Drilling advances

You may have paid handsomely to acquire the drilling rights to a highly prospective lease on federally controlled onshore acreage, but don’t plan on trucking in a rig anytime soon. After you sign on the dotted line, securing a permit to actually drill the prospect is by far a more wearisome proposition than handing over a check.

It seems that the U.S. Bureau of Land Management (BLM), which approves Applications for Permits to Drill (APD) on federal and Indian-controlled lands, is sitting on a backlog of 3,500 unprocessed permit applications, largely because of agency inefficiencies that are dragging out approvals, which average well over seven months. That caustic assessment comes not from disgruntled industry folks, but rather from the watchdog of BLM’s own parent, the U.S. Department of the Interior (DOI).

In a June 26 memo to BLM directors and the Bureau of Indian Affairs, DOI Deputy Inspector General Mary Kendall said the average lag time of 228 days to get a drilling permit approved is untenable and threatens the average $3 billion/yr in federal royalty payments. “Specifically, the federal government and Indian mineral owners risk losing royalties from delayed oil and gas production. Industry officials informed us that delays cause some wells not to be drilled, resulting in additional lost production and royalties,” Kendall wrote.

By contrast, the DOI deputy inspector general pointed out, most state regulators approve permits to drill in 80 days or less. She said the BLM does approve 99% of applications received, but only 6% are given the go-ahead within 30 days of their receipt.

“Although oil and gas operators share responsibility for this situation, inefficiencies in the U.S. Department of the
Interior’s review process impede productivity,” she wrote in the 32-page report that spelled out six recommendations that could help speed up the process.” Long review times create uncertainties in the APD process for both industry and BLM. This adversely affects developing the nation’s domestic energy resources.”

Much of the blame for APD processing delays, Kendall said, can be traced to DOI, which, until recently, has not placed a high priority on improving the process. The hold-ups began raising serious red flags with the acceleration in applications to drill on federal lands in, and around, the Bakken shale. To date, DOI says that more than 3,000 wells/yr are being drilled on federal properties, primarily in Wyoming, New Mexico, Utah and North Dakota.

The BLM shot back that its budget and workforce are insufficient and do not reflect its stature as the nation’s largest land management agency. Rather than calling for an across-the-board staffing increase, Kendall’s recommendations focus entirely on personnel management issues, including the appointment of project managers for every field office to oversee the APD process, develop and enforce performance timelines for application processing, and implement performance measures.

High-tech assistance. The DOI deputy inspector general said operators bear some of the blame by often failing to provide all the complete and necessary information required to grant a permit. A considerable chunk of the data required, and the item that occupies most of the processing time, she said, involves the surface review that must comply with the National Environmental Policy Act. The surface review takes in myriad scientific analyses, such as hydrology, archeology, biology, and wildlife, including an assessment of threatened and endangered species.

If the public and privately-funded Environmentally Friendly Drilling (EFD) program has its way, before the end of 2015, operators will have at their disposal a high-tech analytical tool that will provide all the fully vetted data required for a complete drilling permit application. Currently under development, the GIS-driven Land Use Site Selection Information Tool (LUSSIT) comprises a standardized analytical methodology that addresses the environmental issues of well placement, which its sponsors hope will expedite permitting.

The nine-year-old EFD, which is administered through the Houston Advanced Research Center (HARC) of The Woodlands, Texas, under the direction of Richard Haut, Ph.D., works with industry, academic, governmental and environmental representatives to conduct, what it describes, as “unbiased research” into potentially viable technologies that address air, water and land issues. HARC is the brainchild of the late George Mitchell, who is widely celebrated as the father of hydraulic fracing.

The surface components of a federal APD are at the heart of the LUSSIT tool that EFD is developing in collaboration with the University of Arkansas and Latitude Geographics. If all goes well, the complex analytical tool will be ready for field trial deployment by November 2015.

 The LUSSIT, according to EFD principals, is being developed to provide producers and regulators, alike, with a “flexible and practical analytical tool” to help in placing wells, so they will deliver minimal environmental impact. The tool, which combines data, data models and advanced workflows, would be used in conjunction with specially engineered software.

Computer speak aside, the idea behind the proposed LUSSIT is to provide operators access to the best practices employed in a given area to minimize environmental impact and, hopefully, present to federal regulators a complete APD, which would expedite the approval process.

“This will help operators identify where they should set their pads and build their roads and infrastructure, to avoid environmentally sensitive areas. It also captures best managed practices from 20-plus projects and brings a decision matrix into the process to help operators make better decisions,” says Tom Williams, EFD senior advisor, along with Texas A&M Professor Dave Burnett.