[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
                OIL AND GAS DEVELOPMENT ON PUBLIC LANDS

=======================================================================

                        OVERSIGHT FIELD HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

              Saturday, July 12, 2003 in Rawlins, Wyoming

                               __________

                           Serial No. 108-39

                               __________

           Printed for the use of the Committee on Resources



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                         COMMITTEE ON RESOURCES

                 RICHARD W. POMBO, California, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska                    Dale E. Kildee, Michigan
W.J. ``Billy'' Tauzin, Louisiana     Eni F.H. Faleomavaega, American 
Jim Saxton, New Jersey                   Samoa
Elton Gallegly, California           Neil Abercrombie, Hawaii
John J. Duncan, Jr., Tennessee       Solomon P. Ortiz, Texas
Wayne T. Gilchrest, Maryland         Frank Pallone, Jr., New Jersey
Ken Calvert, California              Calvin M. Dooley, California
Scott McInnis, Colorado              Donna M. Christensen, Virgin 
Barbara Cubin, Wyoming                   Islands
George Radanovich, California        Ron Kind, Wisconsin
Walter B. Jones, Jr., North          Jay Inslee, Washington
    Carolina                         Grace F. Napolitano, California
Chris Cannon, Utah                   Tom Udall, New Mexico
John E. Peterson, Pennsylvania       Mark Udall, Colorado
Jim Gibbons, Nevada,                 Anibal Acevedo-Vila, Puerto Rico
  Vice Chairman                      Brad Carson, Oklahoma
Mark E. Souder, Indiana              Raul M. Grijalva, Arizona
Greg Walden, Oregon                  Dennis A. Cardoza, California
Thomas G. Tancredo, Colorado         Madeleine Z. Bordallo, Guam
J.D. Hayworth, Arizona               George Miller, California
Tom Osborne, Nebraska                Edward J. Markey, Massachusetts
Jeff Flake, Arizona                  Ruben Hinojosa, Texas
Dennis R. Rehberg, Montana           Ciro D. Rodriguez, Texas
Rick Renzi, Arizona                  Joe Baca, California
Tom Cole, Oklahoma                   Betty McCollum, Minnesota
Stevan Pearce, New Mexico
Rob Bishop, Utah
Devin Nunes, California
Randy Neugebauer, Texas

                     Steven J. Ding, Chief of Staff
                      Lisa Pittman, Chief Counsel
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                    BARBARA CUBIN, Wyoming, Chairman
              RON KIND, Wisconsin, Ranking Democrat Member

W.J. ``Billy'' Tauzin, Louisiana     Eni F.H. Faleomavaega, American 
Chris Cannon, Utah                       Samoa
Jim Gibbons, Nevada                  Solomon P. Ortiz, Texas
Mark E. Souder, Indiana              Grace F. Napolitano, California
Dennis R. Rehberg, Montana           Tom Udall, New Mexico
Tom Cole, Oklahoma                   Brad Carson, Oklahoma
Stevan Pearce, New Mexico            Edward J. Markey, Massachusetts
Rob Bishop, Utah                     VACANCY
Devin Nunes, California              Nick J. Rahall II, West Virginia, 
Richard W. Pombo, California, ex         ex officio
    officio


                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on July 12, 2003....................................     1

Statement of Members:
    Cubin, Hon. Barbara, a Representative in Congress from the 
      State of Wyoming...........................................     1
        Prepared statement of....................................     2

Statement of Witnesses:
    Andrikopolous, Shaun, Rimfire Ranch, LLC.....................    39
        Prepared statement of....................................    42
    Bennett, Bob, Director, Wyoming State Office, Bureau of Land 
      Management.................................................    20
        Prepared statement of....................................    22
    Bower, Dru, Vice President, Petroleum Association of Wyoming.     4
        Prepared statement of....................................     6
    Cook, Lance, Wyoming State Geologist.........................    16
        Prepared statement of....................................    17
    Degenfelder, Steve, Vice President for Land, Double Eagle 
      Petroleum Co...............................................    48
        Prepared statement of....................................    50
    Heilig, Dan, Executive Director, Wyoming Outdoor Council.....    10
        Prepared statement of....................................    12
    Magagna, Jim, Executive Director, Wyoming Stockgrowers 
      Association................................................    35
        Prepared statement of....................................    37
    Robitaille, Rick, Manager of Public Affairs for Western 
      States, Anadarko Petroleum Corporation.....................    43
        Prepared statement of....................................    46
    Strange, Jeff, Senior Account Representative, Halliburton 
      Services Co................................................    55
        Prepared statement of....................................    55

Additional materials supplied:
    Lummis, Cynthia, Wyoming State Treasurer, Statement submitted 
      for the record.............................................    65
    Steward, D.G. Mickey, Coordinator, CBMC Corporation, 
      Statement submitted for the record.........................    67


 OVERSIGHT FIELD HEARING ON ``OIL AND GAS DEVELOPMENT ON PUBLIC LANDS''

                              ----------                              


                        Saturday, July 12, 2003

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                         Committee on Resources

                            Rawlins, Wyoming

                              ----------                              

    The Subcommittee met, pursuant to call, at 9:30 a.m., in 
the Jeffrey Memorial Community Center, Rawlins, Wyoming, Hon. 
Barbara Cubin [Chairman of the Subcommittee] presiding.
    Mrs. Cubin. The oversight hearing by the Subcommittee on 
Energy and Mineral Resources will come to order.

  STATEMENT OF HON. BARBARA CUBIN, CHAIRMAN, SUBCOMMITTEE ON 
                  ENERGY AND MINERAL RESOURCES

    Mrs. Cubin. The Subcommittee is meeting today to hear 
testimony on oil and gas development on public lands.
    I'm pleased to be here in Rawlins to convene this 
congressional hearing on a critically important issue to the 
local community, the state of Wyoming, and the Nation as a 
whole.
    Our nation is suffering from what is rapidly becoming a 
dangerous natural gas supply crisis. Natural gas prices reached 
record levels last winter. And as we reach midsummer, natural 
gas storage levels are once again well below historic norms, 
and gas prices are two to three times their historic average.
    While the House Energy and Mineral Resources Subcommittee 
has held several hearings over the past 2 years on the supply 
and demand imbalance, the looming gas crisis has only recently 
begun to achieve national media attention.
    On Thursday, the Speaker of the House of Representatives 
announced the formation of a special task force to address this 
problem. And I was very honored that he chose me to be vice--
one of the vice chairs. There are two vice chairmen, Joe Barton 
from Texas and myself.
    Over the next several weeks, we will be holding field 
hearings around the country. This will be the first--the 
kickoff, basically, of that--that requirement by the Speaker. 
And we'll be gathering facts and issuing findings about what 
caused this crisis and how we can fix it. This event today 
represents, as I said, the first of these hearings.
    One thing I'd like to stress to my colleagues is that a 
great deal of the situation lies--of the solution--excuse me--
lies right here in our home state of Wyoming. We're not only 
blessed with natural beauty, but we are also the friendliest 
people on earth and have a most abundant natural resource 
supply.
    The problems we face as the result of public policies are 
that oftentimes public policy requires us to be at odds with 
one another. We have enacted policies to encourage increased 
utilization of clean burning natural gas, yet we continue to 
hinder the development of that natural gas. Our problems do not 
require solutions from unstable countries in the Middle East or 
in Africa. We have adequate natural gas and coal reserves right 
here to meet our demands, and we have enough oil supplies at 
home to reduce our dangerous reliance on foreign oil imports.
    Most of the--these resources are located under Federal 
lands, often right here in Wyoming. They are a bedrock of our 
national security--or national energy security, as well as our 
state's economy.
    About 1,400 trillion cubic feet of natural gas can be found 
in the United States, and another 1,000 trillion, which sounds 
like an odd number to use, in North America as a whole. That's 
enough to fuel our nation for over 100 years. Nearly 60 percent 
of these resources and the vast majority of new resources exist 
on Federal lands. However, it is growing increasingly difficult 
to access these resources, especially on Federal lands.
    In short, we continue to shoot ourselves in the foot. We 
need to utilize all of our energy resources, oil, gas, coal, 
uranium, and renewables, in order to meet our energy needs and 
find our economic recovery.
    The energy bill that passed out of my Subcommittee and 
through the full House of Representatives last April will do 
much to address these problems. However, it remains gridlocked 
in the Senate with no guarantee of passage this year. As a 
matter of fact, I think that the Democrats in the Senate will 
do everything they can do to see that the energy bill is not 
passed this year or next. With the high energy bills faced by 
consumers, our economy cannot afford to wait any longer. The 
American people and our economy need action now.
    There is concern about the environmental consequences of 
energy development in our beautiful state. I share and respect 
those concerns. But certain groups are determined to fight 
responsible development anywhere it's proposed. This is a bad 
policy for Wyoming, and it's bad for America. New technology 
enables us to develop energy in an environmentally sensitive 
way. Producing energy and preserving the environment are not 
mutually exclusive.
    I look forward to today's testimony and welcome all of our 
witnesses as we all look forward to finding ways to develop a 
smarter and safer natural energy policy.
    [The prepared statement of Mrs. Cubin follows:]

Statement of Hon. Barbara Cubin, a Representative in Congress from the 
                            State of Wyoming

