Interior Secretary Ryan Zinke said the Bureau of Land Management has “not been a good partner” in conducting lease sales and providing an efficient permitting process, and directed the agency to “follow the law” in a secretarial order issued Thursday.
“Oil and gas production on federal lands is an important source of revenue and job growth in rural America but it is hard to envision increased investment on federal lands when a federal permit can take the better part of a year or more in some cases. This is why I’m directing the BLM to conduct quarterly lease sales and address these permitting issues,” said Zinke.
The BLM must do a better job permitting and conducting quarterly lease sales, Zinke said, as the backlog of more than 2,800 Applications for Permit to Drill (APD) has seen a review period exceeding 257 days in FY 2016 on average, above the statutorily indicated 30 days, according to the Department of the Interior. In 2016, eleven of the scheduled quarterly lease sales were canceled or postponed, in contravention of the Mineral Lease Act requirements, Zinke said on a press call.
“I follow the law. The law under the Mineral Leasing Act is clear,” Zinke said. “Believe me, there are eligible lands” available for the quarterly lease sales, he continued.
According to DOI records, as of January 31, 2017 five BLM field offices accounted for 2,060, or 74 percent, of the pending APDs. Located in just four states, those field offices with backlogs include Casper, Wyoming (526 APDs pending), Vernal, Utah (506), Dickinson, North Dakota (488), and Carlsbad/Farmington, New Mexico (540).
In order to be a better neighbor, Zinke said, DOI must be responsive and serve the people. “[W]e will look at ways to improve the process and make sure regulations serve their intended purpose rather than create a mountain of useless paperwork,” said Zinke. “By streamlining approvals of responsible energy development on federal land, and actually holding lease sales, we will generate revenue for local communities and the Treasury to fund the things we all value like National Parks, infrastructure and education.”
U.S. Senator John Barrasso (R-Wyo.), whose state has one of the largest permitting backlogs, praised Zinke’s order. “For years, energy production has been bogged down by permitting delays in BLM offices across the West. If applications aren’t being approved, our economy suffers and we lose out on job opportunities in our local communities,” said Barrasso in a statement.
The BLM in New Mexico last held a quarterly sale in September 2016, and the total revenue generated, more than $145 million, was held up for months by activist groups protesting oil and gas development in the state.
The New Mexico Department of Finance and Administration told Western Wire last month that the state finally received its portion of the proceeds – $69.9 million – from the lease sales in the Permian Basin.
“[D]elays for approving permits and rights of way is costing New Mexico and the federal revenue millions of dollars each day,” said Ryan Flynn, executive vice president of the New Mexico Oil and Gas Association, at a House committee hearing in late June.
Zinke’s order reaffirms the agency’s move to expand access and be a “fair and prudent partner” and not an “adversary” on either the sale or permitting side of the process.
Katharine MacGregor, Deputy Assistant Secretary for Land and Minerals Management at the Department of the Interior, in testimony last week, noted the effort at BLM to reverse a steady decline in federal land development that reached a low in 2016.
“Under Secretary Zinke’s leadership the BLM has had more lease sales, offered more acreage and generated more revenue in the first six months of 2017 than the same time last year. And we’re only just getting started,” MacGregor said.
Federal lands represented 7 percent of oil, 10 percent of natural gas, and 41 percent of coal production in 2016, MacGregor said. According to the DOI, 27 million surface acres are under lease for oil and gas development.
A February 2017 Wyoming lease sale returned $129.3 million, of which approximately half went to the state. Leases intended for a canceled 2016 sale were offered for bidding, and the February offering will be the final in-person event before the remaining quarterly sales move online.
Moving the lease sales online and conducting them regularly as required by law has also produced a great deal of interest, according to the Casper Star-Tribune. BLM sales and Wyoming state sales were conducted online this year, with both generating a higher number of bidders and increasing the price, and thus revenue, for acreage offered.
“We had a lot of [interest] in this area for this lease sale,” Bradford Purdy, spokesman for the BLM High Plains District in Wyoming said. Purdy acknowledged that BLM resource management plans at his office had delayed leasing there, as the plans often take up to a decade to complete.
BLM quarterly lease sales ending in June saw nearly $8.2 million in bonus bids for 175 parcels of land covering 128,000 acres across several Western states, including Wyoming, Nevada, Montana, Utah, Oklahoma, Texas, and Colorado.