Rant of the Week - Government audit of oil and gas leases

Back in June, I blogged about an effort in Congress to force oil and gas companies to develop their idle leases on federal land. If a company doesn’t drill a producing well on their lease within 10 years, it expires and would be available to re-lease at a later date. I made the case that energy development on our public lands is happening quite quickly enough for my tastes and that there is nothing wrong with having idle leases out there. So now our Government Accounting Office (GAO) looked into the issue and found (*gasp!*) that indeed there are a lot of acres out there that are going undeveloped. Here’s the AP article:

Report: Drilling on federal lands could be faster

Let me be frank: I think the findings and recommendations are a bunch of bullshit. The reason these areas are undeveloped lies solely with the oil and gas companies, not with broken agency processes or excess regulation. Sure, environmental reviews often take more than the mandated target of 30 days. However, the vast majority of these Applications for Permit to Drill (APDs) are on leases which have already been developed, not in these undeveloped areas. About 95% of the development that takes place on public land is within established producing oil and gas fields. Look where we’re seeing most development in the west now: Pinedale Anticline, Piceance Basin, Uinta Basin, etc. Companies are spending money where they are certain they’ll get good returns on their investments. Drilling holes in wildcat areas that haven’t been explored yet is financially risky and far less common. So if APDs are being held up, they are not for these undeveloped areas.

DOI lackey Stephen Allred is flat-out lying in the last paragraph of the article. Boy will I be glad to see these industry idiots leave in a couple months. No department has ever been as corrupt or incompetent as Bush's Department of the Interior. Contending that environmental reviews are holding up development amounts to nothing more than another Bush administration attempt to gut all environmental oversight and regulation. If you want to speed up the processing of APDs, increase the freaking BLM budget so they can hire more people to process them. But since that’s never going to happen, I guess we’ll have more deregulation to look forward to.

Regarding Allred’s assertion that we need to fast-track development, this already happened. Thanks to the Energy Policy Act of 2005, the Bureau of Land Management does not have to prepare Environmental Assessments (EAs) anymore for oil and gas wells that meet several new criteria. Instead, they can do a Categorical Exclusion (CX), which is little more than a one-page paperwork exercise. No impacts are analyzed and often no mitigation is applied in CXs. These are called "Section 390 CXs," and are being challenged in court by environmental groups.

In some cases, fast-tracking is appropriate. For example, if a company wanted to re-drill a well on an existing pad and there would be less than 5 acres of new disturbance, and the original well was already analyzed in an EA, then fast-tracking the well makes sense. However, other criteria overreach. For example, the act said that if the agency disclosed the impacts of many wells in a field development Environmental Impact Statement (EIS), all future wells in that area can be permitted by a CX. The problem with this is that a field development EIS is quite broad, and the exact locations of the wells might not be known at that point in time. Therefore, the analysis of environmental impacts is not assessed in enough detail in the EIS; the wells should be subject to individual review under EAs, not fast-tracked by using CXs.

Anyway, setting aside all the complicated details, it’s safe to say that we cannot responsibly move any farther towards fast-tracking oil and gas development than we already are. I shudder thinking what else our politicians might do trying to speed up development even more.