    I am pleased to be here in Rawlins today to convene a congressional 
hearing on a critically important issue to the local community, the 
state of Wyoming and the nation as a whole.
    Our nation is suffering from what is rapidly becoming a dangerous 
natural gas supply crisis. Natural gas prices reached record levels 
last winter, and, as we reach mid-summer, natural gas storage levels 
are once again well below historic norms and gas prices are two to 
three times their historic average.
    While the House Energy and Mineral Resources Subcommittee has held 
several hearings over the past two years on the supply and demand 
imbalance, the looming gas crisis has only recently begun to receive 
media attention nationwide.
    On Thursday, the Speaker of the House of Representatives announced 
the formation of a Special Task Force to address this problem, and I 
was very honored that he chose me to serve as a vice chair. Over the 
next several weeks we will hold field hearings around the country to 
focus on the issue, gather facts and issue findings about caused this 
crisis and how we can fix it. This event today represents the first of 
those hearings.
    One thing I'll stress to my colleagues is that a great deal of the 
solution lies right here in our home state of Wyoming. We are not only 
blessed with natural beauty and the friendliest people on the planet, 
but also some of the most abundant natural resources on Earth, 
especially natural gas.
    The problems we face are the result of public policies that are 
often at odds with one another. We have enacted policies to encourage 
increased utilization of clean burning natural gas, yet we continue to 
hinder the development of natural gas resources.
    Our problems do not require solutions from unstable countries in 
the Middle East, Asia or Africa. We have adequate natural gas and coal 
resources right here to meet our demand, and we have enough oil 
supplies at home to reduce our dangerous reliance on foreign oil 
imports. Most of these resources are located under federal lands, often 
right here in Wyoming. They are a bedrock of our national energy 
security, as well as our state's economy.
    About 1,400 trillion cubic feet of natural gas can be found in the 
United States and another 1,000 trillion in North America. That's 
enough to fuel our nation for over one hundred years. Nearly 60 percent 
of those resources--and the vast majority of the new sources--exist on 
federal lands. However, it is growing increasingly difficult to access 
those resources--especially those on federal lands.
    In short, we continue to shoot ourselves in the foot. We need to 
utilize all of our energy resources--oil, gas, coal, uranium and 
renewables--in order to meet our energy needs and fuel our economic 
recovery.
    The energy bill that passed out of my Subcommittee and through the 
full House of Representatives last April will do much to address these 
problems. However, it remains grid-locked in the Senate, with no 
guarantee of passage this year. With the high energy bills faced by 
consumers, our economy cannot afford to wait much longer. The American 
people and our economy need action now.
    There is concern about the environmental consequences of energy 
development in our beautiful state. I share and respect that concern. 
But certain groups are determined to fight responsible development 
anywhere it is proposed. This is bad for Wyoming and bad for America.
    New technology enables us to develop energy in an environmentally 
sensitive way. Producing energy and preserving the environment are not 
mutually exclusive goals.
    I look forward to today's testimony and welcome all our witnesses, 
as we look for ways to develop a smarter and safer national energy 
policy.
                                 ______
                                 
    Mrs. Cubin. So I would now like to ask the first panel to 
come forward. Ms. Dru Bower, with the Petroleum Association of 
Wyoming. Mr. Dan Heilig of the Wyoming Outdoor Council. Lance 
Cook, Wyoming State Geologist. And Mr. Bob Bennett, Bureau of 
Land Management.
    If you'd come and take your seats at the table.
    I just said come and take your seats at the table just in 
time for Jack to pass this to me to tell you to stand up. And 
it's a new policy this year in the Resources Committee that all 
witnesses will--we will take testimony from witnesses under 
oath. So please stand and raise your right hand.
    Repeat after me.
    Do you solemnly swear or affirm, under the penalty of 
perjury, that the statements made and the responses given will 
be the whole truth and nothing but the truth?
    [witnesses sworn.]
    Mrs. Cubin. Thank you. Please be seated.
    I will call on Ms. Dru Bower with the Petroleum Association 
of Wyoming to begin the testimony.

 STATEMENT OF DRU BOWER, VICE PRESIDENT, PETROLEUM ASSOCIATION 
                           OF WYOMING

    Ms. Bower. Thank you.
    Madam Chairwoman and members of the Subcommittee. My name 
is Dru Bower, and I'm the vice president for the Petroleum 
Association of Wyoming, specializing in public land issues. I 
am here today not only representing the Association but also 
Public Lands Advocacy.
    Wyoming is a uniquely rural state. Lands in the state which 
are owned and controlled by the Federal Government equate to 
approximately 49 percent of the surface and 66 percent of the 
mineral estate.
    The Federal regulatory process is exhaustive and 
cumbersome. Resource management plans have been developed for 
all Federal lands. The plans identify what areas will be 
available for oil and gas leasing and the stipulations to be 
applied to those leases. Many land use plans are currently 
undergoing land planning revisions in several energy rich 
basins in the west. There is great concern within the industry 
that when the plans are completed, there will be a net loss of 
lands available for oil and gas leasing and the areas that are 
available for leasing will have stringent stipulations for 
access with a limited duration of operation.
    It should be noted that once a lease has been issued, it 
becomes a contractual agreement between the lessee and the 
Federal Government. While the lease contract gives the lessee 
the exclusive right to develop that lease, it does not give the 
lessee the green light for exploration and development. Even 
proposed project--every proposed project is subject to a site 
specific NEPA analysis before a permit is approved by an 
agency. Consultations with other agencies must occur, and each 
agency may require new restrictions that directly impact access 
and the economic viability of the project. Even on lease lands 
subject to only standard lease terms, conditions of approval 
identified through project level or site specific environmental 
analysis may be required before the project is approved. Each 
condition of approval limits access to the lease to some 
extent, whether through added costs or delay.
    Another major factor which industry must address when 
accessing Federal minerals is severed estates; for example, 
Federal mineral on private surface. Before agencies will 
approve permits, the lessee must negotiate in good faith with 
the private surface owner to reach an agreement for protection 
of surface resources and reclamation of disturbed areas or 
adequate bonds are put in place sufficient to indemnify the 
surface owner against reasonable and foreseeable damages. All 
costs negotiated in that surface use agreement are the 
responsibility of the operator. It is important to note that 
the operator in most cases is only the lessee. They do not own 
the surface nor do they own the mineral.
    When it comes to mineral development, the Bureau of Land 
Management has a statutory obligation to maximize the recovery 
of Federal minerals and prevent drainage from occurring while 
providing protection to other resources. An example of drainage 
that is current today exists in the Powder River Basin in 
northeastern Wyoming.
    In 2000, the BLM decided to conduct an environmental impact 
statement with a revised reasonably foreseeable development 
scenario before further development of Federal leases could 
occur in the area. A drilling moratorium was imposed on the 
majority of those Federal leases, and they were placed in 
suspense. The record of decision for that Powder River Basin 
Oil and Gas EIS, after 3 years, was finally issued April 30 of 
2003 authorizing the development of approximately 51,000 
coalbed natural gas and 3,200 noncoalbed natural gas wells in 
Wyoming.
    Environmental groups filed four separate legal challenges 
in Federal Court immediately after the issuance of the 
decision. Because of the litigation, no coalbed natural gas 
drilling permits have been approved to date since the record of 
decision was issued. The money lost through drainage that would 
go to the Federal treasury and the state of Wyoming is 
primarily due to protracted regulatory compliance and frivolous 
litigation.
    Another--frivolous litigation is a factor to consider in 
the Federal regulatory process which is most often filed by 
environmental groups whose sole purpose is to delay or deny 
development of natural resources. In Wyoming, virtually all 
lease sales and most project level environmental assessments 
and impact statements have been protested, appealed, or 
challenged in Federal courts. It is obvious that a strategy by 
some groups is to inundate an agency office by filing Freedom 
of Information requests or legal challenges of a Federal 
decision, either through the internal administrative process or 
in Federal Court. This requires a significant portion of agency 
time and personnel just to prepare the administrative record to 
respond to the legal challenges rather than processing permits 
and conducting the necessary onsite inspections.
    Some tout that the additional stipulations, mitigation 
measures, and delays in working through the public process is 
simply the cost of doing business on public lands. This is a 
flawed perception. The energy industry already pays its fair 
share to the Federal Government for the privilege of operating 
on public lands through lease bonus bids, lease rentals, and 
royalty payments.
    It has become apparent that NEPA has become the tool that 
is used as the primary impediment to oil and gas development on 
Federal lands. The cost of NEPA abuse is high. It is safe to 
say that the cumulative impacts of stipulations, conditions of 
approval, and frivolous litigation is strangling industry's 
ability to develop energy resources on Federal lands and to 
supply much needed energy to the citizens of this country.
    Madam Chairwoman and members of the Subcommittee, thank you 
for the opportunity to share with you our perspective.
    [The prepared statement of Ms. Bower follows:]

   Statement of Dru Bower, Vice President, Petroleum Association of 
             Wyoming and on Behalf of Public Lands Advocacy

