Washington (Platts)--22May2009

The US Bureau of Land Management is not keeping up with legally required
environmental inspections of oil and gas wells in the Western US, but the
current gas demand slump is providing a "golden opportunity to catch up," a
coalition of environmental groups said Friday after releasing a new report.

The Billings, Montana-based Western Organization of Resource
Councils -- an umbrella organization for seven resource councils from the
Dakotas to Oregon -- released Thursday a report that said BLM inspectors
issued double the number of well permits between 2004 and 2008, but didn't
increase environmental inspections at the same pace.

Despite increasing the size of its inspection force to 147 inspectors
from 64 at six field offices in such producing areas as the Powder River Basin
and the San Jan Basin in New Mexico, those inspectors spent 35% less time
doing environmental checks in 2008 than in 1999. The report did note, however,
that inspections rose 86% between 2006 and 2007.

WORC researcher Sara Kendall, who obtained data for the report through
a Freedom of Information Act request, noted that despite the increase in total
well inspections, the number of high priority inspections--inspections of
wells in environmentally sensitive areas and inspections of wells drilled by
operators with a history of violations--never climbed above 15% of the amount
required by law.

"They've doubled the number of inspectors but they haven't done the
required inspections," WORC member Peggy Utesch of Fruita, Colorado, said
Friday. "These are the most important inspections to get done."

Kendall said she didn't have the data from the BLM to prove a direct link
between increased permit processing and decreased inspections, but her
conversations with BLM field office workers indicated "they are spending more
time permitting."

A spokesman for the Independent Petroleum Association of the Mountain
States was quick to leap to BLM's defense, noting the agency makes gains for
taxpayers while efficiently regulating drilling.

"Natural gas and oil development currently occupies less than 0.1% of our
public lands and producers face a strenuous and heavily regulated process
that can require up to 10 years to develop any given lease," said IPAMS
spokesman Jon Bargas.

"Considering the obstacles that are constantly thrown up by those who
oppose the development of domestic energy, we believe the BLM does a
remarkable job in balancing our public lands for multiple use," he added. "BLM
spent about $90 million in [fiscal 2008] to administer the onshore natural gas
and oil program in 2008. From that small investment, the federal government
gained $4.2 billion in royalties, rents and bonuses. For every dollar
invested, the oil and gas program returned $46."

The WORC study examined inspection data from field offices in Grand
Junction, Colorado; Buffalo and Pinedale, Wyoming; Miles City, Montana;
Farmington, New Mexico; and Dickinson, North Dakota.

WORC cautioned that data entry has been slowed slightly in some offices
because of the Cobell lawsuit regarding BLM stewardship of royalties that are
due to Indian tribes. Farmington, New Mexico, data was the most suspect, WORC
said, because that office supervises a large amount of Indian leases. There
were no Indian land lease data issues at the Pinedale or Grand Junction
offices, WORC said.

BLM spokesman Matt Spangler said data showed the agency completing 70% of
16,017 inspections at the six western offices in 2007, and 82% of inspections
in 2008. Spangler did not provide a breakout of high-priority inspections.

"It is true that our environmental inspectors had an increased permit
processing workload in recent years and the BLM still has a significant
backlog of [applications for permit to drill] to process," Spangler said, but
he agreed a "golden moment" might be at hand.

"Drilling activity is declining in many areas and we plan to increase the
number of environmental inspections nationwide," Spangler said.

WORC member Utesch said Congress legislated $20 million in 2005 to beef
up the BLM's field staff, but only $8.5 million of that has been appropriated,
a shortfall she attributed to weak leadership at the top of BLM and Interior
during the Bush adminsitration. "It's inattention. There's no leadership at
BLM. That needs to come from the top," she said.

Utesch added that she expected the new Interior Secretary, Ken Salazar,
to turn his attention to BLM's problems as soon as the administration's energy
policy and climate change issues are addressed.

--Bill Holland, bill_holland@platts.com