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Federal Regulators Seen More Threatening Than Low Oil/Gas Prices in Western States

The Bureau of Land Management (BLM) and Environmental Protection Agency (EPA) continue to draw scrutiny from western state governors as a number of states consider legal action against some of the agencies’ recent measures.

BLM's authority covering National Conservation Areas (NCA) and Resource Management Plans (RMP) can affect exploration and production (E&P) activities on public and tribal lands. An example is the recent greater sage grouse listing under the Endangered Species Act (ESA), which was later turned back (see Shale DailySept. 22).

An official with the North Dakota Petroleum Council (NDPC) told the state legislature's Interim Energy Development and Transmission Committee hearing Wednesday that the state's oil production faces a bigger threat from future federal regulations than from depressed energy commodity prices. Kari Cutting, NDPC vice president, expressed concerns about everything from new air quality standards to the ESA listings.

While North Dakota producers have kept production above 1 million b/d through the price crash, Cutting told state lawmakers that the federal regulations are presenting a bigger problem, during the second of two days of hearings to discuss a legislative study of the latest EPA regulations of power plant carbon dioxide emissions.

North Dakota's legislature has passed a law (HB 1432) specifically to establish a state council to protect the state's interests regarding various federal environmental laws and their corresponding regulations, such as the Clean Water, Safe Drinking Water, Clean Air, and Endangered Species acts. The state is tracking two BLM rules that the North Dakota Industrial Commission (NDIC) will likely weigh in on, according to Lynn Helms, director of the state Department of Mineral Resources (DMR).

NDIC might comment on proposed requirements for oil and gas measurement (BLM Onshore Orders 4 and 5) from production on federal and tribal lands, Helms said. And by Oct. 26, NDIC must decide if it will intervene in a lawsuit brought by a coalition of environmental groups seeking more regulation of drilling/hydraulic fracturing (fracking) waste.

"EPA also has its venting production rule out for comment, and we need to give our input by Nov. 17," Helms said. "There is a lot happening on the federal side."

North Dakota Gov. Jack Dalrymple is among five western state chief executives who have expressed concerns to BLM  and the U.S. Fish and Wildlife Service (FWS) on regional RMP amendments that they think unnecessarily restrict future oil/gas activity in and around sage grouse habitat areas. BLM published a 27-page response to the governors' concerns in the Federal Register on Tuesday.

This action involves Idaho, Nevada, South Dakota and Utah in addition to North Dakota. Utah Gov. Gary Herbert has been particularly adamant about getting BLM to drop general habitat management areas for the federal RMPs. Nevada Gov. Brian Sandoval has argued against the need for "sagebrush focal areas" as a subset of the habitat management areas, and all of the governors continue to look for more leeway for each state in the face of the growing environmental and ESA regulations.

On Wednesday, BLM announced an extension of the public comment period for a draft EIS analyzing two NCA draft RMPs and a draft amendment to the St. George (Utah) field office overall regional RMP. So far, there have not been any oil/gas industry comments on these documents, a spokesperson for the Utah BLM operations told NGI's Shale Daily. All of the plans and review processes are part of BLM's role in the 2009 Omnibus Public Land Management Act, which drives the long-term land use in NCAs.

While there are severe restrictions in the NCAs, the BLM spokesperson said "future oil/gas development activities are not impacted by the current draft amendment to the St. George office's RMP.”

Another Utah BLM spokesperson on Thursday told NGI's Shale Daily that over the past 10 years the St. George field office has received only three oil/gas "expressions of interest. Ultimately, the St. George area isn't an area with as much interest from the oil/gas industry as we see in the Moab or Venal areas."

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