    Madam Chairwoman and members of the Subcommittee, my name is Dru 
Bower and I am the Vice President of the Petroleum Association of 
Wyoming (PAW), specializing in public land issues. I am here today 
representing not only PAW, but also Public Lands Advocacy. We would 
like to thank the Subcommittee on Energy and Mineral Resources of the 
Committee on Energy and Commerce for the opportunity to testify at this 
field hearing regarding ``Oil and Gas Development on Public Lands.''
    PAW is Wyoming's oldest and largest trade organization, the members 
of which account for over ninety percent of the natural gas and over 
eighty percent of the crude oil produced in the State. PAW is 
recognized as Wyoming's leading authority on petroleum industry issues 
and is dedicated to the betterment of the state's oil and gas industry 
and public welfare.
    Public Lands Advocacy (PLA) is a non-profit organization whose 
members include major and independent petroleum companies as well as 
non-profit trade and professional organizations that have joined 
together to foster the interests of the oil and gas industry relating 
to responsible and environmentally sound exploration and development on 
federal lands.
    In 1996, Wyoming supplied the nation with 3.4% of the total U.S. 
output of natural gas. In 2002, natural gas production for our state 
rose to 7.1% of the total U.S. output. Noteworthy is the fact that a 
significant percentage of Wyoming is managed by federal agencies.
    Wyoming is a uniquely rural state comprised of 97,914 square miles 
and is the ninth largest state in the Union. Lands in the state, which 
are owned and controlled by the federal government equate to 
approximately forty-nine percent (49%) of the surface and sixty-six 
percent (66%) of the mineral estate. These federal lands are managed by 
agencies such as the National Park Service (NPS), United States Forest 
Service (USFS) and the Bureau of Land Management (BLM). The remaining 
51% of the surface and 34% of the mineral estate are owned by private 
entities, the State of Wyoming and the Tribes.
    Natural gas remains the most abundant and reliable clean burning 
fuel to meet national environmental objectives while enhancing the use 
of stable domestic fuel sources and federal lands must play a growing 
role in future US energy supplies. Prior to 1980, only 9% of all 
domestic oil and gas production came from federal land. According to 
the American Petroleum Institute (API), today federal lands produce 
about one third of domestic oil and gas, but are estimated to contain 
77% of the oil and 60% of the natural gas resources to be found in the 
US. In the short period from 1995 to 2003, there has been an increase 
of at least 75% in estimates of remaining undiscovered domestic oil 
resources and over 23% in estimates of undiscovered natural gas on 
federal lands. Despite greater knowledge of the occurrence of gas 
resources and increased demand for energy, federal policy toward energy 
development has become increasingly restrictive. PAW and PLA urge 
members of this committee to take steps to reverse this trend as 
outlined in the recommendations below.
FEDERAL REGULATORY PROCESS
    The federal regulatory process is exhaustive and cumbersome. To 
comply with requirements of the Federal Land Policy and Management Act 
(FLPMA), agencies are required to prepare land use plans. The National 
Environmental Policy Act (NEPA) requires agencies to evaluate how 
proposed federal actions will affect the human environment. 
Environmental Assessments (EA) must demonstrate that impacts associated 
with a proposed action can be mitigated and that the net effects are 
not significant. If the EA shows a project has significant impacts, an 
Environmental Impact Statement (EIS) must be prepared which identifies 
and discloses the potential effects of the project, along with 
identified mitigation measures to be used if the project is approved.
    Resource Management Plans (BLM) or Land and Resource Management 
Plans (USFS) have been developed for all federal lands. Each plan is 
subject to an extensive EIS process; the plans identify what areas will 
be available for oil and gas leasing and the stipulations to be applied 
to those leases (i.e. No Surface Occupancy (NSO), seasonal restrictions 
for wildlife protection, etc.). In addition, the plans establish 
operating standards that must be met before proposed projects are 
implemented.
    Many land use plans were completed in the mid-to-late 1980s and 
federal agencies are currently undergoing land-planning revisions in 
several energy rich basins in the West. There is great concern within 
industry that when the plans are completed, there will be a net loss of 
public lands available for oil and gas leasing and the areas that are 
available will have more stringent stipulations for access with a 
limited duration of operation.
    Before a lease parcel is actually included in a federal lease sale, 
BLM conducts a ``Determination of NEPA Adequacy'' (DNA) to ensure that 
leasing is consistent with existing plans. This determination indicates 
whether additional analysis is necessary before leasing occurs. 
(Similar DNA analyses are typically prepared before a project is 
allowed to proceed.)
    It should be noted that once a lease has been issued, it becomes a 
contractual agreement between the federal government and the lessee. 
However, while the lease contract gives the lessee the exclusive right 
to develop the lease, it does not give the lessee the green light to 
start exploration or development activities. Every proposed project is 
subject to a site-specific NEPA analysis before a permit is approved by 
the agency. In addition, consultation with other agencies must occur. 
For example, consultations with the US Fish and Wildlife Service 
(USFWS) or a State Historic Preservation Office (SHPO) may be required 
if listed threatened and endangered species or cultural resource issues 
are involved, respectively. Each agency may require new restrictions 
that directly impact access and the economic viability of the project.
    BLM has implemented several new Instruction Memoranda designed to 
make the process more efficient. These include:
     Enhanced Consistencies in Conditions of Approval;
     Cultural Resources Management (block clearances of 40 
acres and modeling);
     Revision of Onshore Order 1;
     Revision of the Gold Book on Operations; and
     Plans of Development (POD) Requirements (master POD 
addressing two or more proposed wells in close geographic proximity to 
one another that share common Drilling and Surface Use Plans).
    These IMs are a positive step in the right direction and industry 
looks forward to their immediate implementation and enforcement in the 
field. In fact, industry hopes to work closely with BLM in its 
revisions of the Onshore Order No. 1 and the Gold Book on Operations. 
However, there are additional measures that must be taken to ensure 
timely and cost effective ``access'' to federal lands. We recommend 
that new Instruction Memoranda be issued to address the following:
     In order to eliminate costly and time-consuming redundant 
NEPA analyses, the agencies must utilize existing NEPA documentation by 
either tiering or incorporating by reference all existing NEPA analyses 
to avoid reanalyzing issues that have already been addressed and for 
which decisions have already been made. In other words, in areas where 
expanded development is proposed, no new resource data collection is 
necessary; simply a new cumulative effects analysis is required; and
     No new cumulative effects analysis is necessary if a 
project proponent wishes to increase recovery of the resource by 
directionally drilling new wells from existing locations that were 
already approved and drilled under a previous decision document. Since 
no new surface disturbance will result, no further NEPA analysis is 
necessary.
    In addition to addressing leased lands, their associated 
stipulations and lands unavailable for lease, other important factors 
must be considered. For example, even on leased lands subject to only 
standard lease terms, conditions of approval (COA) are imposed in 
accordance with land use decisions made by the agencies. In other 
words, while a lease may not be subject to additional stipulations, 
conditions of approval identified through project level or site-
specific environmental analysis may be required for proposed projects. 
Each condition of approval limits access to the lease to some extent 
whether through added cost or delay. Therefore, in reality, it is safe 
to say that all leases issued under standard lease terms are still 
subject to the same constraints imposed on stipulated leases. Further, 
some conditions of approval may be more of an impediment to exploration 
or development than lease stipulations.
    While the Petroleum Industry uses the word ``Access'' as a catchall 
term, the term is not limited to the availability of federal lands for 
leasing. Clearly, leasing is an important aspect of access to federal 
lands for purposes of exploration and development; however, access also 
encompasses the industry's ability to develop new wells in existing 
fields and can limit the duration of operations based on overlapping 
seasonal restrictions. As such, expansion of existing production often 
faces numerous impediments including:
     High cost to industry and long delays for NEPA 
compliance;
     Delays in land use plan revisions;
     A wide variety of surveys and inventories on most 
projects for cultural, wildlife and other resource values that may or 
may not be present in a project area;
     Delays in obtaining drilling and rights-of-way permits 
due to a lack of adequate federal staffing and funding in high volume 
leasing and development areas;
     Financial burdens placed upon industry who may have to 
pay for contract personnel to work on permits in field offices;
     The same restrictive management imposed to protect 
species listed as threatened or endangered under the Endangered Species 
Act are applied to unlisted species (i.e. sensitive, proposed and 
candidate species);
     Endless petitions to the US Fish and Wildlife Service 
(FWS) to list plant and animal species without supporting scientific 
data; but, which cause federal agencies to change their management 
objectives from multiple-use to restricted use; and
     Further, environmental groups are not only filing 
petitions with FWS to list a particular species with limited supporting 
