Posted on 12/04/2002 11:29:02 AM PST by BOBTHENAILER
From the great gas basins of the Rocky Mountains, to the seaboards of the Atlantic and Pacific coasts, to the northernmost reaches of arctic Alaska, battles are being fought between proponents of mineral extraction and advocates of nondevelopment. Debates rage over the amount of public land that should be available for energy production, and how that land should be protected.
The oil and gas industry points to its outstanding environmental record, and believes that it can help supply the nation’s vital energy needs while carefully preserving the environment. Not surprisingly, another camp vehemently disputes this contention.
Underpinning the industry’s urgency is the projected growth in energy demand. In its “Annual Energy Outlook 2002,” the U.S. Energy Information Administration estimates the nation’s total energy consumption will increase more rapidly than domestic energy production through 2020. Petroleum production is expected to decline 0.2% per year to some 5.6 million barrels per day in 2020. The swelling demand will push net oil imports from 53% of consumption in 2000 to 62% in 2020.
At the same time, U.S. gas production is expected to increase significantly, jumping from 52.3 billion cubic feet (Bcf) per day in 2000 to 78 Bcf per day in 2020, an average annual growth rate of 2%. That will not be enough to meet anticipated demand, however, and gas imports are forecast to rise from 9.6 Bcf per day in 2000 to 15 Bcf per day in 2020.
Whether the nation’s drillers can actually supply this gas is an open question, however. Supply is almost wholly domestic, and a considerable resource base lies on lands controlled by the federal government.
”We are currently undergoing a transition in gas supply from domestic sources,” says Mark Papa, chairman and chief executive officer of Houston-based EOG Resources. For the past 10 years, the U.S. supply has been remarkably stable, running around 52 Bcf per day, plus or minus 1 Bcf. But, U.S. gas production is declining at an ever-sharper rate, dropping steeply from a 16% annual decline in 1990 to an estimated 29% in 2002. “When you combine the increasing decline rate with the decrease in drilling activity during the past year, an almost unprecedented decline in U.S. gas production is occurring.
”We see a severe constriction in the supply available to the U.S. gas market during the next several years.”
And, at the same time supply is significantly constricting, environmental groups are working intensively to shut off access to public lands. Indeed, in three offshore areas – the eastern Gulf of Mexico and the Atlantic and Pacific seaboards – new federal leasing of oil and gas rights is prohibited by moratoria. President George H.W. Bush signed an executive memorandum in 1990 placing a 10-year moratorium on new leasing off much of the nation’s coast; President Clinton renewed and extended the moratorium to 2012.
An exception to the ban on new leases is one portion of the eastern Gulf south of Gulf Shores, Alabama, which had been part of a strategic plan for many years and already contained 23 blocks under lease. After a firestorm of protest from Florida, the current Bush administration sliced the size of the eastern Gulf sale, held in December 2001, by 75% to 1.5 million acres.
Another heated battle of late was the effort to open portions of the Arctic National Wildlife Refuge, adjacent to Prudhoe Bay on Alaska’s North Slope. In April, the U.S. Senate defeated a plan to allow oil exploration in ANWR; the current Bush administration had strongly advocated that exploration as part of its national energy plan.
To the Rockies
The Senate refusal to allow oil and gas leasing in ANWR and the withdrawal of 4.4 million acres from the eastern Gulf sale are both perceived by environmentalists as stunning successes, and those groups are now turning their attention to the next target – the Rocky Mountain region, says Marc Himmelstein, president of Washington-based lobbying firm Nation Environmental Strategies. The Beltway firm handles issues in the environmental and energy fields, working with such entities as the Departmental Protection Agency and Department of Energy.
The Bureau of Land Management administers surface activities on some 262 million acres of federal land, and subsurface mineral estates on 700 million acres. Most of these lands are in the 12 Western states, including Alaska- some 84% of the subsurface minerals in Nevada are federally owned, as are 67% of Wyoming and Utah’s mineral estates, 46% of New Mexico’s and 44% of Colorado’s.
A mosaic of regulations already governs oil and gas development in the federal onshore, with constraints ranging from no access at all, to seasonal restrictions on activity, to complex federal permitting requirements.
But, environmentalist are also throwing any obstacle they can in the way of oil and gas development on federal lands – challenging individual permits to drill, existing leases, future lease sales, environmental impact statements, environmental assessments, and resource-management plans, says Himmelstein. “We face lawsuits at every step of the way.”
The Rocky Mountain region is the new poster child for the environmental movement, agrees Jim Sims, executive director of Denver-based Western Business Roundtable. “Eastern-based environmental groups are preparing a broad-based attack against energy and resource development in the region.”
