Are Feds Slowing Oil and Gas Permitting?

Major oil and gas industry players in Wyoming have lately told state lawmakers that they are facing delays in leasing, reviewing and permitting of federal minerals, at a high cost to industry, the state, and local governments.

Yet in some cases the time-consuming environmental review done prior to the final permitting stage on big drilling projects could actually produce the analytical data needed to allow projects to proceed that might otherwise be prohibited – like more oil and gas production in the ozone-plagued Upper Green River Basin, industry, federal and state officials note.

Overall, increasing size and complexity of oil and gas projects, and increasing scientific and public understanding of the natural settings where those projects are proposed, means analysis of projects can take more time now than a decade or more ago, BLM  officials say. Significantly, there is no real timeline for which an oil and gas environmental impact statement (EIS) must be completed, BLM spokesmen say.

“I think the word delay is not an accurate portrayal of what’s going on with these documents. … I would say this is analysis time, not delay time,” Wyoming Bureau of Land Management spokeswoman Beverly Gorny told WyoFile in a recent interview.

Gorny was responding to testimony submitted to the Joint Minerals, Business and Economic Development interim committee last week by EnCana Oil & Gas USA government affairs advisor Paul Ulrich. In his testimony, Ulrich said there have been significant delays for five major oil and gas EISs in Wyoming:

• Beaver Creek, 208 coal-bed methane wells, proposed by Devon Energy Production Co., delayed by 11 months.
• Continental Divide-Creston Infill Project, 8,950 wells, proposed by Devon Energy and BP America, delayed by 49 months.
• Moxa Arch, 1,861 new wells, proposed by EOG Resources Inc., delayed by 53 months.
• Hiawatha Project, 4,208 new wells, proposed by QEP Resources and Wexpro Co., delayed by 49 months.
• Gun Barrel, Madden Deep, Iron Horse, 1,470 new wells, proposed by EnCana Oil & Gas USA Inc., Burlington Resources Oil & Gas Co. LP and Noble Energy Inc., delayed by 27 months.

Ulrich said the estimated delay times are based on the BLM’s own timelines as outlined in the National Environmental Protection Act.

Ulrich said each year one of these projects is delayed, it defers $157 million in royalties and tax revenue to the state, as well as thousands of jobs and a larger cash-infusion into local economies. EnCana hired a third party to conduct analysis of some 23 EISs in Colorado, Wyoming and Utah. Ulrich said the analysis suggested the average cycle time for an EIS has gone from 3.4 years in the 1990s to an average 5.8 years by 2005.

“These delays are not based on the operators’ (timelines), but the BLM’s timeline themselves,” Ulrich told members of the minerals committee.

Wyoming legislators have no authority over the federal leasing, environmental analysis and permitting process. But, Ulrich explained, the state can bring public and political pressure to bear on the federal agencies.

“I’m hoping that if we raise awareness of the problem we got — and it’s not just in Wyoming. … We could shrink EIS times closer to reality,” said Ulrich.

Gorny, contacted later by phone, said no Wyoming BLM officials were invited to speak before the joint minerals committee this month when EnCana made its presentation. The committee did ask for public comment at the conclusion of its 2-day hearings.

“I want to remind you, once gain, there are some very real impacts to our environment. … Also real impacts at the human level, too,” Wyoming Outdoor Council legislative and outreach advocate Richard Garrett testified.

Garrett said stakeholders should consider the EIS analysis as an opportunity to carefully manage and protect all resources for the long-term, and said it’s easier to avoid environmental impacts through good planning rather than to try to fix impacts after they occur.

“I hope the committee takes this into consideration,” said Garrett.

While there are prescribed timelines for certain portions of the NEPA process — for example, a 45 day “scoping period” to collect public input after an EIS is published in the Federal Register — Wyoming BLM officials said the agency is obligated to conduct a thorough analysis of all potential impacts and whether the proposed action meets myriad parameters of environmental laws, no matter how long it takes.

Gorny noted that each EIS is different based on the proposed action and the site-specific topography, climate, air, water and other local considerations.

“So there isn’t really a cookie-cutter analysis. The time it takes is the time it takes,” said Gorny.

