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BLM OKs 3,700-Plus Onshore Drilling Permits in 2014

More than 3,700 onshore drilling permits were approved in fiscal 2014 (FY2014) by the Bureau of Land Management (BLM), on par with 2013, and "half-again as many authorizations" than the industry used to drill on public lands last year, federal officials said Tuesday.

BLM, whose authority oversees almost 100,000 wells on public lands, authorized 3,769 drilling permits in FY2014. On average, the agency's portion of the permitting process was completed "in a little over 90 days," consistent with 2013.

BLM manages more than 245 million acres of public land and nearly 700 million acres of mineral estate, including areas where either the agency or other federal agencies manage the surface, and areas where the surface is privately owned.

"The portfolio of oil and gas wells overseen by the BLM has expanded at the same time that drilling has become more complex," BLM Director Neil Kornze said.

BLM's onshore program accounts for 11% of the natural gas and 5% of the oil produced today in the United States.

Last year's permit approvals and "leasing opportunities" were "in excess of industry demand," BLM said. "During that same time, industry drilled more wells and produced from more acres than in the previous year."

In total, almost 6,000 drilling permits have been approved by the BLM "and are ready for immediate use by oil and gas companies. These permits represents over two years worth of drilling at the current rate."

BLM's permitting process may have improved to just about three months, but the Inspector General's Office of the Department of Interior estimated last summer that it took BLM an average of 228 calendar days to process an application to drill, or APD, during FY2012 (see Daily GPI, July 2, 2014). The report said, however, that federal wells "are more complicated" because of some state and other federal mandates. Operators also often fail to provide required information for BLM review.

During FY2014, BLM said it offered nearly 5.7 million acres through 26 oil and gas lease sales across the western states, with about 20%, or one in five of those acres, receiving bids.

Producers "continued to hold valid leases on over 34 million acres of public lands this year, an area the size of the State of Florida," according to BLM. "Roughly a third of this land is currently being used to produce oil and natural gas."

Since the start of 2014, officials estimated that industry had leased "more new acres, drilled more wells and produced from more acres" than in 2013.

In FY2014, "industry leased, through competitive bidding and other means, nearly 1.2 million acres, a slight increase from the previous year. Oil and gas operators last year drilled 2,544 wells on public lands, also up from the previous year."

The exploration and production industry today is actively producing from 12.7 million acres of public land, the third highest total since 1990, federal officials said.

In the annual report, Kornze made a bid for a bigger budget. In July he had criticized the lack of BLM inspectors, which he said was causing delays in inspections on about 40% of the nation's high-priority oil and gas sites (see Daily GPI, July 22, 2014).

"We have a foundational responsibility to make sure that oil and gas operations on public lands are done safely and responsibly," Kornze said Tuesday. "The BLM is proud of the role we play in supporting responsible energy development on public lands. At the same time, we are mindful of the cradle-to-grave management responsibility that comes with each new well.  We are committed to supporting robust development and must also ensure safe operations and a fair return to the taxpayer."

Interior, which oversees BLM, disbursed more than $13.4 billion in revenue generated by energy production on federal and American Indian lands and offshore areas in FY2014.

"The critical job of overseeing and inspecting the approximately 100,000 wells on public land is a BLM responsibility for the life of the well, often lasting for decades," the agency said. "Currently, the agency covers the cost of this critical work with annual appropriations that do not necessarily match the workload needs of the agency.

"To ensure a continued robust oil and gas program, the president asked Congress in his last four budgets to grant the BLM the authority to charge modest fees that would allow the BLM to be more responsive to industry needs and to properly fulfill its inspection and enforcement responsibilities."

BLM noted that a "similar authority" was granted to Interior's offshore oil and gas regulator, the Bureau of Safety and Environmental Enforcement.

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