Although the health and vitality of the West depend to a large degree on the health and vitality of its energy and resource-development industries, that linkage is not clear to many of today’s Westerners. A heterogeneous mix of ranchers, developers, retirees, and vacation-home owners populates the rural areas; sometimes they own surface rights but not the underlying oil and gas estates. When an oil or gas well is proposed, they can be very alarmed.
Too, while environmental groups have strong grassroots organizations and effective public relations campaigns, like attempts by the industry have not been nearly as fruitful. Indeed, the industry’s efforts to portray itself as a valuable contributor to local economies, as a responsible steward of the environment, and as a sector essential to national security have failed to engage the public.
Moreover, some organizations are actively opposed to the energy industry’s message. While many environmental groups are reasonable advocates of their positions, another set goes beyond advocacy to extremes. Members of the more extreme groups have a hard time seeing the West as an economic development region.
”Certain of these groups have not just an antidevelopment philosophy, but also a political strategy that is designed to force fundamental economic and lifestyle changes through dramatic increases in conventional energy prices,” says Sims.
During the next several years, there will be many votes in Congress that are aimed at locking up sections of the West from development. Part of these will be through creation of national parks and monuments; others will be through riders and amendments to appropriation bills that will try to do a little here and a little there. “Politically, these kinds of votes are easy to force, and they are difficult to vote against.”
Sims is organizing “Save the Rockies Coalition,” a group that is reaching beyond the extractive industries to include many of the region’s diverse constituencies. “We want to rally the West against what we see as direct attacks on our economy by groups that are largely based in the East. Public lands must be available for public use, and domestic energy development is good for both the region’s economic health and for the nation’s security.”
Powder River Basin
The coalbed-methane play in the Powder River Basin is front and center in today’s public lands controversy. Here, operators, local citizens, national and local environmental groups and various federal agencies are wrestling with how public lands should be used and protected.
Drilling operations are being delayed while the industry awaits final environmental impact statements in both Wyoming and Montana. Draft statements, one for Wyoming and one for Montana, were issued May 15.
Presently, no federal permits are being issued in Wyoming’s Powder River CBM play, with the exception of a few drainage locations in the Wyodak fairway. Permits for conventional wells on federal lands are also affected, because they too have reached their threshold of activity. The impact is tremendous, as the BLM controls more than 60% of the oil and gas rights in the CBM play, although it handles just 10% of the surface.
Wyoming’s draft EIS, covering impacts for the potential development of as many as 51,000 wells by 2010, is being reworked at present. The regional office of the EPA came out against the BLM’s preferred alternative, saying that choice would render the Tongue and Belle Fourche rivers unsuitable for irrigation. The agency was also concerned with air quality and the impacts of the development on fish and wildlife.
In Montana, no permits for CBM drilling-on federal, state or fee lands-are being issued at all, outside of a restricted number allowed under a prior settlement agreement. Montana decided to pursue a statewide EIS for CBM development.
The EPA also found problems with Montana’s Draft EIS. It believed the document did not clearly spell out how watersheds would be protected from degradation, and that it did not sufficiently analyze the impacts of development on air quality, tribal life, groundwater and wildlife.
”In the Powder River Basin, we are finding that a traditional EIS is no longer being used,” says Himmelstein. Previously, the EIS was a broad-based document that looked at broad impacts over a large geographic area. “Some of the things EPA is proposing, and the environmentalists are pushing even further, are to consider the EIS a localized document for each and every individual lease and well. When you are dealing with the potential of 50,000-plus wells, it is impossible, impractical and not required by the law to be that precise.”
Currently, the BLM is addressing comments from the federal agencies, state agencies and the public on the drafts for both states. Optimistically, the final EIS documents are expected prior to year-end. After each is issued, a 30-day public comment period will be held. Comments generated during those periods will subsequently be evaluated by the BLM. A “Record of Decision” is the final step, and can be expected as quickly as a month after the close of the comment period or as long as a year later.
Still, these are regional EIS documents, and site-specific National Environmental Policy Act analyses will also be required for drilling permits, notes Joe Icenogle, government affairs specialist for Fidelity Exploration & Production Co., a subsidiary of MDU Resources Group. “Some people have the misconception that once the ROD is issued, we’ll have a shotgun start to development. That is just not the situation.”
Widespread problems
Even on public lands where oil and gas development is allowed, and the environmental assessments and impact statements have been approved and finalized, securing federal permits can take a great deal of time. Clearly, many in the industry are frustrated by the complexity and slow pace of the process.