Ulrich admitted one EIS delay — the Gun Barrel, Madden Deep, Iron Horse EIS — was due to the fact that EnCana changed plans after initiating the EIS process, saying, “We quadrupled the size of (drilling) we were looking at.”

Of the seven major oil and gas EISs now in the works in Wyoming, none have gotten to the “draft” stage. Once a draft is issued, stakeholders can better predict when the process might be completed. But in the early stages of the process, Ulrich said the scope and detail of the analysis seems to have greatly expanded.

“More and more is analyzed under the umbrella of an EIS,” said Ulrich, adding that the analysis includes more air pollutants than before, and more animal species.

Environmental groups say a more thorough and lengthy analysis is in order given the fact that over the past 10 years there have been numerous impacts measured due to oil and gas development, including declines in sage grouse in the Powder River Basin, declines in a deer herd near Pinedale, and spiking ozone concentrations in the Upper Green River Basin.

“The easier ground has been leased. Often the areas being looked at today are valuable wildlife habitats and other valuable resources as well,” Trout Unlimited energy director Brad Powell told WyoFile in a phone interview.

Trout Unlimited is one of three key partners in the Sportsmen for Responsible Energy Development coalition. Powell noted that more than 40 million acres of public land in the West is under lease for energy development. As energy activity continues to expand into more sensitive areas it justifies more analysis in order to protect all valued resources, and to avoid litigation.

“From a sportsman’s perspective, we want to see energy developed and we want to see it done wisely,” said Powell. “That requires that the public be engaged and we have opportunities to make wise decisions. We’ve seen the results of some of those short-cuts.”

Last fall, the uranium mining industry asked state legislators to create deadlines for the Wyoming Department of Environmental Quality to analyze and decide the fate of permit applications, complaining of repeated rounds of questioning by DEQ staff regarding qroundwater management. DEQ administrator John Corra explained to the joint minerals committee, then, that one answer begets another question, and so on, much like a lawyer questioning a witness.

Draft legislation — written by the industry itself — regarding DEQ permitting was dropped. In his testimony before the joint minerals interim committee this month, Corra again discussed permitting challenges and said, “The degree of public involvement and the degree of public scrutiny on our process has increased.”

And so have the administrative challenges, he added.

“It takes more time to respond to a better-informed public,” said Corra.

The More We Know

“It’s an iterative process,” Wyoming BLM’s Melissa Hovey said of EIS analysis. Hovey, a physical scientist specializing in air quality, said it’s necessary to repeatedly go back to operators and cooperating resource professionals with additional questions.

Hovey told WyoFile that a more thorough analysis is all part of the nation’s greater understanding of the environment. As time passes, scientists gain more evidence from monitoring, and as technology advances it allows scientists to perform more detailed analysis of the potential impacts of activities such as oil and gas development.

There’s also a new emphasis on establishing baseline data. For example, state and federal regulators in Wyoming have said that the occurrence of ozone spikes on sunny, snow-packed days in the Upper Green River Basin — a phenomenon of recent years — wasn’t a consideration when they conducted initial EISs for the Jonah and Pinedale Anticline natural gas fields many years ago. Now that regulators know ozone is a potential impact of oil and gas development, regulatory agencies are focused on collecting more baseline data through monitoring, and performing more detailed modeling to understand whether ozone spikes will continue if a project is allowed to move forward.

“As these new tools are available … analysis under NEPA increases, and we can make more informed decisions. There is an expectation that we do that,” said Chris Carlton, planning and environmental coordinator at Wyoming BLM.

All sides agree that air quality modeling is one of the most time-consuming aspects of Wyoming’s current set of oil and gas EISs. It took considerable time for the BLM, operators, the U.S. Environmental Protection Agency’s Region 8 office and Wyoming DEQ to agree on the exact air quality modeling program.

For the first time in Wyoming, the agencies are using a photochemical grid model, in part because among the pollutants it analyzes is ozone.

“For the first time it allows us to analyze ozone impacts. Prior to these ones, we typically didn’t use very good modeling,” said Hovey.

The photochemical grid modeling is furthest along on the Continental Divide-Creston Infill EIS. BLM officials say they expect that modeling effort to be complete by the end of the year. Once completed, it should provide the experience necessary to perform photochemical grid analysis in a more timely fashion in the remaining oil and gas EISs.

