Hearings and Business Meetings

SD-366 Energy Committee Hearing Room 10:00 AM

Ms. Mary Flanderka

State Planning Coordinator, Office of the Governor - State of Wyoming

TESTIMONY OF MARY FLANDERKA,

STATE PLANNING COORDINATOR

IN THE

WYOMING OFFICE OF THE GOVERNOR,

BEFORE THE

SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES

JUNE 26, 2006

 

Good morning, Mr. Chairman and members of the Committee. I appreciate this opportunity to submit this statement as a part of today’s hearing related to the implementation of the Energy Policy Act provisions on enhancing oil and gas production on federal lands in the Rocky Mountain region.

 

In their role as cooperating agencies, the Wyoming State Planning Office, along with various state agencies, have been involved in Bureau of Land Management (BLM) oil and gas development in Wyoming as well as participating in the implementation of many of the 2005 Energy Policy Act provisions.

 

For successful energy development to occur, attention needs to be given to these three issues: flexibility in permitting based upon site-specific issues and appropriate available technology; speed in permit issuance; and accountability to ensure that the right practices are implemented in the right way and at the right time.  The early implementation of the Energy Policy Act has focused on permit issuance.

 

My remarks this morning will focus on the impact of the legislation on energy development in Wyoming regarding permitting, planning, monitoring/inspection and reclamation activities.

 

The opportunity exists for the BLM, with appropriate funding, to maximize the positive impacts and minimize the negative impacts associated with energy development in Wyoming.

 

There is no question of the need to develop Wyoming’s energy resources. As a result of that development, the state of Wyoming receives significant revenue from royalties generated by mineral production. However, concurrently, Wyoming feels the impact of accelerated development through social and economic changes in local communities as well as impacts to wildlife, recreation and air and water resources.

 

There is support for permit-streamlining efforts that will increase energy production; however, there is equal support for strengthening other aspects of regulating energy development. This includes effective and efficient planning and inspection/monitoring activities. Planning and monitoring require a partnership between the state of Wyoming, the BLM and others. Without improving planning and inspection/monitoring activities, permitting times could continue to languish due to social or even legal constraints related to impacts on other resources.

 

Bottom line, an increase in permits is not the only element that will increase and maintain energy production. The entire development stream (planning, permitting, monitoring and reclamation) must be fully attended to if energy development is to occur efficiently and effectively.

 

Project environmental impact statements (EIS) and resource management plans (RMPs) are overdue.  These documents are imperative to successful energy development.

 

Three of the four BLM time-sensitive projects identified in a June 2004 priority list of Wyoming BLM land-use planning projects are yet to be finalized – two years after their initial deadlines. The staff at the state and local field offices find themselves multi-tasking to a remarkable degree and being torn between planning and permitting. Additional resources are needed to allow a planning team to focus on completing RMPs, and project EISs are needed to ensure that there is always a next generation of applications waiting to be processed.

 

The completion of RMPs is important for reasons other than just permitting; there is a need to address thresholds of protection for other important resources. The current RMPs are outdated. At the time of printing the current RMPs, the current level of development had never been anticipated and new technology and science have since created additional opportunities for development. The RMP revisions need to identify those areas whose leasing should be deferred for the protection of other resources, while energy-rich areas are fully developed. As an example, the Pinedale Field Office had 92% of its area leased, with a high likelihood of full development. The 8% of remaining land does not seem able to protect other resource values such as sage grouse, mule deer, antelope or recreation opportunities.

 

Even with additional personnel in the pilot offices, the permitting increase is occurring. The state and local BLM offices are still struggling under increasing workload and high turnover.  This will change with training and experience.

 

I would like to take just a few minutes, though, to give credit to the state BLM office and Wyoming’s field offices. The state agencies, local counties and BLM offices have been working on many issues, either as partners or via cooperating agency status. Although the process is always not smooth, there is a commitment by all to continue to make the relationships more effective and efficient. Wyoming BLM Director Bennett has been a leader in making sure communication continues regardless of impediments.

 

Permitting is ramping up in Wyoming.  The Wyoming BLM has processed 2900 Applications for Permit to Drill (APD) in 2005 and is anticipating processing 4500-5000 APDs in 2006.

 

Wyoming BLM, from the state’s perspective, has faced serious pressure to lease and permit – both of which are necessary for development. The Buffalo and Rawlins field offices have received almost all personnel to fulfill permitting goals. But throwing money and personnel at a problem does not necessarily make permitting go faster. Experience and coordination are necessary if efficient permitting is to happen. It is ludicrous to expect field offices with up to 20% annual turnover rates to be operating at full speed.

 

There are currently no state agency employees actively involved in the permitting emphasis in the pilot projects. The state departments of Environmental Quality and Game and Fish see their roles evolving with planning or monitoring/inspection activities. And, again, both areas are suffering.  Dialogue is occurring regarding the placement of state employees in these two offices.