scientific data; petitions are concurrently being filed by the same 
parties with BLM to manage the species' habitat as an Area of Critical 
and Environmental Concern (ACEC). An area with an ACEC designation 
carries additional restrictions for mineral development.
ROADLESS CONSERVATION RULE
    The Roadless Conservation Rule prevents road building on more than 
58 million acres of the National Forest System C a move that will place 
11.3 TCF of economically recoverable natural gas off limits to 
exploration and development. Ironically, this decision coincides with 
Administration warnings of shrinking gas supplies. The Bush 
Administration sees only ``limited opportunities'' to increase 
dwindling natural gas supplies over the next 12 to 18 months, calling 
for conservation to head off a summer shortage. Moreover, Federal 
Reserve Chairman Alan Greenspan has publicly stated that dwindling 
supplies could add serious pressure to the US economy.
    According to the Department of Energy Report, Undiscovered Natural 
Gas and Petroleum Resources beneath Inventoried Roadless and Special 
Designated Areas on Forest Service Lands, November 2000, 83 percent of 
the natural gas resource found in the Rocky Mountain Region is located 
in slightly less than 5 percent of the total proposed Inventoried 
Roadless Areas (IRA) nationwide. PAW and PLA urge Congress to support 
modification of the Roadless Conservation Rule. Removal of the 5% IRAs 
that overlie these important natural gas resources would still allow 
for the majority of the IRAs to be set aside while providing for 
development of the critically important natural gas resource base.
SPLIT ESTATE & DRAINAGE
    Another major factor which industry must address when accessing 
federal minerals is severed estates (i.e. federal minerals / private 
surface). Before agencies will approve permits, the lessee must 
negotiate in ``good faith'' with the private surface owner to reach an 
agreement for protection of surface resources and reclamation of 
disturbed areas. Further, if an agreement cannot be reached, the agency 
requires adequate bonds to be in place sufficient to indemnify the 
surface owner against reasonable and foreseeable damages.
    All costs negotiated in the Surface Use Agreement are the 
responsibility of the operator. It is important to note that the 
operator in most cases is only the lessee. They do not own the surface 
nor do they own the minerals. Operators contract for the exclusive 
right to develop a federal mineral lease at their own investment and 
associated risks.
    When it comes to mineral development, the BLM has a statutory 
obligation to maximize the recovery of federal minerals and prevent 
``drainage'' from occurring while providing protection to other 
resources. ``Drainage'' is defined as the ``migration of oil or gas in 
a reservoir due to a pressure reduction caused by production from wells 
bottomed in the reservoir'' (Manual of Oil and Gas Terms, Williams and 
Meyers, third edition). Not only can drainage occur from adjacent 
federal leases held by different lessees, drainage of federal minerals 
may occur when the lease is adjacent to producing private or state 
leases.
    The permitting process for non-federal lands is more timely and 
predictable and, therefore, the most appealing for operators. It is 
possible that due to the permitting and regulatory process and 
potential legal challenges, it will be virtually impossible for lessees 
to develop domestic oil and gas resources; thereby, choosing to divert 
investments from development of federal minerals to other areas either 
domestically or over seas.
    An example of drainage occurring today exists in the Powder River 
Basin in northeastern Wyoming. The Wyodak Coal Bed Methane Project 
Environmental Impact Statement Record of Decision (Wyodak EIS) was 
completed in 1999, which authorized the development of 5000 new wells. 
This cumulative analysis included wells to be developed on federal, 
private and state minerals. Due to the timeliness and predictability of 
acquiring state and private permits, many initial permits were sought 
on those lands instead of federal lands. The BLM recognized that this 
created a significant drainage situation and immediately conducted 
another environmental assessment to analyze an additional 2500 federal 
drainage wells (Wyodak Drainage Environmental Assessment). The 
importance of the Wyodak EIS and the Wyodak Drainage EA were to gather 
significant information regarding coal bed natural gas development and 
its associated impacts on other resources.
    In 2000, BLM decided to conduct an additional EIS with a revised 
reasonably foreseeable development scenario before further development 
of federal leases outside of the Wyodak area would be authorized. A 
drilling moratorium was imposed on the majority of federal leases 
(again outside of the Wyodak area) and the leases were placed in 
suspense. While a detailed cumulative analysis was being conducted, 
development continued on private and state minerals creating 
significant drainage of federal minerals. The Record of Decision for 
the Powder River Basin Oil and Gas EIS was finally issued April 30, 
2003 authorizing the development of approximately 51,000 coal bed 
natural gas and 3,200 non-coal bed natural gas wells in Wyoming.
    ``Environmental groups'' filed four separate legal challenges in 
federal court immediately after the issuance of the decision. Because 
of the litigation, the Administration has instructed BLM to continue to 
refrain from approving permits while the lawsuits are being reviewed 
internally. As a consequence, no coal bed natural gas drilling permits 
have been approved to date since the Record of Decision was issued. As 
a matter of information, currently there is a backlog of approximately 
2000 permits in the BLM Buffalo Field Office of which 90% or more would 
prevent drainage from occurring on federal minerals. The money lost 
through drainage that would go to the federal treasury and the state of 
Wyoming is primarily due to protracted regulatory compliance with 
FLPMA, NEPA and frivolous litigation.
FRIVOLOUS LITIGATION
    Another important factor to consider in the federal regulatory 
process is litigation by ``environmentalist groups'' whose sole purpose 
is to delay or deny development of natural resources. In Wyoming, 
virtually all lease sales, and most project level EAs or EISs, 
including geophysical projects, have been protested, appealed, or 
challenged in federal court. The same is true for the other Rocky 
Mountain States.
    A strategy by some groups is to inundate an agency office by filing 
Freedom of Information Act requests (FOIA) or legal challenges of a 
federal decision either through the internal administrative process 
(State Director Reviews or Interior Board of Land Appeals) or in 
federal court. This requires a significant portion of agency time and 
personnel just to prepare the administrative record to respond to legal 
challenges rather than processing permits and conducting the necessary 
on-site inspections.
    Some tout that the additional stipulations, mitigation measures, 
and delays in working through the public process is simply the cost of 
doing business on public lands: This is a flawed perception. As an 
example, the energy industry in Wyoming already pays its fair share to 
the federal government for the privilege of operating on public lands--
between $500 million to nearly one billion dollars annually to the 
federal treasury through lease bonus bids, lease rentals and royalty 
payments.
    It has become apparent that NEPA has become a ``tool'' that is used 
as the primary impediment to oil and gas development on federal lands. 
PAW and PLA support without qualification the Act's provisions for 
public comment, identification of alternatives to the proposed action, 
and consideration of impacts and mitigation measures to be used. 
However, these same provisions are being used by some groups as 
opportunities to stop proposed projects without regard for cost and 
delay of impacts on land management agencies, the US taxpayer, or 
multiple users of the public lands.
    The cost of ``NEPA abuse'' is high. For example, the burden of 
agencies' management responsibilities frequently shifts to operators; 
such as preparation of NEPA documentation, resource inventories and 
species surveys, monitoring activities and ensuring adequate staff is 
available to process permits. All of these new obligations put a 
tremendous burden on industry's ability to economically develop the 
resource for the benefit of the country. It is safe to say that the 
cumulative impacts of stipulations, conditions of approval and 
litigation is strangling industry's ability to develop energy resources 
on federal lands and to supply much needed energy to the citizens of 
this country.
RECOMMENDATIONS
    In conclusion, PAW and PLA appreciate Congress' recognition of the 
important role access to federal lands plays in meeting the energy 
needs of the nation through its efforts to pass an energy bill. 
However, many of the additional measures discussed in this testimony 
can also be easily addressed through the regulatory process.
    PAW and PLA recommend the following:
     Reiterate the importance of federal lands in meeting the 
nation's energy needs;
     Provide adequate funding for BLM staffing to specifically 
address APD and Rights-of-Way backlogs;
     Require timely issuance of leases in areas determined to 
be available for oil and gas leasing;
     Require timely issuance of APD and Rights-of-Way;
     Eliminate the 5% of Inventoried Roadless Areas in the 
Rocky Mountain Region that encompass 83% of the natural gas resources 
found within the areas covered by the Roadless Conservation Rule;
     Encourage aggressive implementation and enforcement of 
recently issued BLM Instruction Memoranda (IM) that provide field 
guidance for improving processing of APDs and Rights-of-Way;
     Recommend issuance of new IMs that eliminate redundant 
NEPA analyses; and
     Require reimbursement to the prevailing party for 
reasonable attorney's fees, actual court costs incurred, or any other 
relief, which may be granted through a legal challenge of an agency 
decision.
    Madam Chairwoman and members of the Subcommittee, thank you again 
for the opportunity to share with you our perspective regarding the 
``Oil and Gas Development on Public Lands''.
                                 ______
                                 
