president of government relations and political affairs. “IPAA has long advocated for many of the reforms in this bill, which will drive U.S. economic growth and create new jobs.”

Specifically, the IPAA said it was encouraged by the elimination of the one-size-fits-all federal regulatory structure by delegating regulatory responsibility to states that are willing to opt-in. The group also said the legislation would “rein in bureaucratic overreach” and expand offshore energy development opportunities.

“While supporting the Secure Act, IPAA looks forward to working with the committee to address a number of issues in the legislation of importance to our members and independent oil and gas producers across the nation,” Naatz said.

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