BLM outlines drilling permit process on federal lands
FARMINGTON - So you want to drill an oil or gas well on federally-managed land? Get ready to navigate a confusing array of laws -- from environmental to Native American religious freedom -- and federal agencies ranging from the Army Corps of Engineers to the U.S. Fish and Wildlife Service.
And while not all permits require input from the half a dozen or so agencies that may get involved, many of the more than 100 oil and gas operators in the San Juan Basin echo the same complaint: in an industry where time is money, it simply takes too long for the Bureau of Land Management to process an Application for Permit to Drill, or APD.
According to the BLM Farmington Field Office, the San Juan Basin has 23,350 active oil and gas wells, more than 16,000 of which are on federally-managed land.
Zach Stone, spokesman for the BLM Farmington office, said that his office currently has 35 pending applications for drilling projects on federally-managed and Indian-Allotted land, and that from 2016 to the present, the average time to process an application has been 120 days. Seventy-five applications were processed during the last calendar year, said Stone.
To shed some light on this intricate and regulation-laden procedure, several officials from the BLM Farmington Field Office recently sat down to explain the process.
"BLM Farmington faces unique challenges in balancing energy development with the complex environmental and cultural resources found within the San Juan Basin," said BLM Farmington District Manager Victoria Barr.
The BLM is bound by its multiple-use mandate, meaning that the agency must manage public lands for the protection, use and conservation of multiple natural resources, and must balance that with responsible oil and gas development.
Much of what guides the BLM when processing drilling permits involving federal land is the agency's mandate to fulfill requirements of the 1970 National Environmental Policy Act, or NEPA. The law requires federal agencies to assess environmental effects of actions, including petroleum exploration, on federal lands before deciding to issue permits to drill.
After a lease for a parcel of land has been obtained by an operator, the operator holds the rights to develop the fluid minerals, explained Sarah Scott, supervisory natural resource specialist for the BLM Farmington Field Office. Development must start on the land within the term of the lease - usually 10 years - or the lease will expire.
"The next step is for the operator to file a Notice of Staking, or NOS, or to file an APD," said Scott. "Most operators file a NOS first."
Once the BLM receives a NOS or APD, Scott said her agency has 10 days to schedule an on-site inspection of the proposed drilling location.
Farmington BLM natural resource specialist Michael Porter explained the on-site inspection.
"We go to the site where the operator wants to drill and look at everything involved, including where the actual well will be, as well as any roads, pipelines or other structures that are planned," he said. "We take note of any concerns, including environmental, biological and cultural resources."
There is no time stipulation for when the on-site inspection must occur, just for scheduling the inspection, said Porter, but they're usually scheduled three weeks out. Notices of inspections are posted on the BLM website, and the inspections are open to anyone who wants to be present.
Usually within two weeks of the on-site inspection, a meeting of an interdisciplinary team, which consists of BLM officials, archaeologists, geologists, as well as other resource specialists, takes place. At the meeting, all possible issues and concerns about the drilling project, such as impacts to wildlife, water and air quality, and other environmental and cultural concerns, are discussed.
"In the meantime, to expedite the process, the operator usually hires third-party contractors to conduct archaeological, biological and paleontological surveys, if needed, for the Environmental Assessment, or EA," said Scott.
While the third-party contractor is developing the Environmental Assessment report, BLM usually receives the drilling permit application from the operator. BLM has 10 days from receipt of the application to review it and determine if it's complete. The application consists of several parts, including a drilling plan and a plan for how the operator will reclaim and restore the land during the life of the well and after it is plugged.
"We let the operators know via letter if the APD is complete, or if there are any deficiencies," said Porter. "The operator then has 45 days to address any deficiencies in the APD. If the APD is deemed complete and if all NEPA requirements are met, we have 30 days to process it."
While the process usually moves along at a regular clip up until this point, if the NEPA requirements are not met or deficiencies have not been adequately addressed, the application will be placed into a deferred status.
"These deficiencies can extend the permitting process," said Porter. "But we cannot approve the permit until all NEPA requirements are met."
One of the BLM Farmington Field Office requirements involves sending letters out for tribal consultations. Tribal consultation is not a NEPA requirement, but is required by the National Historical Preservation Act under section 106, as well as the American Indian Religious Freedom Act, and is another of the many requirements BLM is bound to adhere to before permitting can occur.
Consultations with other federal agencies such as the U.S. Army Corps of Engineers, U.S. Forest Service, U.S. Fish and Wildlife Service, or with state-level offices - also required by law - can extend the application process.
"Anytime we have to send something out of our office, we must wait for their responses, whether timely or not," said Porter.
Another cause of permitting slow-downs, said Scott, relates to the BLM's need to balance permitting duties with other priorities with the agency's multi-use mission.
"APD projects are not the only thing employees are working on, so it may take some time for them to get to the necessary reviews," she said.
