Oil producers

The crew of an MBI Energy Services workover rig finishes an oil well near Fairview in this file photo.

Larry Mayer, Billings Gazette

The demand by Interior Secretary Ryan Zinke that Bureau of Land Management officials get cracking on a backlog of the oil and gas permits had Montana officials a little perplexed.

The number of delayed drilling applications for Montana federal land fewer than 100. The number that could be potentially rushed to approval was much smaller.

“In Montana, there were 84 pending applications, and of those, 82 of them are in a pending status. There’s no way of acting on them because they’re in the” Interior Board of Land Appeals, said Scott Haight of BLM.

Oil and gas drilling permits on federal land in Montana weren’t languishing because of BLM foot-dragging, Haight explained. The permits were being slowed either by public objections over project conditions or myriad other reasons. Either another government agency hadn’t signed off or an oil and gas company hadn’t supplied all the necessary information to move ahead.

The order signed by Zinke on July 6 has uncorked a long-fermented jug of criticisms about oil and gas development on federal lands, both by environmentalists and energy companies. The former say poor market prices for fossil fuels combined with federal policy that allows awarded leases to go undeveloped has gummed up the program.

Energy advocates say the BLM delays are real and are hurting fossil fuel development in the West.

“We all know what drives this is the market,” said Jayson O’Neill of the Western Values Project in Whitefish. “Market prices for oil aren’t setting any records right now.”

Working with Democrats in the U.S. House, Western Values Project has compiled a list of more than 7,000 awarded leases nationally that aren’t producing oil, gas, or the royalties that flow to both federal and state governments. Federal law allows energy companies to apply for lease suspensions and extensions that keep a lease active without any production.

Citing permitting delays as the cause to order BLM to get busy on processing leases, O’Neill said, opens the door to softening regulations.

The delays in federal oil and gas leases are real, said Alan Olson, Montana Petroleum Association executive director.

“The big kicker is even on a Bakken well with the state, we can get a permit in 30 days for a horizontal well 10 days for vertical well,” Olson said. “The BLM, for reasons I don’t understand, can take 18 months to two years.”

There are many things that can trip up a federal lease, Olson said. If there’s U.S. Forest Service or tribal land involved, officials for those agencies have to sign off. When they don’t, the process stalls.

Energy companies nominate federal parcels for lease sales, which are supposed to take place quarterly. A bidder actually identifies the parcel where the company wants to drill. BLM then begins the environmental review and the public comment process that must take place before the lease sale.

The deadline required for nominating a parcel has in some cases been set nine months in advance, Olson said. That wait can hobble negotiations with private landowners with mineral rights in the project area.

BLM land can be described as the property sodbusters passed on during the land grab era of the 1910s. More often than not, the BLM property shares a fence line with private land. It’s nearly impossible to develop a project on private land without getting a lease for the neighboring federal land, Olson said.

A long delay for a federal lease can thwart agreements with neighboring private landowners, Olson said.

In ordering BLM to ramp up permitting, Zinke cited 2,802 delayed drilling permits through the end of January. There’s a 30-day processing deadline for permits, but on average processing is taking 257 days. The secretary’s order calls for quarterly lease sales, something energy companies say hasn’t been happening.

Haight said lease sales have been quarterly for the BLM division headquartered in Billings. The BLM office holds lease sales for Montana, North Dakota and South Dakota.

However, not every region handled by the BLM office in Billings received a sale every quarter. Montana is divided into two parts, with sales tied to Miles City and representing the eastern part of the state occurring regularly. The remainder of the state comprises a second division where lease sales might take place once a year, according to one developer who requested not to be named out of concern that his name might tip off other energy companies about his Montana development plans far from the Bakken.

Oil and gas development in Montana has all but stalled out, with only one drilling rig active in the state last week, according to Baker Hughes, a drilling supply company that monitors drilling activity worldwide.


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