”It’s a challenge to be in the oil and gas business if your leases are on federal lands, due to a number of factors,” says John Northington, vice president of Nation Environmental Strategies. “Part of it is just the bureaucracy.”
At a seismic symposium sponsored by the Rocky Mountain Association of Geologists and Denver Geophysical Society in early 2002, Stuart Wright, a geophysical advisor with WesternGeco, noted that companies should optimistically plan on four to five months to obtain a federal permit for seismic on lands administered by the BLM. The Federal process includes filing a notice of intent to obtain permission to survey the area, a biological survey, an archeological survey, and a review of the permit by the state’s historic preservation office. Native American groups also may have to be notified, and a 30-day public comment period is required.
After the permit is secured, actual acquisition for a small survey might take another 15 to 40 days. But, restrictions for winter range activity, raptor nesting, sage grouse strutting, elk calving and hunting seasons can shrink the time available for that work to a period from August to mid-November.
Drilling permits can be equally as arduous to obtain. Bill White, vice president and chief financial officer for Midland-based Pure Resources Inc., says his firm has had problems obtaining federal permits. “We have federal leases in the San Juan Basin, and when we tried to get permits they would be turned down.”
The company came up against interpretational differences between what it believed was stated by the regulations and how the local BLM offices interpreted those regulations. In one case, the field office of the BLM had a rule that a location had to be within 300 feet of a road. That particular guideline was not provided for in the regulations, and the company was eventually successful in having the guideline set aside.
Pure’s approach is to foster relationships with the regulators that recognize both sides of the issues. “We have a very thorough understanding of the regulations, and we know the regulators very well and understand where they are coming from.
”Often, the lease stipulations are totally subject to the local BLM jurisdictions. A lot of the interpretations are a function of the political and environmental stances of the individuals involved in the process. Bureaucracies can certainly be arbitrary.”
Nonetheless, there is some positive movement. “During the past two appropriation cycles – and if the Interior Department appropriations move forward, a third consecutive year- Congress has increased resources provided to process leases, to review the environmental impacts and to provide enforcement,” says Himmelstein. Those actions will potentially speed up the industry’s capability to access the nation’s natural gas.
The issue remaining will be the perennial one of economics, and included in the economics will be an operator’s estimation of what it will cost to continually fight the environmentalist. “They are not going to go away,” he adds.
Still, significant volumes of untapped gas reserves reside in the Rocky Mountain area, and it is one of the only domestic areas that can grow its production. “The nation clearly needs to reach a balance between meeting environmental goals and obtaining gas supply, and we that that can be accomplished,” says EOG’s Papa.
WHERE AND HOW MUCH
In a 1999 study, “Meeting the Challenges of the Nation’s Growing Natural Gas Demand,” the National Petroleum Council began to quantify the amount of natural gas resources that underlay federal lands, and how much of this resource was subject to access restrictions.
In its first look, the NPC estimated that the eastern Gulf of Mexico and the eastern and western seaboards of the U.S. contained 76 trillion cubic feet (Tcf) in gas resources on which development was barred or strongly restricted.
The Rocky Mountain region, which is shaping up as the great battleground for public land access, contained 137 Tcf of federally controlled resources, 29 Tcf of which were totally closed to development and 108 Tcf of which lay beneath lands with restricted access. That amount was 40% of the potential resource in the entire region.
More detailed efforts to analyze gas resources under onshore federal lands are now under way. A groundbreaking report was issued in May 2001, covering the Greater Green River Basin of southwestern Wyoming. The study, which was funded by the Department of Energy, was carried out by Advanced Resources International, a consulting group headquartered in Arlington, Virginia.
The basin was reviewed first because it contains about 160 Tcf of potential gas resources, the largest amount in the Rockies.
The federal government directly controls 56% of the 29 million acres in the study area. Based on resource estimates by the U.S. Geological Survey and Advanced Resources for the DOE, 117 Tcf underlie the federal lands, some 73% of the total resource. Advanced Resources concluded that 34 Tcf was completely off limits to development, either closed by statue or administrative actions. An additional 45 Tcf carry some type of leasing stipulation that restricts access. More that 100 discrete stipulations, which mainly limit the time of the year when operations can take place, were in force on those leases.
Just 38 Tcf of the resource base on federal lands was subject to standard lease terms.
Currently, the firm is working on a new more extensive inventory of onshore federal lands, to identify the oil and gas resources and the extent of restrictions to their development. It expects to finish this study in November, after which it will be released by the federal government, says Jeffrey Eppink, vice president.
