CBM producer protests new drilling fee
A Wyoming coalbed methane producer says a new requirement to pay $4,000 in administrative costs for every oil or gas well drilled on public land will prompt companies like his to focus more on drilling on state and private land.
The change came in a congressional directive signed by President Bush on Dec. 26. The idea is to reimburse the federal government for the cost of processing drilling applications.
U.S. Bureau of Land Management officials estimate that $4,000 is the average cost of processing each application for a well, according to Tim Spiesak, the BLM’s fluid minerals chief in Washington, D.C.
Spiesak said processing an application costs the same even if the BLM rejects it.
Driller cites waits of yearsBut an independent driller, Double Eagle Petroleum Co., said the fee is a burden on top of long waits — up to several years — to get applications approved.
“It’s just another reason why companies will look to state and private lands to drill wells as opposed to federal lands,” Double Eagle Vice President Steve Degenfelder said.
Degenfelder also said the application cost doesn’t make financial sense if he can’t be assured that his wells will be approved.
“It’s like you’re going to a car wash and the attendants say, ‘Well, to wash your car it’s $250.’ And you say, ‘OK, are you gonna wash it and wax it,’ and they say, ‘We haven’t decided yet, so go stand at the end of the tunnel and see what you’re going to get,”‘ Degenfelder said.
Degenfelder said he would protest any fees for outstanding applications he filed before the fee was instituted.
—The Associated Press