American Oil and Gas Reporter - July 2017 - 93

ConventionSection: Western Energy Alliance

Western Energy Alliance
Helps Speed Reform
By Colter Cookson

DENVER-The members of Western
Energy Alliance have much to celebrate.
With a business-friendly presidential administration in office, the onerous regulations that have made oil and gas development on federal lands too time-consuming
and expensive are being revised.
"The Trump administration has made
great progress in rolling back stifling policies and regulations, but we cannot stop
working to reduce the costly and redundant
processes that hinder development on
public lands," says Daryll Howard, Alliance
chairman and chief operating officer of
Denver-based independent Fuse Energy.
At the Alliance's annual meeting,
which will be held Aug. 2-4 at the Park
Hyatt in Beaver Creek, Co., Alliance
members will discuss the way forward.
For Howard, the key is reducing regulatory
uncertainty. "If we know what the regulatory roadmap looks like, we can navigate
it. But if it changes constantly, it is difficult
to make investment decisions," he says.
The Trump administration seems to
understand how much uncertainty discourages oil and gas development, Howard
assesses. He points out that the administration is delaying and reviewing several
regulations finalized in 2016, including
a new rule for calculating royalties on
federal lands.
Alliance President Kathleen Sgamma
calls the rule's suspension a wise move.
"The rule would have made royalty reporting extremely complex, even in situations where the federal government
would not receive additional revenue,"
she explains.
Even large companies with multilayered accounting departments would have
found the rule difficult to interpret, Sgamma says, noting that the Office of Natural
Resources Revenue could not answer
questions about its application. "The
rule's vagueness would have put producers
at great financial risk," she warns. "Independents who tried to apply it in good
faith could have been audited years later
and ordered to pay back royalties and
penalties because they interpreted an un-

clear section differently than ONRR."
Since suspending the rule, she notes,
ONRR has solicited public comments on
rescinding or revising it. "I can see the
rule being changed substantially or rescinded altogether so the department can
start anew," Sgamma says.

Venting And Flaring
Sgamma notes that the Bureau of Land
Management is delaying the compliance
date for four expensive components of
its venting and flaring rule until a lawsuit
filed by the Alliance and the Independent
Petroleum Association of America concludes (see story, page 30).
The portions of the rule affected by
the delay include requirements that operators upgrade or replace pneumatic
equipment, capture or combust storage
tank vapors, implement leak detection
and repair programs, and use or sell a
gradually-increasing percentage of their
adjusted gas production (their total gas
production minus an offset for each well).
These provisions would have taken effect
on Jan. 1, 2018.
In its notice announcing the delay,
BLM points out that the rule's long-term
fate is uncertain. In addition to facing
the aforementioned lawsuit, the rule is
under administrative review as part of
the agency's efforts to implement an executive order directing agencies to review
rules that may "unnecessarily encumber
energy production, constrain economic
growth and prevent job creation," including
the venting and flaring rule.
Citing letters from the Alliance and
the American Petroleum Institute, BLM
observes that complying with the leak detection and repair, storage tank and pneumatic device provisions by Jan. 1 would
require operators to start spending hundreds
of thousands of dollars. "Operators should
not be required to expend substantial time
and resources to comply with regulatory
requirements that may prove short-lived
as a result of pending litigation or the administrative review that is already under
way," the agency reasons.
"We are pleased the Interior Department has listened to the concerns of com-

panies about having to comply with rules
that are likely to be overturned in court
or changed significantly through the rulemaking process," Sgamma comments.
"The Environmental Protection Agency's
mercury rule showed that forcing companies to comply with rules that ultimately
are overturned because they exceed the
government's authority kills jobs and
economic growth needlessly."
The decision to delay the venting and
flaring rule and any changes to it will
lead to lawsuits from the environmental
lobby, Sgamma predicts. Green groups
immediately sued EPA for issuing a 90day stay of the fugitive emissions, pneumatic pump and professional engineer
certification requirements in its New
Source Performance Standards, she notes,
even though the Clean Air Act contains
provisions for such stays. Since then, the
agency has proposed a two-year suspension of the requirements to keep them
from taking effect while it works through
the reconsideration process.
To delay the venting and flaring rule,
BLM invoked provisions of the Administrative Procedure Act, Sgamma observes.
"While BLM has done a great job of following that act and should be able to defend its decision to delay and reconsider
the venting and flaring rule, we do not
want to take any chances," Sgamma declares. "We will continue the lawsuit
against the rule."
Briefings are scheduled to take place
in July and August, and Sgamma expresses
hope the judge will rule as early as October. "Our prospects of a favorable ruling
are good," she assures. "Although the
judge did not grant our request for a preliminary injunction, everything he wrote
in that ruling was skeptical of Bureau of
Land Management's ability to regulate
air quality."

Permitting Delays
On federal lands, a permit that may
only take a month to get for projects on
private or state lands can take six months
to a year, Sgamma relates. In many cases,
she says, the biggest contributor to such
delays is the environmental assessment
JULY 2017 93

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