American Oil and Gas Reporter - August 2017 - 30

low-water leases is less than the 18.75
percent published in the proposed notice
of sale, but was adjusted "to reflect recent
market conditions." The royalty rate for
leases in water deeper than 200 meters
will remain at 18.75 percent, BOEM
adds.
National Ocean Industries Association
President Randall Luthi praises BOEM's
announcement, saying it "will provide a
welcome financial incentive to hard-hit
operators on the Gulf of Mexico Shelf.
We think this will generate more interest
in the sale."
Unleash American Energy
The President referenced the new offshore leasing schedule in an Energy Week
speech he made at the Department of
Energy on the same day as Zinke's announcement. "We are here today to usher
in a new American energy policy-one
that unlocks millions and millions of jobs
and trillions of dollars in wealth," the
president declared, according to a copy
of his speech posted on the White House
website.
Reflecting that the United States has
a nearly 100-year supply of natural gas
and more than 250 years' worth of coal,
President Trump says his administration
intends to use "these incredible resources
. . . (to) seek not only American energy
independence that we have been looking
for so long, but American energy dominance."
Trump references what he calls "six
brand-new initiatives to propel this new
era of American energy dominance." In
addition to the new offshore leasing program, he says his administration has approved construction of a new petroleum
pipeline to Mexico, DOE has approved
two liquefied natural gas export applications by Lake Charles LNG in Louisiana,
and Sempra Energy has signed an agreement "to begin negotiations for the sale
of more American natural gas to South
Korea."
In addition, he promises "a complete
review of U.S. nuclear energy policy . . .
to revive and expand our nuclear energy
sector," and says "the Department of
Treasury will address barriers to financing
highly efficient, overseas coal energy
plants."
By pursuing what he calls "the golden
era of American energy," Trump vows,
"We will bring new opportunity to the
heartland, new prosperity to our inner
cities, and new infrastructure all across
our nation."
Onshore Leasing
Six days later, on July 6, Secretary
Zinke signed DOI Order 3354 to:

30 THE AMERICAN OIL & GAS REPORTER

* Support and improve implementation of the quarterly oil and gas lease
sale provision found in the Mineral Leasing
Act;
* Identify options to improve the federal onshore oil and gas leasing program;
and
* Develop clear and actionable goals
for reducing BLM's permit processing
time.
As of Jan. 31, Zinke observed in announcing the new order, BLM had 2,802
applications for permits to drill pending.
Even though statutes require that BLM
process APDs within 30 days, Zinke says
the average time to process an APD in
fiscal 2016 was 257 days.
"It is hard to envision increased investment on federal lands when a federal
permit can take the better part of a year or
more," he comments, adding, "DOI will
be a better neighbor in the Trump administration. We will look at ways to improve
the process and make sure regulations
serve their intended purpose rather than
create a mountain of useless paperwork."
Independent Petroleum Association
of America Senior Vice President Dan
Naatz praises DOI's announcement and
suggests one way to improve the permitting process is through the BLM pilot
office program, which was established
initially by the Energy Policy Act of
2005 and allocated a portion of rental
fees paid by producers to specific BLM
offices to hire additional staff.
"One of IPAA's highest priorities for
2014 was to ensure . . . language reauthorizing the BLM pilot office program
was included in the National Defense
Authorization Act for FY 2015," which
was signed into law by President Obama
in December 2014, Naatz says.
Secretary Zinke notes that 74 percent
of BLM's pending APDs are in the five
BLM field offices located in Casper,
Wy., Vernal, Ut., Dickinson, N.D., Carlsbad/Hobbs, N.M., and Farmington, N.M.

Methane Lawsuit
Less positive for the oil and gas
industry are legal developments regarding
EPA's methane and BLM's flaring regulations.
On June 5, EPA published notice it
was staying enforcement of certain provisions in its June 2016 New Source Performance Standards for fugitive emissions
of methane, volatile organic compounds
and other air pollutants from new and
modified oil and gas sources under Subpart
OOOOa. Included in the stay are leak
detection and repair requirements for
low-volume wells, standards for pneumatic
pumps, alternative means of limiting
emissions, and professional engineer cer-

tification (AOGR, July 2017, pg. 30).
A number of environmental groups
immediately filed suit in the U.S. Court
of Appeals for the District of Columbia
Circuit, contending EPA failed to provide
sufficient notice to stay the rules, which
were to become effective June 3.
On July 3, the court agreed, although
on July 13 it delayed its mandate to
enforce the standards for two weeks to
give EPA time to consider its next course
of action.
EPA chose not to respond to that opportunity, although a large group of industry associations that includes the American Petroleum Institute, IPAA and more
than a dozen of its cooperating associations
as well as the Domestic Energy Producers
Alliance did file a motion for rehearing
on July 27. A group of 12 state attorneys
general led by West Virginia also filed a
petition of intervenor-respondents in support of the industry petition, according
to a communique from IPAA's attorney.
Although it had not yet responded to
industry's request to rehear en banc the
original lawsuit challenging EPA's decision not to enforce the methane NSPS,
on July 31 the D.C. Circuit voted 9-2 to
order EPA to begin enforcing the methane
regulations, according to an IPAA
spokesman.
The industry's motion for rehearing
argues that the D.C. Circuit did not have
jurisdiction to hear the challenge to EPA's
order in the first place, and that the threemonth stay of the regulations was not
ripe for court review because it was part
of an ongoing regulatory reconsideration
process.
IPAA says the D.C. Circuit's July 3
ruling and the July 31 order "mean that
new oil and gas wells, and those drilled
since the methane rule was proposed in
September 2015, must comply with all
its requirements, including having leak
detection and repair systems in place."
One positive in the ruling that the
Texas Alliance of Energy Producers
points to, however, is that the justices
also concluded that "nothing in this opinion in any way limits EPA's authority to
reconsider the final rule and to proceed
with its June 16 notice of proposed rule
making."
Also important, the Alliance continues,
the ruling does not affect the information
collection request that EPA put out to
determine whether the methane NSPS
ought to be applied to existing facilities.
EPA Administrator Pruitt announced
March 2 he was cancelling the ICR
(AOGR, April 2017, pg. 25), and "operators need not comply with that initiative,"
the Alliance assures. "Those requirements
are no longer in place."



Table of Contents for the Digital Edition of American Oil and Gas Reporter - August 2017

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