The work was mandated by the 2000 Amendments to the Energy Policy and Conservation Act, which called for a scientific inventory of oil and gas reserves and resources on federal lands. The Department of Interior is funding the project, which is being conducted in cooperation with the departments of Agriculture and Energy. The areas that are covered are the Montana Thrust Belt, Powder River Basin, Green River Basin (updated from the previous study), the Uinta/Piceance basins, and the San Juan/Paradox basins.
”The EPCA inventory is similar to the Greater Green River Basin study, although the oil is now included as are reserves (which by definition are accessible). In addition, categorizations have changed slightly,” says Eppink. “With five major areas being assessed in the EPCA effort, we’re working fast and furiously on the project.”
The following quote is a must read for any wind/solar dreamers out there in the web netherworld.
"Certain of these groups have not just an antidevelopment philosophy, but also a political strategy that is designed to force fundamental economic and lifestyle changes through dramatic increases in conventional energy prices"
Lends itself to a great mental picture, particularly when its dark out, no wind and below zero.
Ironic, as well as blatantly hypocritical.
They think that the info in this article will be LOST on the general voting "sheeple".
Probably thinking that most people get their energy knowledge from the likes of Babwa Streisand and Robert Redford.
Poetic justice, I love it.
What's even worse is to see individuals with heavy investments in corporations extracting Middle East oil using their private, tax-exempt "charitable" foundations to fund environmental groups seeking to prevent access to any alternative sources of energy. Indeed, they do everything possible to mandate increased dependence upon fossil fuels.
Which is to stand the wisdom of Baron von Clauswitz' on its head. What would be citizens in such a war, but less than slaves? Those who would be taxed to by their own yokes.
Maybe I'm stupid, but I've never seen an environmental group oppose alternative energy sources, even when they aren't environmentally, much less commercially, sound.
I guess I'm having trouble with your logic here. I'd like to see the source which links "individuals" and their private tax exempt organizations. Most corporations that USED to be involved with middle eastern oil extraction, were long ago nationalized by the arab homeboys.
They advocate renewables until it's time to actually build production facilities. Then all they talk about is "conservation." You should see all the resistance to wind farms (kills birds, noisy, looks ugly...), biomass (relies on logging or beef production (for methane... bad, bad, bad)), geothermal (water pollution, thermal pollution, odors, etc.), and hydroelectric (now tell me how many environmentalists you hear advocating dams). The only "green" power source environmentalists almost continuously support is solar. As we both know, that source consumes vastly more energy than it produces except for perhaps passive solar home heating. Even the payback on solar hot water is poor.
I guess I'm having trouble with your logic here. I'd like to see the source which links "individuals" and their private tax exempt organizations. Most corporations that USED to be involved with middle eastern oil extraction, were long ago nationalized by the arab homeboys.
I sure can tell you haven't read that book.
Rockefeller (XOM), Prince Barnhard (Shell), British royals (BP), the Pew family (SUNOCO), and now even the Packard family (that's right, Hewlett/Packard money) all have big-time interests in fossil fuel production (although the Packard money is now in offshore gas). Their respective foundations are all first line supporters of environmental groups, and are they ever in good company.
Consider the credentials of the single most effective promoter of UN environmental initiatives (from pages 319-320):
Maurice Strong is a Canadian billionaire, a Board member of Petro-Canada and Dome Petroleum, and President of Ontario Hydro. He is Director of the IUCN (the EPA of the UN), Chairman of the Earth Council, Trustee of the Aspen Institute, Director of the World Future Society, Director of Finance for the Lindisfarne Association, founder of Planetary Citizens, member of the Club of Rome, Chairman of the World Resources Institute, and Co-Chairman and founder of the Council of the World Economic Forum and Senior Adviser to the President of the World Bank. He is President of the World Federation of United Nations Associations, Senior Advisor to the UN Secretary General and for the Rockefeller and Rothschild Trusts.These individuals use their "charitable" foundations to purchase political influence to enhance their personal portfolios. The more money that foundation makes, the more political power they wield as Directors.
There are a number of excellent books out on the topic of influence buying by "charitable" foundations. Perhaps the best is Undue Influence, by Ron Arnold. Unfortunately all such books have one flaw in common: they offer no structural solutions. In that respect, mine is unique.
You see, it's not ABOUT energy - it's about MONEY.
The averAge american has TOO much of it compared to the rest of the world and the only way to smooth out the economic pond is to let the money flow downhill, just like water. When we send money, to receive a substance that is just lying around underground for the taking, we transfer wealth.
Wealth is ALWAYS produced from the ground in some manner, be it ore or oil or food. If you happen to be sitting on top of this ground, you'll get rich: if not, you'll be poor.
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