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Interior IG: 'Very Long' Review of Drilling Applications at BLM

Overall processing times at the Bureau of Land Management (BLM) for drilling applications on onshore federal and Indian lands have improved, but review times remain very long, largely due to government inefficiencies. However, oil and gas operators share some of the blame, according to the Inspector General's (IG) Office at the U.S. Department of Interior.

In a 32-page report released last month, Deputy Inspector General Mary Kendall said BLM approves thousands of applications for permits to drill (APD) a year and conceded that overall processing times had improved.

"Nevertheless, we found that review times are still often very long," Kendall said. "Although oil and gas operators share responsibility for this situation, inefficiencies in the government's review process impede productivity."

According to the report, it took BLM an average of 228 calendar days, or about seven and a half months, to process an APD during the 2012 fiscal year. By comparison, state regulators claim to take 80 days or less to process their applications, but the IG Office said federal oil and gas wells "are more complicated because of a multiple-use mandate, land ownership issues and compliance with laws that do not pertain to non-federal lands. In addition, operators also bear responsibility by often failing to provide the required information for the government's review."

The IG Office added that many factors prevent the BLM from predicting just how long the APD process should take. Those factors include the number of available staff at field offices and natural resource or drilling issues unique to each region.

"Processing delays have occurred because, until recently, improving the APD process has not been a high departmental priority," the IG Office said. Although BLM issued a memorandum in April 2013 to its state office directors -- an order that established some timelines, definitions and procedures to speed up the APD process -- "it is too early to assess whether these actions will be successful...

"The memorandum, however, did not establish individual accountability and deadlines for completing the APD review."

Data integrity was also found to be a problem. The IG Office said the Automated Fluid Minerals Support System (AFMSS), the BLM's official database for managing the fluid minerals program, worked against the department's employees.

"The database does not provide sufficient workflow information to serve as a management tool," the report said. "For example, one cannot determine an APD's status at any time in the process. Consequently, many field office employees reported they do not use AFMSS to track and manage the APD process. Employees said they do not consider AFMSS to be user friendly because entering and querying the database is highly complex."

AFMSS also had data entry errors, making its reliability questionable.

The IG Office found several BLM and Bureau of Indian Affairs (BIA) offices understaffed at several critical positions -- including adjudicators, petroleum engineers and geologists -- which in turn led to longer APD review times. It cited staffing issues at BLM offices in Durango and Silt, CO; Dickinson, ND; and Vernal, UT; and BIA offices in Ignacio, CO; Fort Duchesne, UT; and Fort Berthold Agency, ND.

Another issue is that BLM field offices process APDs with manual hard copies, even if they are initially received electronically. One office that was visited, Vernal, was running out of room for its files and may have to store some records off-site.

"Using an automated process wherever feasible would also eliminate the time currently spent on printing, making copies, assembling paper folders and filing," the IG Office said. "Further, electronic filing saves money by eliminating physically storing records...we see no downside for keeping the official permanent files in electronic format."

The IG Office also found that some field offices were underutilizing the Notices of Staking and Master Development Plans. The former enables onsite inspections before an operator submits a formal APD, while the latter lets an operator submit multiple APDs in specific areas that share the same plans for drilling, surface use, future development and production.

To fix the aforementioned problems, the IG Office recommended that the BLM appoint project managers for each field office; develop, implement, enforce and report performance timelines for APD processing; create outcome-based performance measures for the APD process; ensure accurate and consistent data entry into the AFMSS system; and work with Congress on receiving appropriate funding to staff the field offices with the greatest need.

Kendall said it wasn't a completely dismal picture at BLM, however.

"We identified a number of improvements that would expedite the review process and still maintain quality," Kendall said. "We also found several promising practices performed at some field offices that could enhance the APD processing effectiveness of other offices."

One suggestion was for BLM offices to conduct remote processing, where one office would assist another in reviewing APDs. Another was for setting up "strike teams," where specialists from multiple offices would deploy at another that has a backlog of APDs. The IG Office found that one such strike team deployed at the Dickinson field office and processed 357 APDs in just two months.

Other ideas included:

?       Setting up "one-stop shops", where a single locale would be staffed with sufficient resources to process APDs;

?       Conducting outreach training for oil and gas operators, ensuring more accurate APD submissions;

?       Virtual on-site inspections of well sites; and

?       Industry-funded employment agreements, where oil and gas associations provide financial support to increase the BLM district offices' permitting capacity.

The report said Interior's onshore oil and gas program has provided the federal government an average of $3 billion in annual royalties since the 2011 fiscal year (FY). In FY 2013, federal onshore and Indian oil and gas accounted for 37% of royalty revenues. Indian royalties doubled in the last three years, reaching 25% in FY 2013.

According to the report, three states -- Wyoming, New Mexico and Utah -- currently have the most drilling activity on lands managed by the BLM, in descending order. "The greatest drilling increase in recent years has occurred in North Dakota due to concentrated oil activity in the Bakken Shale formation," the report said.

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