This more detailed analysis supposedly has backing from the oil and gas operators. In recent years, operators in the Pinedale Anticline and Jonah fields have expressed confidence in their ability to significantly cut emissions, and ongoing monitoring and more sophisticated modeling will be their proof.

“The more monitoring data the better,” said Ulrich. “That goes for air quality, and that goes for wildlife.”

Others in the industry say federal and state regulators have simply gone too far.

“There’s paralysis by analysis, and that’s what’s really going on,” said Western Energy Alliance spokeswoman Kathleen Sgamma.

Sgamma told WyoFile in a phone interview that she believes the Obama administration wants to stop the expansion of energy development on public lands. She said EIS delays and other difficulties of drilling on public lands have resulted in a drilling resurgence in other states — North Dakota, Pennsylvania, Texas, Oklahoma — where there are fewer federal minerals and federal environmental requirements.

“When you pile on additional federal regulations, they (federal lands) become less economic than other places in the country,” said Sgamma.

Impacts Analyzed, Not Fixed

One point that regulators and oil and gas operators have underscored in recent months is that an EIS document is not intended to avoid and fix all potential impacts.

“Number one: it’s a disclosure document. There’s nothing that says there can’t be impacts,” said the BLM’s Carlton.

Carlton said NEPA requires federal agencies to analyze all reasonably potential impacts, propose how to reasonably mitigate those impacts and provide alternative scenarios for moving forward with a project.

Both industry and regulatory officials complain that many comments from the public and administrative objections are based on an expectation that industrial projects have a net-zero impact on the environment.

“NEPA is obviously the favorite whipping boy for a lot of discussions,” said Ryan Lance, director of the Office of State Lands and Investments.

A draft EIS discloses all of the potential impacts under each operational scenario, said Lance, who formerly worked as a policy advisor to Gov. Dave Freudenthal.

“People read the EIS and say ‘you have to mitigate all those bad things.’ That’s not true. … You have to decide if it’s in the public’s interest to move forward or not,” said Lance.

Ulrich told members of the joint minerals committee that he believes government agencies spend a lot of time trying to make planning documents like EISs “litigation proof.” Yet, he said, the extra efforts haven’t stemmed administrative and legal challenges.

What’s really important, said Ulrich, is that the planning documents meet the letter of the law by detailing a thorough analysis. He said planning documents for oil and gas development usually withstand challenges from environmental groups because, “We’ve got better lawyers than they do.”

Nonetheless, there are a few absolutes, like certain air quality standards, that Congress said in the federal National Environmental Protection Act, cannot be violated. If an analysis shows a project would mean local air quality would not meet certain national standards, that would mean a project can’t go forward.

NEPA demands that no federal agency approve of an activity that leads to the violation of certain standards, such as the National Ambient Air Quality Standards under the Clean Air Act.

This could be a game-changer for future oil and gas drilling in the Upper Green River Basin, because state and federal regulators admit they don’t know whether the industry can lower its NOx emissions enough to avoid wintertime ozone spikes.

“We’re not the regulatory agency that makes that call,” said Wyoming BLM spokeswoman Beverly Gorny.

Concern about whether some oil and gas drilling proposals in the Upper Green River Basin could be prohibited because of air issues is one of the reasons for the BLM to take considerable time in analyzing air impacts. Wyoming regulators and industry are working together to try to come up with an approach to development that can be shown will prevent violation of federal air quality standards, and so allow development to proceed. BLM staff are working to analyze the data the state and industry partnership presents. So some of the delays in EIS work could actually work to the advantage of industry, if it allows otherwise doomed projects to go ahead.

Corra told WyoFile he remains optimistic that industry can drill thousands of new wells and still lower its emissions enough to avoid ozone spikes — and that the DEQ-industry partnership is committed to achieve that goal.

At the request of the joint minerals committee’s leadership, Corra described some problem areas he’s identified in working with the EPA and other federal agencies. Corra said Wyoming DEQ, for the most part, has a good working relationship with federal agencies. He listed several examples of how he believes EPA has attempted to “extend” its authority, and said, “Your sense that certain states can influence EPA is right on.”

Contact Dustin Bleizeffer at 307-577-6069 or dustin@wyofile.com.

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