    Mrs. Cubin. Thank you.
    I would now like to recognize Mr. Dan Heilig of the Wyoming 
Outdoor Council.

 STATEMENT OF DAN HEILIG, EXECUTIVE DIRECTOR, WYOMING OUTDOOR 
                            COUNCIL

    Mr. Heilig. Thank you very much.
    It would indeed be easier for industry to develop its 
resources if the citizens and private surface owners who are 
being affected by development were to simply move away and 
vacate the lands for industry. I do not doubt that that would 
be beneficial, but I don't think that is a reasonable approach 
for any person to be advocating.
    Madam Chairwoman and members of the Subcommittee, my name 
is Dan Heilig. I'm the executive director of the Wyoming 
Outdoor Council.
    Established in 1967, WOC is the state's oldest and largest 
independent environmental organization. Our mission is to 
protect and enhance Wyoming's environment by educating, 
involving citizens, and advocating environmentally sound public 
policies and decisions.
    I appreciate the opportunity to present my organization's 
views on this important subject of oil and gas development on 
our public lands.
    As you well know, Wyoming is also blessed with abundant 
supplies of mineral and energy resources. While our solar and 
wind power potential is enormous, it remains virtually 
untapped. At the same time, activity in Wyoming to develop 
fossil fuel resources is at an unprecedented level. It is our 
responsibility, we believe, both as a state and a nation, to 
ensure that the exploitation of our mineral riches does not 
permanently impair the natural values that make Wyoming unique.
    Before I address the subject of impediments, the subject of 
this hearing, I want to use this opportunity to briefly respond 
to claims made by those in the industry that environmentalist 
groups have appealed most project level EAs or EISs prepared 
for oil and gas development projects. The following is a list 
of just a few of the dozens of major energy projects that have 
been approved recently without appeals or litigation from the 
environmental community. The Continental Divide project, 3,000 
wells. Jonah II, 450 wells. Pinedale Anticline, 700 wells. 
Wyodak CBM project, 5,000 wells. Wyodak CBM Drainage project, 
which I might note was authorized under EA FONZI, 2,500 wells. 
And then Gillette North, South, Marquiss, and Lighthouse. And I 
want to correct an error here. Lighthouse was, in fact, 
appealed by the Powder River Basin Resource Council. I 
apologize for that error.
    Mrs. Cubin. Thank you.
    Mr. Heilig. Annually Wyoming BLM issues dozens, if not 
hundreds, of project level authorizations for oil and gas 
activities without public comment, much less an appeal being 
received.
    In addition to a number of other large oil and gas 
projects--excuse me. In addition, a number of other large oil 
and gas projects are moving through the process toward 
approval. I list them here. I'll quickly go through them. South 
Piney, 210 wells. Jonah Infill by EnCana, Inc., 1,250 wells. 
Seminoe Road, 1,240 wells. Atlantic Rim CBM, 3,880 wells. Wind 
River Natural Gas Development project, 325 wells. Big 
Porcupine, 453 wells. There are others listed. I won't take the 
Committee's time to cover this list. That's in the testimony.
    In my view, whether these projects will be the subject of 
appeals or litigation will frankly depend largely on whether 
BLM decides to follow the law, properly disclose and mitigate 
the environmental effects, and protect the rights of property 
owners whose lives and livelihoods are being adversely affected 
by increased development.
    The point I wish to make now is that the public lands are, 
in fact, that exactly. They're public lands. We all have a 
stake. We all have an interest in these lands. They do not 
belong to one particular group. We all must share.
    I, in my testimony, have a written excerpt from FLPMA, the 
Federal Land Policy and Management Act, the provision 
describing multiple use. And I think it's important to 
highlight that. FLPMA's definition does not mean all uses on 
all lands. What it means is rather a combination of balance and 
diverse resource uses that takes into account the long-term 
needs of future generations for renewable and nonrenewable 
resources, including but not limited to recreation, range, 
timber, minerals, watershed, wildlife and fish, and natural 
scenic, scientific, and historic values and harmonious and 
coordinated management of the various resources without 
permanent impairment of the productivity of the land and a 
quality of the environment with consideration being given to 
the relative values of resources and not necessarily to the 
combination of uses that will give the greatest economic return 
or the greatest unit output.
    I see that I'm just about out of time. I apologize for 
that.
    I think the most important part of the testimony of mine 
has to do with the recommendations. And most of that focuses on 
future--a future world where nonfossil fuels are the primary 
source of energy, wind, solar, hydrogen, and so forth. I'm 
happy to discuss with the Committee short-term solutions and 
recommendations that may address the immediate near-term 
future.
    Thank you very much.
    Mrs. Cubin. If you'd like to do that--if you--hello. If you 
would like to go ahead and do that, I'm not going to stick real 
tightly to the time limit if it won't take more than a minute.
    Mr. Heilig. No. I just--I have a few recommendations that I 
could certainly share with the Committee. Can you hear me OK?
    Mrs. Cubin. Uh-huh. Do I have a blank look on my face?
    Mr. Heilig. No, not at all. You're very engaging, in fact.
    There are those voices that claim that delays are due 
primarily to red tape, procedural requirements of NEPA, and 
other laws and frivolous appeal and litigation. Fundamentally, 
we believe the problem is traced to conflict and competition 
over diminishing resources. Everyone, as I mentioned at the 
outset, has a stake in our public lands. And they feel very 
strongly and emotionally about their particular ideas of how 
the public lands should be managed.
    In Wyoming, we have a large amount of surface--private 
surface estate overlying Federal minerals, as well. And the 
Federal Government is making decisions that have a direct 
impact on the lives of the people who occupy the surface, who 
were invited by this Federal Government 100 years ago to settle 
that land and to build communities and businesses there. And 
now they're being asked to step aside and make way for this 
newest government initiative to develop natural gas.
    I think fundamentally there are deep ingrained conflicts 
between the users of lands that need to be addressed. I don't 
think a streamlined NEPA or removing certain regulatory groups 
is the answer. The problem is much deeper. And it requires, I 
think, hearings like this followed by dialog and communications 
so we can begin to understand better the basic views of each of 
the public land users.
    Mrs. Cubin. Thank you.
    Mr. Heilig. Thank you.
    [The prepared statement of Mr. Heilig follows:]

