Government Delays In O&G Permitting – Growing Problem

If you ran a $3.3 billion business, wouldn’t you make it a priority to keep the revenue flowing?   That  pretty much describes the U.S. government’s problem in keeping revenue from oil and gas projects flowing.   The Inspector General for the U.S. Department of Interior released a report recently that looks at the permitting process for oil and gas drilling on Federal or Indian lands.   It might be more accurate to say the lack of a permitting process.

The report, which can be found on the Association of Energy Service Contractor’s website here, says the government is way behind on processing permits.   The report paints a less-than-flattering portrait of the process the Bureau of Land Management uses to process the more than 5,000 drilling applications it receives every year:

We found that neither BLM nor the operator can predict when the permit will be
approved. Target dates for completion of individual APDs are rarely set and
enforced, and consequently, the review may continue indefinitely. The process at
most field offices does not have sufficient supervision to ensure timely
completion. BLM also does not have a results-oriented performance goal to
address processing times.

Remember, this is a program that produces more than $3.3 billion in royalty revenue for the Federal government every year.  This is a little like McDonalds telling you it has no idea whether your Big Mac and fries will be ready today, tomorrow or sometime next week.   And the study flatly says that until recently (and after a lot of criticism), the government wasn’t trying very hard to fix the problem:

Processing delays have occurred because, until recently, improving the APD
process has not been a high priority for DOI. Other contributing factors are
resource challenges and an inadequate oil and gas database for monitoring
performance at the field office and national program levels.

In fairness, industry deserves a share of the blame for filing inaccurate or incomplete permits, which slows down the process even more. But, to use the McDonalds analogy again,  if I forget to ask them to supersize my meal, the whole restaurant doesn’t come to a grinding halt.

What’s the safety connection?   Previous investigations have shown that because of staffing problems at BLM,  employees wind up getting pulled back and forth between permitting, inspection and investigation duties without a coherent order to their workflow.  If the goal is to focus on high risk operations and encourage safe operations, the system in place runs counter to that goal.

What’s to be done?  The investigation makes a number of recommendations, which BLM has apparently agreed to pursue.  However, it makes it clear that it will take money and manpower to solve a large part of the problem.   That means the administration and Congress will need to work together to appropriately fund and staff the agency.   The clear message from the Inspector General’s report is that the investment is needed if we are going to fix the permitting mess.


One Reply to “Government Delays In O&G Permitting – Growing Problem”

  1. Government is a money pit. Maybe if they issued permits, royalties would take care of the expense and provide the fuel for economic and employment recovery.
    I am still not convinced that offshore ‘new well’ permits are back to pre-Macondo levels.

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