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Vol. 15, No. 30 Week of July 25, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

BPA: Feds to permit wells on state lands

Blowout Prevention Act adds layers of rules, bureaucracy to oil and gas permitting; Waxman says needed to prevent more oil spills

Kay Cashman

Petroleum News

A major oil spill occurs in federal waters — under federal regulatory jurisdiction — and the U.S. House Energy and Commerce Committee decides to take away the rights of states and private property owners to regulate oil and gas wells on their lands.

Canada Free Press calls the U.S. Blowout Prevention Act of 2010 the “Oil-Production Prevention Act.”

Dan Kish, senior vice president of policy for the Institute for Energy Research in Washington, D.C., describes the bipartisan effort in the U.S. House of Representatives to push the bill through before Congress adjourns for the election season as “the most stunning power grab of all” because it’s the first bill ever to “require federal permission for every onshore oil or gas well drilled in the United States.”

The Blowout Prevention Act, championed by House Energy and Commerce Committee co-chairman Henry Waxman, a Democrat from Hollywood, Calif., is designed to “make energy harder to produce, more expensive, more imported and more rare,” Kish says.

Waxman and his supporters believe the bill, intended to prevent more oil spills and overhaul the way federal authorities regulate both offshore and onshore drilling, is needed to protect the United States from another major oil spill.

The legislation, Waxman says, “seeks to ensure that we never have a repeat of the BP disaster.”

Control of wells on state and private land

For the states, including the State of Alaska, and private landowners, the bill will place all onshore and offshore oil and gas exploration, development and production wells under the control of the federal government.

The states will be allowed to regulate under the Blowout Prevention Act, but only after federal approval of the projects within their borders, which is currently a complex, time-consuming and uncertain process at best.

The Blowout Prevention Act, Kish says, “extends the possibility of a state regulatory scheme mirroring the federal one.”

Why Republicans voted for the Act

The legislation, which contains a bundle of new rules for drillers, has already unanimously passed Waxman’s committee. Press reports have been favorable; the issue of state’s rights seldom addressed.

“Every committee Republican” in the Energy and Commerce Committee voted for “a federal takeover of the oil and gas permitting process for all drilling, even on state or private property,” a recent Wall Street Journal editorial noted, describing the situation in Congress as a “madhouse.”

Why would Republicans vote to abdicate state and private landowners rights AND add layers of bureaucracy on oil and gas development before a final report on the Macondo disaster has been completed?

Because the vote on the Blowout Prevention Act “unfortunately came against the backdrop of Joe Barton of Texas’s much-criticized apology to BP and those who might have normally opposed apparently went along with it, so as not to look uncaring regarding the spill. Therefore, it passed 48-0 out of Energy and Commerce, making it harder to stop,” Kish told Petroleum News in a July 21 e-mail.

Kish would like to see new legislation that deals with regulation of drilling on hold until after the investigation of what went wrong at BP’s Macondo well in the deepwater Gulf of Mexico has been determined.

“With this bill, Chairman Waxman is leaping before he looks, with serious consequences for U.S. energy and national security, as well as for the jobs of not just the hundreds of thousands who work in the offshore energy industry, but their counterparts on land, as well. He is leaping off a cliff while holding onto America’s arm,” Kish wrote in a July 19 report on the legislation on the institute’s web page, at www.instituteforenergyresearch.org.

States deemed ‘incapable’ of regulating without feds

Currently, there are about 1 million producing oil and gas wells in the United States, the vast majority on state and private lands, Kish said.

“States have adjusted their permitting to meet the conditions on the ground and have a stellar track record of working to enhance and improve operational safety while minimizing environmental impacts,” he said.

“But under this bill Texas — with almost 250,000 operating wells and California — with over 50,000 wells, are deemed incapable of what they’ve been doing for a century unless they seek and are awarded federal approval. And while “marginal wells” (those producing 10 barrels or less per day) are exempted from the bill, it is silent on how someone can validate that a well he intends to drill is marginal before he drills it,” Kish said.

Alaska, he said, has 1,767 producing oil wells and 261 gas wells.

“The only thing that is certain about this bill is that it will make it harder to produce domestic energy, create uncertainty for domestic producers and all the jobs they support, and lead to making the U.S. less competitive in energy production and more reliant on foreign sources of energy made competitive by the visible hand of government malfeasance,” Kish said.



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