PRB Oil Drilling

An oil drilling site sits in the Powder River Basin.

Christine Peterson, Star-Tribune

Technology allows Wyoming operators to drill for oil and gas via a horizontal well that may extend underground two miles away from where it started.

It has unleashed a wealth of oil for operators, but it has also increased the amount of regulations they face. Federally owned minerals are spread throughout the state and it’s more and more likely that a well on private or state land will hit federal resources. That trips the cumbersome and costly federal permitting process.

Rep. Liz Cheney would like states to have more control over oil and gas development, a proposal she raised last month in another bill called the Federal Land Freedom Act. Now she also wants to address how horizontal drilling is impacting landowners, by making them exempt from the Bureau of Land Management’s regulatory process even if their well drills into federal minerals. It would mean no environmental impact statements, no National Environmental Protection Act directions, just the state process. The ONSHORE Act would accomplish this goal, Cheney said.

As an added bonus, Wyoming would get back a 2 percent royalty that right now goes to the feds.

“These funds are rightly ours and are crucial to our communities and state budget,” the congresswoman said in a statement.

Mark Watson, supervisor of the state oil and gas regulator agency, testified before the U.S. House of Representatives Friday that Wyoming has a long history proving how well they regulate oil and gas. From fracking to setbacks between wells and homes, the state has been proactive in setting down rules for operations that balance Wyoming’s key industries with the environment and human health, he said.

The fact that horizontal drilling is spreading the BLM’s regulatory span is viewed in Wyoming as a “classic case of federal overreach,” he said.

And it’s not something operators can easily avoid. Wyoming produces the most federally owned natural gas in the country. It’s second for federally owned oil, he said. That means about 75 percent of Wyoming natural gas and 56 percent of its oil touches federal resources.

The backlog of federal permits as a result of federal rules has been a sticking point for industry in Wyoming for some time, and it’s reached a tipping point politically.

The state process permits to drill in less than two months. The federal agency can take up to two years.

Watson recently laid out the severity of the backlog in a meeting before state legislators. At that hearing he said he believed a series of MOUs between the state and feds would probably be the best option, allowing the state to share regulatory control over some aspects of industry.

One thing that the feds do quite well, however, is look at the ways development will affect the community, the landscape and wildlife, according to the Powder River Basin Resource Council. And though groups like the northeast Wyoming landowner’s coalition note that those state rules are at times better than federal rules, the studies that BLM puts together have been useful to landowners and Wyoming advocates in the past.

“What we are concerned about is what you are not going to get, the analyses that take place under federal permitting for large scale groundwater impacts, surface water impacts, air quality impacts,” said Jill Morrison from the council. “The wildlife impacts are going to be lacking.”

Before the committee in D.C. on Friday, Watson noted that the new administration’s desire to reduce the permitting backlog could be achieved by cutting back on overlapping regulations and engaging in cooperative management with the state.

“Wyoming is encouraged by this new attitude,” Watson said. “And believes it has the capability and resources to manage oil and gas development on federal minerals.”

Follow energy reporter Heather Richards on Twitter @hroxaner

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Heather Richards writes about energy and the environment. A native of the Blue Ridge Mountains in Virginia, she moved to Wyoming in 2015 to cover natural resources and government in Buffalo. Heather joined the Star Tribune later that year.

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