Their reactions came 2 days before the House Natural Resources Committee holds a May 23 hearing on HR 2337, called the Energy Policy Reform and Revitalization Act, which was introduced last week (OGJ Online, May 18, 2007).

"My immediate reaction is that HR 2337 will be detrimental to energy security and harmful to consumers. It"s going to decrease supply, increase reliance on foreign energy, and cause prices to increase," said Marc W. Smith, executive director of the Independent Petroleum Association of Mountain States in Denver.

"This legislation singles out a key domestic supply region, the Intermountain West, and almost guarantees that less energy will be produced in 2008 and beyond," he told OGJ in a telephone interview.

"I knew that it would be distasteful to the oil and gas industry. I was surprised at how extensive it was," said Claire M. Moseley, executive director of the Public Lands Advocacy in Denver. She expressed surprise that House Natural Resources Committee Chairman Nick J. Rahall (D-WVa.), who voted for the 2005 Energy Policy Act (EPACT), now apparently favors repealing nearly every provision in that law which benefits domestic oil and gas producers.

"This bill obviously would have a tremendous impact on the search for energy resources on federal lands. It would shift the financial burden from government to industry, yet we pay billions of dollars to the government already to search for oil and gas," said Moseley. She noted that in fiscal 2006, domestic producers paid the federal government $3.6 billion, more than 40 times the $89 million it cost the government to administer its onshore oil and gas program.

Moseley and Smith separately cited portions of HR 2337 that would substitute arbitrary approaches for federal land managers" decisions, which now are reached on a case-by-case basis.

Drilling permits

Section 102 of HR 2337 would repeal Title III of EPACT, which established a 30-day timeframe for the US Bureau of Land Management to issue a decision on applications for onshore drilling permits. Moseley noted that in the year following EPACT"s passage, the number of permit applications processed was 35% higher compared to the prior 2 years. Equally important was that permit rejections rose 55% during that same period, a sign that BLM was not "rubber-stamping" drilling permit applications, she said.

Smith said repealing this EPACT provision would make it hard for Rocky Mountain producers to plan ahead. "We"re competing with other regions of the country for equipment and services. It will create greater uncertainty as to whether companies will have locations to drill," he explained.

"We never asked for a guaranteed "yes." We do need a timely decision. This provision was on a track to provide that. When all other areas of government have seen process improvement the past few years, to not expect the same from our federal land managers is ridiculous," Smith said.

Smith and Moseley also questioned Section 103 of HR 2337, which would repeal that portion of EPACT directing that energy corridors be designated within 2 years. "I would guess this is troubling for every part of the energy industry in the sense that if you look at a US map at night and see where all the lights are, and then look at a map of where all the energy resources are, it becomes obvious that energy has to be moved from where it is to where it is needed," Smith said.

"You need corridors—whether you"re transmitting energy from wind, geothermal, or natural gas," he said. "Stripping this provision sends us back into the dark ages of not planning ahead, not planning for our future. When I think there are some Third World countries in Africa with 50-year plans for energy, for the US to at least not try to develop an energy corridor plan to meet the next 10 years means we"re engineering a crisis."

PIN/OGJ.COM