Any of these factors can make applying to drill on federal land a much more complicated and lengthy process than the process involved with state-managed or private land, neither of which are bound by NEPA requirements.
An application to drill on state-managed land, for example, typically takes less than 10 days to process, said Daniel Sanchez, compliance and enforcement manager for the New Mexico Oil Conservation Division.
"The operator files the APD at our district office. It's reviewed by the line manager, then it goes to a geologist who checks to make sure the location and zone are listed correctly. It's then reviewed one last time by the district supervisor," said Sanchez. "If all is in order, the APD is approved. We almost always meet our goal of getting permits out within 10 days or less."
Scott stressed that despite the added steps and regulations required for federal land, she and her BLM co-workers are doing their best to process applications as quickly as possible.
"It's just not the case that we're prolonging the process," said Scott. "We have so many other things we manage in addition to oil and gas, and a lot of it goes back to limited resources that prevent us from moving things along as expeditiously as possible. Add to that the need to involve other entities, most of which probably have a similar lack of resources, and it slows things down even further."
With Farmington BLM's process, once all of the permit's NEPA requirements have been met and deficiencies addressed, the environmental assessment ends up on the desk of the Farmington BLM's planning and environmental coordinator, Katie White Bull, who reviews it and sends it to the project lead for final edits.
"This review is usually done within 10 days," said White Bull. "After the review and edits, the assessment goes to BLM management, which decides whether there are substantial complaints or concerns about the project to warrant a public comment period."
The comment period, if ordered, lasts up to 30 days. If substantive concerns are raised during the comment period, the management team revisits the NEPA document for the project and addresses any remaining issues.
"There is no regulatory time frame for public involvement opportunities for Environmental Assessment's associated with APDs. There is a time limit set for Environmental Impact Statements, but those are typically not required for APDs," said White Bull, adding that when a Right of Way permit is also required for a drilling project, that process could add up to another 120 days, depending on how complete the right-of-way application is.
Once all issues have been addressed, and if the BLM management team determines there is no significant impact from drilling, a Finding of No Significant Impact, or FONSI, is signed, and the final approved application package will be returned to the operator, usually within a few days. The operator then receives the permit with any applicable conditions of approval.
Undoubtedly, the complicated and lengthy permitting process for drilling on federal land will continue to generate complaints from oil and gas operators, so long as they continue to drill in areas that the BLM must, as required by law, manage and regulate.
"I don't think anyone's intentionally trying to shut down industry, but at the end of the day, permits in this area are much harder to get," said Jason Sandel, vice president of Aztec Well Servicing, which provides equipment and services to oil and gas operators within the Basin and throughout the U.S. Although Sandel's company isn't required to deal with the BLM, his business is directly affected by his customers' ability to obtain drilling permits.
"Operators have to look at what kind of return they're going to get on their investment. If it's going to take a year to get a permit in the (San Juan) Basin but just a few weeks in the Permian (Basin), they'll decide to drill there instead. Something is broken in the process and it truly impacts jobs and our local economy."
Despite criticisms of the permitting process, the BLM officers said that their agency is proud of the positive impact it has made on the country's economy.
"It's important to keep in mind that the BLM has generated billions of dollars from onshore oil and gas production," said Stone. "We're one of the highest contributors to the U.S. Treasury, half of which goes to the states."
Leigh Black Irvin is the business editor for The Daily Times. She can be reached at 505-564-4621.
BLM permitting timeline:
- Lease is obtained by operator (development must start within the term of the lease – typically 10 years - or the lease will expire).
- Operator files a Notice of Staking.
- BLM must schedule an on-site inspection of the NOS within ten days and post the NOS for a 30-day review. There is no time requirement for the actual inspection.
- Within two weeks after the on-site inspection, a NEPA interdisciplinary team meeting takes place.
- Operator files APD.
- BLM has 10 days to review the APD and determine if it is complete.
- If deficiencies in APD are found, operator has 45 days to address them.
- If the APD is complete and NEPA requirements are met, BLM has 30 days to approve, deny or defer the permit.
- After contractors submit the NEPA documentation (which averages 30 days to compile), BLM and specialists review it within 10 days.
- If NEPA requirements are not met, the APD is placed into deferred status until they're met. There is no time requirement for deferred status.
- Once NEPA documentation has been reviewed by specialists and requirements are met, it is reviewed by BLM planning and environmental coordinator, usually within 10 days.
- The NEPA documentation then goes to BLM management for review.
- If management determines a public comment period is needed, comment period may last up to 30 days.
- Management may revisit the NEPA documentation in order to address substantive comments. There is no time limit for this process.
- If a significant impact is found, an Environmental Impact Study is initiated.
- Once all issues have been addressed, and if the BLM team determines there is no significant impact from drilling, the operator receives the approved permit, usually within a few days, along with any applicable conditions of approval. The operator is free to begin drilling (so long as any needed Right of Way approvals for roads, etc., have been obtained).