  Statement of Dan Heilig, Executive Director, Wyoming Outdoor Council

    My name is Dan Heilig, and I am the executive director of the 
Wyoming Outdoor Council (WOC). Established in 1967, WOC is the state's 
oldest and largest independent environmental organization. Our mission 
is to protect and enhance Wyoming's environment by educating and 
involving citizens and advocating environmentally sound public policies 
and decisions.
    I appreciate the opportunity to present my organization's views on 
the important subject of oil and gas development on our public lands.
    Wyoming is blessed with extraordinary and unique natural treasures 
including Yellowstone National Park, the nation's first; Grand Teton 
National Park; Devils Tower, the nation's first national monument; and 
the Shoshone National Forest, also the nation's first. We are the 
nation's headwaters state: the Colorado, Columbia and Missouri Rivers 
all have their origins in western Wyoming's remote high country. Our 
congressionally-designated wilderness areas that surround Yellowstone, 
besides offering some of the best backcountry recreational experiences 
in the country, comprise the largest pristine Class I airshed in the 
contiguous United States. Nationally-significant historic trails like 
the Oregon, California and Mormon trails traverse the state. Our clear 
skies, stunning panoramas and abundant wildlife are the envy of the 
nation.
    Equally important, particularly for Wyoming's residents, are the 18 
million acres of public lands in Wyoming managed by the Bureau of Land 
Management. Wyoming's Red Desert, the Upper Green River Valley, Powder 
River Breaks, Split Rock, and Adobe Town are just a few of the dozens 
of special places that Wyoming's residents cherish, use and enjoy for a 
variety of pursuits.
    As you well know, Wyoming is also blessed with abundant supplies of 
mineral and energy resources. While our solar and wind power potential 
is enormous, it remains virtually untapped. At the same time, activity 
in Wyoming to develop fossil fuel resources is at unprecedented levels. 
It is our responsibility, both as a state and nation, to ensure that 
the exploitation of our mineral riches does not permanently impair the 
natural values that make Wyoming unique.
    Before I address the subject of impediments, I want to use this 
opportunity to briefly respond to claims made by those in the industry 
that ``environmentalist groups'' have appealed ``most project level EAs 
or EISs'' prepared for oil and gas development projects.
    Following is a list of just a few of the dozens of major energy 
projects that have been approved recently without appeals or litigation 
from the environmental community:
     Continental Divide--3,000 wells;
     Jonah II--450 wells;
     Pinedale Anticline--700 wells;
     Wyodak CBM project--5,000 wells; Wyodak CBM Drainage 
project--2500 wells;
     Gillette North, Gillette South, Marquiss, and Lighthouse 
CBM projects.
    Annually, Wyoming BLM issues dozens, if not hundreds, of project-
level authorizations for oil and gas activities without public comment, 
much less an appeal, being received.
    In addition, a number of other large oil and gas projects have 
either recently been approved or are moving through the process towards 
approval:
     South Piney Natural Gas Development Project, 210 wells, 
Sublette County;
     EnCana, Inc's Jonah Field Infill Drilling Project, 1,250 
wells, Sublette County;
     Seminoe Road CBM Project, 1,240 wells, Carbon County;
     Atlantic Rim CBM Project, 3,880 wells, Carbon County;
     Wind River Natural Gas Development Project, 325 wells, 
Fremont County:
     Big Porcupine, 453 CBM wells, Thunder Basin National 
Grasslands;
     Kennedy Oil Pilot Exploratory CBM Project, 20 wells, 
Sweetwater County;
     Copper Ridge Shallow Gas Project, 89 wells, Sweetwater 
County;
     Little Monument Unit Natural Gas Project, 31 wells, 
Sweetwater County.
    In my view, whether these projects will be the subject of appeals 
or litigation will frankly depend largely on whether the BLM decides to 
follow the law, properly disclose and mitigate the impacts, and protect 
the rights of property owners whose lives and livelihoods are being 
adversely affected by increased development.
EPCA and ``Impediments''
    I will focus my comments on public lands managed by the BLM, since 
that is where the majority of natural gas bearing formations are 
located.
    As noted earlier, the BLM in Wyoming administers approximately 18 
million acres of public lands and an additional 29 million acres of 
federal mineral estate, most of which is overlain by privately owned 
lands. Under the applicable Resource Management Plans required by 
federal law, the vast majority of public lands under BLM's jurisdiction 
- 90% or more - are open to oil and gas leasing and development. For 
the most part, the only lands off-limits to oil and gas development 
activities are the wilderness study areas established by BLM pursuant 
to congressional directive, totaling approximately 577,000 acres.
    Under the Federal Land Policy and Management Act, 43 USC 
Sec. Sec. 1701-1785, the BLM is required to manage the public's lands 
for multiple uses. This does not mean all uses on all lands, but rather 
``... a combination of balanced and diverse resource uses that takes 
into account the long-term needs of future generations for renewable 
and nonrenewable resources, including but not limited to, recreation, 
range, timber, minerals, watershed, wildlife and fish, and natural 
scenic, scientific and historical values; and harmonious and 
coordinated management of the various resources without permanent 
impairment of the productivity of the land and the quality of the 
environment with consideration being given to the relative values of 
the resources and not necessarily to the combination of uses that will 
give the greatest economic return or the greatest unit output.''
    Recently, industry representatives have provided a misleading 
portrayal concerning perceived ``impediments'' to their access to 
public lands oil and gas. I hope to clarify a few of these 
misconceptions. First, the 2003 Energy Policy and Conservation Act 
(EPCA) report makes it clear that for 60 million acres of federal lands 
in five major western basins, 85 to 88% of oil and gas reserves are 
available for leasing with standard and other resource-protection 
stipulations. The EPCA report was firm in its conclusion as universally 
reported in the press that there are indeed few restrictions on public 
land oil and gas. Indeed, Assistant Interior Secretary Rebecca Watson 
called these findings ``unexpected.''
    Closer to home, for the Montana and Wyoming Powder River Basin, the 
EPCA report found that for 10.7 million acres of federal lands, 91 to 
96% of oil and gas reserves are likewise available for leasing. The 
Wyoming Powder River Basin is 99% open to leasing and over 95% under 
lease. For the Greater Green River Basin in Colorado, Utah and Wyoming, 
encompassing 11.6 million acres of federal lands, 88 to 90% of oil and 
gas reserves are likewise available for leasing. The BLM lands within 
the Wyoming BLM Pinedale Field Office area in the Upper Green River 
Valley are approximately 85% open to leasing, and very nearly all of 
those lands are leased.
    Industry trade groups and drilling companies have tried to 
undermine the EPCA findings. The Petroleum Association of Wyoming, for 
example, in recent testimony before this Subcommittee, complained of 
``conditions of approval'' on drilling operations as an impediment to 
their access to these reserves. These drilling requirements, however, 
are developed in land use plans and other environmental documents as 
part of the public comment process, in which industry participates, to 
help select reasonable mitigation measures to preserve multiple use, 
protect other resources, and allow BLM to manage public lands in 
accordance with federal law in order ``to prevent undue or unnecessary 
degradation.
    The treasured public lands within Wyoming are bearing a 
disproportionate amount of the impacts from the drilling-biased 
National Energy Policy and underscore how truly few restrictions and 
delays there are to public lands oil and gas drilling. Two figures 
highlight this fact: nationally there are about 35-40 million acres 
committed to federal oil and gas leases--and Wyoming has 15 to 20 
million acres of them, or approximately one-half. Second, there are 
52,000 producing oil and gas wells in the United States on federal 
lands--nearly 22,000 of them, or over 40%, are on Wyoming BLM lands.
    While we certainly recognize the ``downstream'' environmental 
benefits of natural gas as a substitute for coal and oil in electricity 
production and as a heat source, the development, production and 
transmission of natural gas has significant environmental implications. 
In Wyoming the effects are most noticeable in terms of habitat 
destruction, air quality degradation, and industrialization of open 
spaces. In the Powder River Basin, for example, BLM has just approved 
the largest federal oil and gas project in the nation's history--over 
77,000 coalbed methane wells in Wyoming and Montana. The project will 
result in over 17,000 miles of new roads, 25,000 miles of new pipelines 
and powerlines--enough to circle the planet--thousands of noisy and 
polluting compressor stations, and hundreds of thousands of acres of 
destroyed soils, vegetation, ranch lands and wildlife habitat. 
Moreover, the unique water impacts associated with coalbed methane 
development will result in between 1 and 2 trillion gallons of water 
depleted from near-surface aquifers and dumped into thousands of 
discharge points on dry, erosion-prone soils and into 4,000 or more 
excavated surface contamination pits. Finally, as disclosed in the 
FEIS, impacts to air quality in the project area as well as in nearby 
Class I areas, will be significant.
    In the Pinedale area, growing concerns about the negative effects 
of development prompted public support for preservation. In response to 
the call for ``scoping'' comments in conjunction with the revision of 
the Pinedale RMP, the BLM found that ``almost all [of the over 17,000] 
comments expressed a desire for preservation over continued 
development.'' In addition, a recent editorial published in the local 
Pinedale paper, the Pinedale Roundup, illustrates the public's growing 
concerns. The paper's editor, Rob Shaul, calls for a halt to oil and 
gas development on public lands in Sublette County to protect the 
valley's unique natural values for future generations.
    The prospects of expanding oil and gas development in Wyoming's Red 
Desert prompted hundreds of Wyoming citizens (who know quite well the 
deleterious effects of development) to turn out at public hearings in 
Lander and Rock Springs to voice support for protection of the Jack 
Morrow Hills area. Nationally, the BLM received over 60,000 comments 
urging protection of this unique area.
    In addition to the push to develop oil and gas resources throughout 
the Rocky Mountain West the BLM often eliminates what few environmental 
protections exist. Each decision approving a major oil and gas 
development, as well as each oil and gas permit, contain terms, 
conditions and promises that are made part of the lease to ensure other 
resources such as wildlife are protected where oil and gas development 
occurs. As these stipulations sometime limit drilling periods (e.g., 
drilling may be prohibited in crucial winter range during winter months 
to protect wintering wildlife) industry constantly asks for exceptions 
to these stipulations. A quick review of such requests for exceptions 
indicates that BLM field offices in the Rocky Mountain Region are 
approving approximately 85% of the requests thereby eliminating the 
minimal environmental protection efforts currently protecting our other 
valuable natural resources.
Recommendations
    Rather than removing the few and minimal environmental protection 
measures for public lands, the laudatory goals of energy independence 
can be accomplished much more wisely, and without devastating effects 
on the environment, by emphasizing a transition to renewable energy 
sources within the United States, and ultimately promoting the 
transition to a hydrogen economy, as President Bush has advocated.
    Windpower is just as cost effective as natural gas at today's 
prices. Rapid expansion of the nation's wind turbine fleet could 
sharply boost wind generation over the next four years, increasing its 
output to the equivalent of 3 billion cubic feet per day--about as much 
natural gas as the states of Colorado and Alaska produce today.
    According to the American Wind Energy Association (AWEA), wind 
energy is already helping to reduce the current natural gas supply 
shortage in the U.S., and could be deployed rapidly over the next few 
years to bring it under control. The current supply shortage amounts to 
3-4 billion cubic feet of natural gas per day (Bcf/day), according to 
energy experts, and the increasing use of gas for electricity 
generation is one of the major causes of the shortfall. But in many 
areas of the country where wind farms are generating electricity, they 
are directly helping to conserve vital natural gas supplies.
    In a recent release, AWEA executive director Randall Swisher 
stated, ``We estimate that the wind farms already in place, and those 
that will be installed by the end of this year, will be saving about 
0.5 Bcf/day in 2004. ``That means the natural gas shortage would be 10-
15% worse if it were not for the relatively small amount of wind 
generation we have today.''
    The potential for windpower, just in Wyoming, is enormous. Wyoming 
ranks 7th in potential windpower in the United States. The windpower 
potential that exists just in North Dakota and South Dakota, for 
instance, could make enough hydrogen to power 100% of all U. S. highway 
vehicles. Wind energy companies pay royalties for the use of an owner's 
ranch land. Here in Wyoming, an average wind generator will pay $4000 
to $6000 per wind generator per year, and yet not interrupt a private 
owner's ranching and farming activities.
    If a renewable portfolio standard (RPS) were put into place, 
nationally, requiring every power company to produce at least 20% of 
their energy portfolio from renewable (non-hydro) sources by 2020, it 
could greatly spur wind and solar energy development nationwide. A RPS, 
if adopted today, that provided 10 percent of U.S. electricity from 
wind, solar, geothermal, and bioenergy would have virtually no impact 
on electricity prices and could save consumers as much as $13.2 
billion, according to the results of two studies by the U.S. Department 
of Energy's Energy Information Administration (EIA).
    This will have the salutary effect of diversifying the nation's 
energy mix, decreasing global warming, and promoting sources of energy 
that are stable and not subject to the wilder fluctuations of oil and 
gas prices, based upon global events that Americans cannot control. 
Solar and wind energy sources also have the advantage of being much 
less vulnerable to attack. They are not concentrated, and there is no 
vulnerable fuel source that could be made to explode or otherwise be 
destroyed.
    Conserving our energy resources is also a very viable solution. 
Simply raising the Corporate Average Fuel Economy (CAFE) standards that 
govern automobile fuel efficiency, using off-the shelf technologies, 
could boost fuel economy by nearly 75 percent, with no compromise in 
safety. An average new vehicle could get 40 miles per gallon by 2012, 
if such standards were enacted now. An added benefit, since fuel-
efficient vehicles cost less at the gas pump, is that the average 
driver can save more than $2,000 over the lifetime of the car--
something Wyoming drivers could definitely appreciate.
    Increasing energy efficiency standards for appliances, buildings, 
and industry as well as increased incentives for utility efficiency 
programs can also go a long way to alleviate our nation's energy needs. 
We know efficiency works. In 1970, 38 million homes in the U. S. were 
heated using natural gas, using about 5 trillion cubic feet of gas. In 
2001, 59 million homes were heated with the same amount of gas. The 
reason: newer homes and the heating systems used in them have been made 
more energy-efficient.
Conclusion
    Wyoming's public lands have made and will continue to make a 
substantial contribution toward meeting this country's energy needs. 
But our public lands are valuable for more than just oil and gas. They 
generate hundreds of million of dollars annually in economic benefits, 
harbor sensitive and rare species, provide opportunities for a variety 
of commercial and recreational activities, serve as clear air 
repositories, honor our proud heritage of bold pioneers, and provide 
the spiritual solace of open spaces.
    We must recognize and honor our obligation to future generations to 
be responsible stewards of our natural heritage, and not allow a short-
sighted crisis mentality to dictate the fate of these precious lands. 
It is a great nation that can plan for the long-term future and 
exercise the self-control to save, rather than squander, its treasures.
    Madam Chairwoman and members of the Subcommittee, thank you again 
for the opportunity to share with you our views on this important and 
timely matter.
                                 ______
                                 
    Mrs. Cubin. Mr. Cook, would you please grace us with your 
testimony.

