On Thursday, officials in the U.S. reported a rush on oil and gas drilling permits to remove any delay in drilling on Indian and federal lands. This was done in response to the expected slump in applications, an estimated 40 percent drop compared to their usual average.
Lower energy costs have limited domestic exploration which in turn has caused a dip in revenue. This has had a significant effect on state budgets for some of the giants of energy production. Alaska, Colorado, Montana, New Mexico, North Dakota, and Wyoming have all experienced a crimp in their financial plans. Normally, these states are given a large portion of the revenue made from oil and gas activity on American soil.
According to Neil Kornze, U.S. Bureau of Land Management Director, said that under the new proposal, incoming drilling applications must be completed online to simplify approvals and lower costs for the energy companies. In the past, companies blamed higher costs on the delays in approvals.
By permitting only online, roughly 90 percent of applications could be processed in no more than 115 days said Beverly Winston, bureau spokesperson. In 2015, the average processing time was 220 days. “The new system is a big improvement over the current, hard copy-based application system,” said Kornze.
Reps throughout the industry have reported working with Kornze’s agency to repair glitches in the system over the past few months. They appreciate the effort to make the permitting process more cost-effective and organized.
Western Energy Alliance’s Kathleen Sgamma is less approving, however. According to Sgamma, the lengthy processing time for permits is due to environment studies and other aspects of the procedure that are not factored into the 220-day average. For instance, Sgamma said, an application that is filed in January may have to wait until summer when plants are in bloom for the vegetation to be properly surveyed. The months between January and summer are not counted in the expected processing times.
“We’re a bit skeptical that the (automated) system will result in significant time savings,” said Sgamma, “Generally companies avoid public lands if they can, because they know there’s no certainty on getting through all the leasing.”
It is not yet known how or how much the decision could affect new exploration. This is mostly influenced by oil and gas prices that have dropped significantly during the last two years.
Article written by HEI contributor Briana Steptoe.