The Obama administration today announced steps to significantly speed the permitting of oil and gas wells, a move designed to make public lands more accessible to drillers.
Interior Secretary Ken Salazar made the announcement from North Dakota, where he is ending a two-day visit to drill sites and oil production facilities in the oil-rich Bakken Shale play.
The agency plans to launch an automated system for tracking onshore drilling applications that could slash permitting times for onshore wells by two-thirds.
"By upgrading and improving our oil and gas drilling permit processing systems and technologies, we believe we can improve efficiencies while ensuring thorough reviews for safety and compliance," Salazar said in a conference call from the Fort Berthold Indian reservation. "This is another significant step forward in the Obama administration's efforts to reduce the nation's dependence on imported oil, spur local economies and create jobs."
The new system, which was piloted in the Bureau of Land Management's Carlsbad, N.M., field office and is based on a model used for offshore drilling, will allow regulators to quickly scan applications for missing or incomplete information.
The system is designed to reduce the back-and-forth handling of applications between industry and BLM that consumes most of the permitting time. Applications are typically submitted in hard copy, and neither the public nor industry operators can access them or monitor BLM actions.
The new system, which is expected to be in full operation by May 2013, is expected to trim wait times to as little as two months. The Obama administration in its first three years processed about 15,000 permits to drill and expects to process about 5,500 more in 2012.
In addition, Interior today announced the launch of a national oil and gas lease sale system to streamline the phases of competitive oil and gas lease sales.
Salazar's visit comes after a month in which North Dakota surpassed California as the third largest oil producer, trailing only Alaska and Texas. The surge in production, jobs and state revenue is due in large part to the use of horizontal drilling to tap the Bakken formation, which is believed to hold more than 4 billion barrels of recoverable oil. An updated assessment by the U.S. Geological Survey could increase that number.
"With the help of new technology, the Bakken play here in North Dakota is generating impressive energy production for our country and creating thousands of American jobs, as well as substantial royalty revenues for the state, tribes and taxpayers," Salazar said.
Until now, the vast majority of drilling in North Dakota has occurred on private lands, where companies are exempt from many of the laws that critics say encumber drilling operations on public lands. Bureau of Land Management Director Bob Abbey acknowledged the agency could improve its permitting times but noted that industry is sitting on more than 7,000 approved drilling permits.
More drilling for federal minerals
Interior said permitting and production from federally owned minerals in the Bakken region have steadily risen in recent years. BLM inspection and enforcement for production accountability have increased nearly fivefold in the past five years, the agency said.
Of the more than 2,000 leases covering roughly 1 million acres that BLM manages in North Dakota, more than half were issued in the past seven years. In addition, the agency in fiscal 2011 set a record for leasing revenue in Montana and the Dakotas, netting more than $100 million on parcels in North Dakota alone, most of which were in the Bakken.
On the Fort Berthold Indian reservation, where the BLM permits wells, royalty revenue in 2011 was $117 million, four times what it was the previous year. Salazar said the reservation had only one operating well when he visited three years ago but now has 245 wells and an additional 100 permitted.
"The Native American community and the vast amounts of lands we hold in trust for them ... are in fact open for business," Salazar said, calling Fort Berthold a "ground zero" for production.
But Salazar's visit comes as Republican and industry officials have accused the Obama administration of delaying energy production on federal lands, where the agency has implemented oil and gas leasing reforms to more closely vet impacts to wildlife and scenery.
Ironically, critics say Bakken drilling -- where there is minimal federal oversight -- is largely responsible for the eight-year rise in domestic oil production. A recent report by the Congressional Research Service found that 96 percent of the increase in oil production since 2007 has occurred on private lands, a fact that has become a talking point among Republican critics. Still, the federal share of total U.S. production fell by only about 2 percent over that time, the report notes.
"I would suggest it's in spite of the administration's efforts to date that the Bakken has been able to lead the nation in terms of oil production," said Ron Ness, president of the North Dakota Petroleum Council.
Ness estimated that up to 90 percent of the wells being drilled in North Dakota are on private land and most are targeting privately held minerals. Of the 206 drilling rigs in North Dakota, only one is on federal lands in the Dakota Prairie National Grasslands, which is managed by the Forest Service, he said.
Still, oil production on federal lands has increased in each of the past several years, topping out at 112 million barrels in the last fiscal year, according to Interior statistics compiled by the Energy Information Administration.
Ness said that it takes longer to receive a drilling permit on federal lands and that agencies are short-staffed and underfunded.
'Delays and costs'
In addition, state and tribal leaders have warned that pending regulations for hydraulic fracturing, also called fracking, could make permitting on American Indian and public lands more burdensome, creating a further disincentive to tap federal minerals.
In a March 9 letter to Salazar, Tex Hall, chairman of the Three Affiliated Tribes of the Fort Berthold reservation, warned that Interior lacks the authority to impose fracking regulations on the reservation and has failed to comply with its tribal consultation policy. He said the current permitting process is already time-consuming and costly.
"These delays and costs are one of the primary reasons why oil and gas developers look just over the reservation boundary for cheaper and quicker development opportunities on private lands," he said. "We need to remove road blocks to Indian energy development, not increase them."
There are currently 22 drilling rigs operating at Fort Berthold, where drilling has surged in recent years thanks in part to efforts by federal agencies to create a one-stop permitting office.
On average, production of oil on federal lands and water has been 13 percent higher in the first three years of the Obama administration than during final three years of the George W. Bush administration.
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