        STATEMENT OF LANCE COOK, WYOMING STATE GEOLOGIST

    Mr. Cook. Thank you, Madam Chairman, for the opportunity to 
speak before you today. Your topic, oil and gas development on 
public lands, is most important to our state since the Federal 
Government is by far the largest landowner in Wyoming.
    The United States has spent the past 15 years creating the 
energy problem that we face today. During these years, oil and 
gas producers have been enticed by high prices into making 
substantial capital investments only to suffer through 
subsequent spells of low prices which make their capital 
investments at best marginally economic. This pattern has been 
repeated several times during the 1990's. As a result, we now 
find ourselves in a difficult situation, one where the current 
round of high prices seems to be failing to stimulate a large 
investment in drilling activity.
    As an aside, I can tell you that in looking at the number 
of state permits that have been issued for oil and gas wells 
during 19---or during 2003, we are lagging behind last year's 
drilling pace. And that's despite the fact that gas prices are 
twice what they were a year ago.
    As a result of these past price oscillations, we now have 
an oil and gas industry that is risk averse, and operators are 
not willing to respond to the--to the promises of a new gas 
spike. They want to see, I believe, a more sustainable and 
long-term gas price.
    Unfortunately, the risk-averse mentality on the supply side 
has come at a time when the supply problems that have created 
the recent price spike are both profound and serious. It 
appears that our energy supply problem is now a fundamental 
problem in the supply and transportation segments of the energy 
industry, and the crossing curves of supply and demand may have 
moved into an area where we cannot quickly and easily drill our 
way out of a supply crisis. There may be no quick fix this 
time.
    The chart that I have included in my testimony suggests 
that gas prices are moving in response to more fundamental 
forces than a simple temporary shortage.
    The United States is the world's largest gas consumer. We 
consume roughly 22 trillion cubic feet of gas annually. A 
trillion cubic feet of gas is an abstract concept. A trillion 
cubic feet is a cube two miles on an edge filled with natural 
gas. We consume 22 of those in a year. That's a lot of gas. As 
that rate of consumption grows as a result of an orchestrated 
Federal policy that encourages the use of natural gas as the 
fuel of choice, we're faced with the difficulty of meeting that 
increased demand, much less maintaining the supply at the 
current rate of production. There is already talk of a 30 TCF 
gas economy in our future. In the meantime, our nation's 
historic production base is depleting due to natural declines 
in the giant fields of Texas, Oklahoma, and Louisiana, where 
the easy to find, easy to produce natural gas has been largely 
depleted.
    Canadian gas imports are likely to decline in the future 
due to declines in the Alberta Basin, which is their primary 
producing area, and increased gas demand for domestic Canadian 
use in the Canadian oil sands industry. Canada cannot come to 
our rescue. Due to the severity of the problem, supplying gas 
at elevated rates to satisfy increasing demand will require 
multiple solutions. No single solution can deliver us from this 
problem. We need to conserve our hydrocarbon resources, 
undoubtedly. Conservation is part of the near-term solution. 
But in the short term, we should make our economy more 
efficient, producing more gross domestic product with less 
energy. But we also need to look at other solutions. We do need 
increased supplies in the near term. We're going to need 
increased supplies in the long term. We need to invest in 
infrastructure to secure gas from the North Slope. But that's a 
long-term solution. We will need to import LNG. It's not a very 
acceptable solution, but it's going to become necessary to 
secure the supplies that we need. But that's a 10-year-out 
solution. We need something to get us out of that 10-year 
timeframe. We need a bridge to the future. Wyoming gas could be 
part of this near-term and midterm solution while we try to 
implement those longer term solutions.
    Wyoming's gas reserves at the end of the year were pegged 
at a little over 18 trillion cubic feet, conservatively. This 
does not take into account the gas in the Powder River Basin, 
which is estimated at 25 trillion cubic feet of gas. Clearly, 
Wyoming has the resources necessary to be part of that near-
term and midterm solution. But we need to address those 
problems in three particular areas. We need to improve the 
access to Federal lands. We need to improve the Federal 
permitting process. And we need to invest and facilitate the 
installation of infrastructure to move our resource to market.
    There are additional details on these three areas that I'm 
recommending changes, Madam Chairman, but in the name of 
brevity, I'll cut my testimony short at this point.
    Thank you very much.
    [The prepared statement of Mr. Cook follows:]

            Statement of Lance Cook, Wyoming State Geologist

    Thank you for the opportunity to address you today. My name is 
Lance Cook, and I am the State Geologist of Wyoming and Executive 
Director of the Wyoming Geological Survey. I also serve as a member of 
the Wyoming Oil and Gas Conservation Commission. I am a Registered 
Professional Geologist in the State of Wyoming. I have a Bachelor of 
Science degree in Geology from Texas Christian University and a Masters 
Degree in Geology from the University of New Mexico. Prior to my 
service as State Geologist, I spent over 20 years working in the 
petroleum industry for Shell Oil Company and Union Pacific Resources. 
Many of those years were spent exploring for oil and gas here in 
Wyoming.
    Your topic today, Oil and Gas Development on Public Lands, is most 
important to our state since the Federal Government is by far the 
largest land owner in Wyoming. The United States has spent the past 15 
years creating the energy problem that we face today. During these past 
years, oil and gas producers have been enticed by high prices into 
making substantial capital investments, only to suffer through 
subsequent spells of low prices which have made their capital 
investments marginally economic. This pattern has been repeated several 
times in the 1990 s. As a result, we now find ourselves in a difficult 
situation, one where the current round of high prices seems to be 
failing to stimulate a large investment in drilling activity. I believe 
that as a result of these past price oscillations, we now have an oil 
and gas industry that is risk averse, and operators are not yet willing 
to respond to the siren song of a new price spike.
    Unfortunately, this risk-averse mentality on the supply side comes 
at a time when the supply problems creating the recent price spike are 
profound and serious. It appears that our energy supply problem is now 
a fundamental problem in the supply and transportation segments of the 
energy industry, and the crossing curves of supply and demand may have 
moved into an area where we cannot quickly and easily drill our way out 
of a supply crisis. There may very well be no quick fix this time. The 
chart below suggests gas prices may be moving in response to more 
fundamental forces than a temporary shortage.
    The United States consumes roughly 22 TCF of natural gas annually, 
and that rate of consumption is growing, to a large degree as a result 
of an orchestrated federal policy that encourages the use of natural 
gas as the fuel of choice. Already, there is talk of a 30 TCF gas 
economy in our future. At the same time, our nation s historic 
production base is depleting due to natural declines in the giant oil 
and gas fields of Texas, Oklahoma and Louisiana where the low-hanging 
fruit has already been picked. Additionally, Canadian gas imports are 
likely to decline due to declining production in the Alberta Basin and 
increased gas demand from the Canadian oil sands industry. 
[GRAPHIC] [TIFF OMITTED] T8257.001

