Cites Importance of Inspection and Enforcement to Ensure Fair Return to Taxpayers
WASHINGTON – Bureau of Land Management (BLM) Director Neil Kornze today testified before the Senate Energy and Natural Resources Committee on a bill that would increase the efficiency of oil and gas permitting on public lands and coordination among agencies by continuing the BLM’s Oil and Gas Pilot Office program.
During his testimony on S. 2440, the BLM Permit Processing Improvement Act of 2014, Kornze described the key role pilot offices play in supporting the Administration’s All-of-the-Above energy strategy to create jobs and reduce the nation’s dependence on foreign oil.
“The Obama Administration has made it a priority to permit environmentally responsible oil and gas development on the nation’s public lands,” Kornze said. “This bill helps ensure that we continue to have the engineers and the natural resource specialists on the job to do this important work.”
Federal onshore oil production is the highest it has been in a decade and has risen for the fifth year in a row. Last year, the BLM offered 5.7 million acres for lease by industry, the most in a decade. Since 2008, the BLM has approved more than 27,000 Applications for Permits to Drill (APDs), and has reduced the average processing time for permits to the lowest it has been in eight years. Oil and gas development on Federal public lands is critically important to States and Tribes, which receive approximately half of the more-than $3 billion in oil and gas revenue generated by the BLM annually.
As a result of efforts like the pilot offices, there are now 100,000 oil and gas wells on Federal public lands, the most ever. Kornze noted that the BLM needs to match its Inspection and Enforcement efforts to the growing number of wells on public lands. These inspections are critical for ensuring proper development of these wells and for accounting for the billions of dollars in royalties due from oil and gas production on the public lands.
At the same time, Kornze said that a shortage of inspectors, declining budgets, and a record number of wells on public lands hampers the BLM’s ability to ensure a fair return to the taxpayer.
“The taxpayers deserve a fair return on their public resources, and increasing our inspection and enforcement will help ensure that,” Kornze said. “With an oil and gas budget that has declined by roughly 20 percent when accounting for inflation, the challenges are considerable.”
In response to these challenges, the President’s FY 2015 budget proposal asks Congress for the authority to charge an inspection and enforcement fee that reflects the actual cost of performing this function in order to strengthen the BLM’s inspection and oversight capability. Kornze said that this fee system will help the BLM become more responsive to industry needs while also improving production accountability and safety and environmental protection of oil and gas operations. He noted that a similar fee system was authorized by Congress for offshore oil and gas inspections and has proven to be a successful model for both industry and relevant agencies. Without additional resources to meet this critical need, the BLM may be forced to consider drawing scarce resources from other high priority efforts like permitting and leasing.
At the hearing, Kornze also testified in support of the goals of S. 279, the Public Lands Renewable Energy Development Act of 2013, a bill which would expedite the development of renewable energy projects on public lands.
The BLM manages more than 245 million acres of public land, the most of any Federal agency. This land, known as the National System of Public Lands, is primarily located in 12 Western states, including Alaska. The BLM also administers 700 million acres of sub-surface mineral estate throughout the nation. The BLM's mission is to manage and conserve the public lands for the use and enjoyment of present and future generations under our mandate of multiple-use and sustained yield. In Fiscal Year 2014, the BLM generated $5.2 billion in receipts from public lands.