API: Permitting, Leasing Snafus Tie Up Production in West

While large spreads of federal lands technically may be open for oil and natural gas exploration, producers still are prevented from drilling on them because of restrictions in their leases and a severe backlog of drilling permitting requests, the president of the American Petroleum Institute (API) said last week.

Industry critics fail to acknowledge that there are major obstacles to developing trillions of cubic feet of natural gas that lie beneath nearly half of all federal lands in western states, API's Red Cavaney said in a March 27 letter to Rep. Barbara Cubin (R-WY), chair of the House Resources Subcommittee on Energy and Mineral Resources.

He argued that members of the Natural Resources Defense Council (NRDC) and the Wilderness Society during a March 15 hearing of the subcommittee provided "significant distortions" in their calculations of the amount of federal lands that are off-limits to producers.

"Importantly, they gloss[ed] over the most significant point: the percentage of government lands available for leasing is a meaningless figure without knowing whether the leases can be developed," Cavaney wrote.

The NRDC and Wilderness Society officials "surgically selected certain data, and omitted other significant data to attempt to prove their inaccurate assertions," he said. For example, the Wilderness Society estimated that only about 3.5% of the federal lands in certain western states under the supervision of the Bureau of Land Management (BLM) are closed to producers. But, Cavaney noted, it failed to point out that the National Petroleum Council (NPC) has identified another 3.2% of BLM lands that are subject to "no surface occupancy." The combined 6.7% represents 15% of all the natural gas resources on BLM lands.

Once lease restrictions are factored in, the society conceded that producers are denied access to another 32% of BLM lands. But it neglected to report that these lease limitations --- seasonal and other non-standard stipulations in leases --- are responsible for taking about 47% of the gas resources under BLM's control off the table for producers, Cavaney said. Even more telling, he noted, is that 38.7% of all BLM lands are either off-limit lands or are subject to lease restrictions, which affects 62% of the gas resources on BLM-supervised lands.

Moreover, he said that the BLM wasn't the only federal agency putting restrictions on producers. There are the U.S. Forest Service, the Bureau of Indian Affairs and the departments of Energy and Defense. The NPC estimates about 137 Tcf of gas resources that lie beneath federal lands in the Rockies are either off limits to exploration or are heavily restricted, Cavaney said. This is nearly half of the natural gas resources on all federal lands in the region, he noted.

Also, "inadequate agency resources in many BLM offices and required but outdated resource management plans often make it difficult to get drilling permits, seriously delaying viable projects for up to 100 days or sometimes years," according to Cavaney. "In the Rawlins, WY, BLM office, for example, thousands of applications for permits to drill are awaiting action because of manpower shortages. In the Buffalo, WY, office, thousands more cannot even be submitted because the resource management plans for the coal-bed methane plays in the area are woefully out of date."

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