Permit concerns, low gas prices, battles with US EPA vex explorers
Houston (Platts)--9Nov2012/619 pm EST/2319 GMT
Concerns over permits for drilling on federal lands, the low price of
natural gas and environmental issues associated with oil and gas production
remain the hot button topics for US explorers, speakers at the Independent
Petroleum Association of America's annual meeting in New Orleans said Friday.
H.A. True III, managing member at True Oil, said it is taking up to 18
months for producers to obtain a permit to drill on federal lands in many
producing basins in the West.
He said True Oil, which is active in the Bakken Shale play, is having
difficulty getting federal approval to install a pipeline along a right of
way, even though two existing pipelines follow the same right of way.
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Federal regulators are requiring the firm to conduct an environmental
impact statement to determine if the pipeline's construction could disturb
breeding grounds for sage grouse, even though no breeding grounds have been
found in the area.
"It's just that mentality that's going to drag this whole process down.
We're finding the same thing with our permits in Wyoming," he said.
However, speaking on the sidelines of the conference, Mike Watford, vice
chairman of the IPAA as well as chairman and CEO of Ultra Petroleum, said he
does not consider dealing with the federal government a big impediment to
"We just have to figure out ways to make it work and we have," he said.
Since 1996, Ultra has been one of the major players in the Jonah field
and the nearby Pinedale Anticline of western Wyoming, two gas plays where the
primarily landowner is the federal government.
"We are accustomed to dealing with federal regulatory issues on federal
lands, which are more difficult than private lands," he said.
John Walker, president and CEO of EnerVest, said the E&P industry, which
for the past several years has been engaged in a spirited debate over the
safety of hydraulic fracturing, is just beginning to see a new threat from
overzealous federal regulators.
Walker declared victory in the argument over whether the industry should
be permitted to continue to engage in fracking in the production of oil and
gas. "We as an industry are winning that," he said. "But I've started getting
concerned about the creeping federal regulation of greenhouse gases."
Under newly enacted regulations that the Environmental Protection Agency
promulgated under the Clean Air Act, "we have to report the emissions from
every frack job," Walker said.
The regulations, which are being phased in in stages, also will require
producers to install green completion equipment on all new and refracked
wells by 2014 to capture virtually all fugitive emissions.
"The feds, since they lost on hydraulic fracturing, are using the Clean
Air Act," to try to regulate the industry, Walker said.
"It doesn't matter if you're on private, federal land, etc.," he said.
Walker added that the warm winter of 2011-12, also had a pronounced
negative impact on the E&P industry, by dramatically reducing the demand for
"If we have another really warm winter, we'll be taking too much gas
into 2013. A warmer-than-normal winter will impact not only 2013 prices, it
will impact 2014 prices. We can't lose sight of the unpredictability of this
business because of Mother Nature," he said.
--Jim Magill, email@example.com
--Edited by Keiron Greenhalgh, firstname.lastname@example.org