US to streamline drilling applications on federal land

AP/Fuel Fix:
U.S. officials announced plans Thursday to speed up permitting for oil and gas drilling on federal and Indian lands to reduce delays, as applications were projected to be down 40 percent versus their historical average amid an ongoing price slump.

Low energy prices already have curtailed domestic energy exploration, driving down revenue. That’s put a crimp in budgets for the major energy producing states, including Wyoming, New Mexico, Colorado, Alaska, North Dakota and Montana, which receive a substantial share of revenue from oil and gas activity on U.S. lands.

In an attempt to streamline drilling approvals and reduce costs for companies, U.S. Bureau of Land Management Director Neil Kornze said all drilling applications would have to be filed online under the new proposal.

RELATED: Obama administration halts new coal leases on federal land

The move follows years of criticism from the energy sector over the Obama administration’s handling of drilling applications. Companies say lengthy delays have driven up costs.

Online-only permitting would allow 90 percent of drilling applications to be completed within 115 days, bureau spokeswoman Beverly Winston said. The average time in 2015 was 220 days.

But Kathleen Sgamma with the Western Energy Alliance voiced doubt about the potential time savings. She said the long time to process permits is driven in part by environmental studies and other requirements not counted in the administration’s 220-day processing average.

As an example, she said a drilling application could be filed in January, but surveys of whatever plants are present at the site might have to be done during the summer when the plants are blooming. The intervening months are not included in the government’s processing time estimates, she said.
Many of the states listed above are technically in a recession having gone through two straight quarters of negative GDP growth.   New Mexico, Montana, Wyoming, and Alaska had consecutive quarters of negative economic growth in the fourth quarter of 2015 and the first quarter of 2016.   Iowa, Nebraska, and Oklahoma are also suffering downturns in their economy.

It is still much easier to drill in the Permian Basin of Texas which means the cost will be lower for producers.  When profits are as slim, as they are now, that makes the choice on where to drill that much easier.


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