Federal environmental regulations have delayed 22 major oil and natural gas drilling projects in Utah and Wyoming that could create thousands of jobs and lead to billions of dollars in economic impacts, according to a new report prepared for the energy industry trade group Western Energy Alliance (WEA). The report examined operators' proposed well projects across the West and determined that as of Jan. 1, a total of 44,329 wells were under a required review by the National Environmental Policy Act (NEPA).
The 30-page study was prepared by Las Vegas-based SWCA Environmental Consultants. However, the timing of the report, which was announced on Wednesday, was a bit awkward. It followed by one day Interior Secretary Ken Salazar's decision to greenlight Anadarko Petroleum Corp.'s plans to drill 3,700 natural gas wells in the Greater Natural Buttes area of Utah's Uinta Basin over 10 years (see Daily GPI, May 9). Anadarko's project is one of 11 in Utah cited in the report as being delayed by federal regulations. In February regulators also approved the South Unit Oil and Gas Development Project in the Ashley National Forest in northeastern Utah, which approved drilling 400 wells. That project also was cited in the report.
Because all but 30 of the 44,000-plus wells under NEPA review were in Utah and Wyoming, researchers focused on those two states using a "progressive analysis" to estimate the impacts of energy development and production, followed by a baseline economic analysis. The economic values were estimated regarding delayed projects, i.e., the "opportunity costs" that may be lost because of the sometimes lengthy NEPA process.
"The total annual impact of the 22 proposed projects is 3,164 wells drilled, 120,905 jobs, $8 billion in wages, $275 billion in economic activity and $139 million in government revenue," according to "Economic Impacts of Oil & Gas Development on Federal Lands in the West." The total economic impact of the projects over their anticipated lifespan, which is usually between 10 and 15 years, was estimated at $383.5 billion.
"Our members, especially the small independent businesses who are the backbone of the Western economy, know firsthand how difficult it is to operate on public lands," said WEA's Kathleen Sgamma, who is vice president of government and public affairs. "This study provides hard evidence of how bureaucratic delays are adversely affecting small businesses and working families."
Under the NEPA reviews for the oil and gas sector, operators propose projects and Interior's Bureau of Land Management or the U.S. Forest Service complete an environmental analysis to ensure that the proposal is viable. Development doesn't move forward on federal lands without an approved NEPA review. Operators "regularly pay for contractor support...but the government is responsible for managing the contractors and approving the documents," the report noted.
Based on the findings, the Wyoming proposals to drill 1,445 wells/year would create more than 58,400 jobs, and every year boost the economy by $14.8 billion and add $56.7 million in government revenue. In turn, Utah's proposals to drill 1,445 wells a year would create more than 62,400 jobs, and bring to the state every year $12.7 billion in economic impact and $56.7 billion in government revenue.
"The majority of the wells, 30,789, are proposed in NEPA documents that have been under way for over two years," the researchers said. "Many of these were begun over five years ago, delaying projects for years past the usual processing times. Outstanding projects delayed over three years represent 22,835 proposed wells, or about 1,631 wells per year. Federal government delays to these projects are preventing the creation of 64,805 jobs, $4.3 billion in wages, and $14.9 billion in economic impact every year."
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