 

Monitoring is vital to validating whether or not development is proceeding properly.

 

Although the Energy Policy Act refers to the development of best management practices and the need for enforcement, very little attention was directed to those areas during the act’s development. Moving ahead quickly on any project is dangerous if there is no monitoring to make sure that the project is being done correctly. BLM energy development in Wyoming is headed in exactly this direction due to a focus on permits above all else and a lack of funding. Without the assurance that development is proceeding appropriately, additional permits could be processed with faulty information, leading to serious environmental problems – which could in turn lead to court injunctions.

 

BLM monitoring funds have seen limited increases from the national monitoring funding, but that funding is spread continually thinner as more wells are completed. A smaller overall percentage of wells is actually inspected annually. Frankly, the words in the lease become meaningless if there is no accountability, assurance or inspection that the work is getting done. Numbers already indicate that field offices in Wyoming are having a difficult time meeting the existing inspection requirements. Wyoming BLM field offices in 2001 were able to complete 93% of 1750 required environmental inspections, for a total of 15,000 federal permitted wells. In 2005, the BLM completed only 66% of its required 2100 environmental well inspections of a total of 20,000 federal permitted wells; this year, the state office anticipates that it will be able to conduct 66% of required well inspections. The data clearly indicates that an expedited well permitting process coupled with increased drilling applications requires that federal agencies be provided additional adequate resources to fulfill inspection and enforcement guidelines. Some may argue that there is no need, but there was an inspection incident in and adjacent to the Pinedale Field Office  Jonah field in 2005, where a reporter uncovered many significant environmental violations. Inspection is far less expensive to industry, the BLM and the state than an injunction stopping additional development.  The pilot office initiative has addressed inspection and enforcement capability to the Rawlins and Buffalo Field Offices but is only in the early stages of implementation.  Similar assistance needs to be added to other BLM field offices.

 

A Government Accounting Office (GAO) Oil and Gas Report June 2005 identified the concern that increased permitting activity by the BLM has lessened the agency’s ability to meet its environmental protection and liability responsibilities. The report indicates that field managers under pressure to complete permitting processes often shift workloads from inspection and enforcement to application processing. Examples from the report describe how the Buffalo, Wyoming and Vernal, Utah field offices, the two field offices with the largest amount of permitting activity, were only able to each meet their annual inspection goals once in the past six years. Additionally, the report highlights that the Buffalo Field Office was only able to achieve 27 percent of its required environmental inspection goals during the 2004 fiscal year. Clearly it is in the interest of the public, state agencies, the BLM and industry to ensure that the guidelines of leases and permits are being followed. The GAO recommends acquiring staff who would be dedicated to performing inspection and monitoring activities.  Again, Wyoming concurs with this recommendation.

 

Federal energy development in Wyoming can be accomplished in such a way that meets the nation’s energy needs while still protecting the state’s social, economic and natural resources. In order to do that, the entire development process from cradle to grave needs attention from planners, decision makers, permitters and inspectors.

 

Suggestions for improvement:

 

In an effort to improve the effectiveness and efficiency of oil and gas development the following suggestions are offered:

 

  • Complete RMPs and project EISs.
  • Provide performance-based objectives, rather than prescriptive limitations within project and RMP final decisions.
  • Continue to obtain and develop the necessary staff in both numbers and expertise to continue to permit.
  • Continue to coordinate formally (via cooperating agency status) or informally with local and state governments to address site-specific social, economic and resource concerns in an appropriate manner.
  • Stabilize and/or increase the U.S. Environmental Protection Agency’s (EPA) funding to states so that existing state staffs can provide equal attention to their portion of the permitting process.
  • Increase the funding for EPA’s Underground Injection Control program to the Wyoming Oil and Gas Conservation Commission.  
  • Maintain or increase the National Park Service funding for the Historic Preservation Grant. Wyoming is the busiest state in the nation for Section 106 reviews with over 400 requests for comment from the BLM, but ranks 44th in funding.
  • Commit funding to coordinating and procuring the most up-to-date resource data.
  • Consider the creation of NEPA teams led by individuals with project management experience to complete RMPs and project EISs.
  • Make the Pinedale field office a pilot office.

 

Finally, there was much controversy in 2005 about whether winter stipulations on BLM land were a hindrance to energy development. I would encourage you to avoid any hasty action that would remove these stipulations. Generally, these stipulations provide crucial protection to wildlife. Our preference is to have BLM outline in advance opportunities to work through stipulations. With proper planning and good communication, more times than not, issues can be worked out appropriately.

 

Again, thank you for this opportunity to submit my written comments to the record.

 

Respectfully submitted,

 

Mary Flanderka

Wyoming State Planning Coordinator