    Due to the severity of the problem, supplying gas at elevated rates 
to satisfy increasing demand will require multiple solutions. No single 
solution can deliver us from this problem. Undoubtedly, we need to 
conserve our hydrocarbon resources. In the short term, we should make 
our economy more efficient and produce more GDP value with less energy. 
In the longer term, we need to invest in infrastructure to secure new 
sources of supply from non-traditional areas, such as the Beaufort Sea, 
Grand Banks of the North Atlantic and the Alaskan North Slope. We will 
need to build new ports to receive shipments of liquefied natural gas 
from other countries that have excess gas for export. However, 
conservation alone cannot free up the volumes of gas needed to fix this 
problem. Importation of LNG is part of a long-term solution, and cannot 
stand alone as our solution. North Slope and Beaufort Sea gas cannot 
get into our marketplace in less than 10 years. We need to bridge this 
problem in the short term, and part of that solution can be the 
development of gas from Lower-48 sources. Wyoming gas can be part of 
this near-term and mid-term solution while we try to implement the 
longer-term solutions that are also necessary.
    Officially, at the end of 2001, Wyoming s gas reserves were pegged 
at 18.4 TCF. This is a very conservative number. It does not fully 
include recoverable coalbed methane resources in the Powder River 
Basin, which I have estimated to be 25 TCF. It does not include the 
growing reserve base from the Pinedale Anticline, which may exceed 5 
TCF when fully developed. It does not include new information from the 
Jonah Field, where down-spacing may eventually supply several 
additional TCF s of gas. Additional gas may come from other coalbed 
methane projects in the Hanna Basin, the Washakie Basin, the Green 
River Basin, and others. We have tight gas resources in areas that 
represent hundreds of TCF s of potential future gas supplies. Wyoming 
is a gas-rich state, and it is only logical that our country would look 
to us for near-term and long-term relief.
    The largest mineral owner in our gas-rich state is the federal 
government, which controls roughly 60% of our gas-prospective lands. 
Can the federal gas resource make a difference in domestic energy 
supply? In 1996, Wyoming supplied 3.4% of the domestic gas output, and 
by last year, that number had grown to 7.1%, or more than doubled. We 
estimate that if our producers could receive a stable gas price of 
$3.50/mcf, a price that is actually less than today s gas price, 
Wyoming can add another 50% to our gas deliverability within 5 years. 
That would put our production rate at roughly 5.8 BCF per day, or 11 
percent of total U.S. output. As the largest landowner in the state, we 
must expect the federal land management agencies to facilitate recovery 
of the gas resources from federal lands within our state. There are 
three areas the federal government needs to address in order to make 
this happen:
    First, we need to improve access to the federal lands. The recent 
EPCA study of access to federal lands understated the difficulties 
associated with exploration and production activities on federal lands. 
Several recent NEPA documents illustrate the protracted delays in 
gaining access. The recent Powder River Basin Oil and Gas EIS required 
3 years to prepare, and the first permit has yet to be issued while 
litigation continues. The Continental Divide/Wamsutter II Natural Gas 
Project EIS took approximately 3 years to complete, and this delayed 
the infill drilling of natural gas wells within a known, producing 
giant gas field. More recently, the Jonah Gas Field is nearing the 
limits of allowed gas wells under a previous EIS, and infill 
development drilling in that field will probably come to a standstill 
while a new EIS is prepared. I suggest that at a time of natural gas 
supply problems, the federal government needs to streamline NEPA 
implementation and find ways to complete these documents in a time 
frame closer to the 18 months outlined in the regulations. I believe 
that this can be done without compromise to the environment or at the 
expense of other natural resources. Three year delays in drilling 
infill gas wells because of delays in required NEPA analyses do not 
appear to serve our national interests. Additionally, the fragmentation 
of federal lands into special administrative classifications creates 
impediments to exploration, which is the most basic of activities 
necessary to grow our gas supply. Wilderness study areas that remain in 
limbo for years or decades are off-limits to exploration, while new 
Wilderness Study Areas are being created. Research Natural Areas, Areas 
of Critical Environmental Concern, Roadless Areas, Historic Trails 
designations and others all provide important protections for valuable 
resources, but these special designations have eliminated many of the 
large, contiguous blocks of land necessary for access to conduct 
exploratory activities and left only a patchwork of available lands. 
While federal agencies should continue to protect important competing 
interests where appropriate, federal land managers must be more 
cognizant of the cumulative negative effects of their decisions on 
energy supply and the economy and seek alternate means to achieve true 
multiple use.
    Second, we need to improve the federal permitting process. While 
some federal offices are able to process permits within the time frame 
of 45 days as required by statute, other offices within the same agency 
require 6 months or more to issue permits. I have been told by 
operators that some offices have unofficial quotas , and that no 
individual company can expect to receive more than 25 well permits in a 
twelve month period. As a result, operators cannot plan multi-million 
dollar drilling programs with the degree of certainty required for such 
capital expenditures. While our economy s gas supply strategy seems to 
have moved to a just-in-time inventory strategy, our federal permitting 
process seems to have moved to a multi-year planning process. We 
believe that improved federal permitting processes that are consistent 
between agencies and offices within the federal agencies will help 
facilitate efforts to rebalance our gas supply. Consistency, clarity 
and efficiency should be achievable without sacrificing permitting 
requirements and appropriate safeguards for other important resources.
    Third, during the past few years, as Wyoming s productive resource 
base has grown, our gas producers have encountered increasing 
difficulties in receiving a fair price for their produced gas. The 
difference between Wyoming gas prices and the national market has at 
times been greater than $2.00/mcf, and currently is in the neighborhood 
of $1.00/mcf. Our gas must receive a fair price in the marketplace if 
adequate capital investment is to occur. We suggest that FERC should 
review the regulatory scheme surrounding pipeline permitting and 
financing and move aggressively to facilitate the construction of new 
take-away capacity from the Rocky Mountain region. Until the critical 
link of transportation is addressed, additional gas production in the 
market will depress regional gas prices and discourage necessary 
investment.
    In conclusion, I would encourage you to look to Wyoming for part of 
the solution to our energy supply problems. We have large resources 
that the nation can draw upon. However, without facilitation by federal 
agencies and Congress, our role in solving the nation s problems will 
be diminished at the expense of all Americans.
                                 ______
                                 
    Mrs. Cubin. Thank you. I'm afraid to leave it on that I 
might say something embarrassing.
    I'd now like to recognize the BLM director for Wyoming, Mr. 
Bennett.

STATEMENT OF BOB BENNETT, DIRECTOR, BUREAU OF LAND MANAGEMENT, 
                      WYOMING STATE OFFICE

    Mr. Bennett. How is that? Is that--this isn't working.
    Mrs. Cubin. Yeah, it is. Do I still have that blank look?
    Mr. Bennett. No, ma'am.
    Madam Chairman, I'm pleased to appear before you this 
morning to discuss oil and natural gas development on public 
lands and the impediments to accessing those resources. I will 
discuss the Energy Policy and Conservation Act, or EPCA, 
inventory, which provides us with a scientific inventory of 
these very issues.
    Madam Chairman, I will summarize my written remarks that I 
have been submitted--that have been submitted for the record.
    In order to provide for our nation's growing energy needs, 
President Bush's National Energy Policy established a 
comprehensive, long-term energy strategy. Part of that strategy 
focuses on providing for more of our energy needs with domestic 
supplies. I'm pleased to report that BLM Wyoming is actively 
working to implement the president's energy policy.
    Federal lands in Wyoming play a significant role in 
providing energy for our nation. There are currently over 
21,000 Federal oil and gas leases in the state, covering 15 
million acres. Now, those are not all actively producing, but 
that's the total lease package. And including over 13,000 
producing oil and gas wells.
    Last year, BLM Wyoming approved over 1,700 drilling 
permits. The Federal minerals in Wyoming contribute nearly 61 
percent, or 33 million barrels, of the state's total oil 
production and approximately 41 percent, or 723 billion cubic 
feet, of the state's total natural gas production. Royalties 
from these productions totaled nearly 73 million oil and nearly 
193 million for gas. Of course, the state of Wyoming receives 
half of these royalties as required by law.
    The President's National Energy Policy recognized the 
important role that the congressionally mandated EPCA inventory 
plays in solving some of our energy problems. The policy 
directed that EPCA be expedited and constraints to Federal oil 
and gas leases be reassessed and modified where opportunities 
exist consistent with the law, good environmental practice, and 
balanced use of other--of other resources. The policy further 
directed that any reassessment--that any reassessment of 
constraints be conducted with full public consultation, 
especially with people in the region.
    The EPCA inventory was released in January. It identifies 
the technically recoverable oil and natural gas resources on 
Federal lands in five energy rich western basins and analyzes 
the constraints from various existing lease stipulations to 
accessing those resources. Two of the five EPCA basins--the 
Powder River Basin and the Greater Green River Basin--lie 
predominantly in the state of Wyoming.
    EPCA found that in the Green River Basin, an estimated 57 
percent of the technically recoverable oil and 61 percent of 
the natural gas in the basins are available under standard 
leasing stipulations while 13 percent of the oil and 10 percent 
of the gas are totally unavailable.
    In the Powder River Basin, meanwhile, EPCA found that an 
estimated 63 percent of the technically recoverable oil and 59 
percent of the natural gas are available under standard leasing 
stips and only 4 percent of the oil and 9 percent of the gas 
are totally unavailable. The remaining resources in these 
basins are available with various restrictions.
    It is our goal in the Bureau of Land Management to provide 
optimal access to the resources from public lands consistent 
with sound land stewardship principles and full public 
involvement. The information developed in the EPCA inventory 
played an important role in advancing this strategy. The Bureau 
is taking steps to ensure the report's integration into its 
land use planning process, drilling permit process, and other 
land use authorizations. The Bureau is currently in the process 
of finalizing guidance related to these efforts.
    The Bureau in Wyoming also is looking to new sources to 
provide for additional energy supplies. For example, it's well 
known that a great deal of natural gas may be recoverable from 
the coal beds of Wyoming's portion of the Powder River Basin. 
As most folks here know, on April 1, I signed a record of 
decision that authorized the effects of drilling up to 51,000 
coalbed natural gas wells in the area over the next 10 years. 
This analysis represents the cumulation of a comprehensive 3-
year planning process. The record of decision itself does not 
authorize the drilling of wells, but it provides a framework 
for development. Before specific drilling proposals are 
approved, the Bureau will conduct additional environmental 
reviews to identify site specific environmental impacts and 
appropriate mitigation measures. Some of that work is being 
completed now. We are about to approve several drilling permit 
applications in basins as soon as next week.
    The Bureau of Land Management is continuing to work to make 
our drilling permit process more efficient. We process more 
drilling permits on Federal lands than any other Bureau of Land 
Management state. As I mentioned, over 1,700 last year. We are 
looking to make improvements, find deficiencies within the 
requirements of existing laws and regulations rather than to 
take shortcuts.
    In that spirit, Director Clarke has issued new policy 
memoranda that examined ways to expedite permitting. We are 
encouraging, for example, block cultural surveys where 
appropriate to cover entire project areas at once. We are also 
encouraging multiple drilling permit submittals to look at 
projects as a whole under NEPA and to improve efficiency. For 
instance, our Buffalo field office has had great success in 
working with operators to group permits into plans and 
developments of 30 or more proposed wells. We are also 
partnering with the State to provide for electronic permit 
submittals by operators that satisfy both state and Federal 
requirements.
    Madam Chairman, I wish to thank you for the opportunity to 
testify today. And I would certainly welcome any questions that 
the Subcommittee has.
    [The prepared statement of Mr. Bennett follows:]

 Statement of Robert A. Bennett, State Director, Wyoming State Office, 
       Bureau of Land Management, U.S. Department of the Interior

    Madam Chairman and members of the Subcommittee, I am pleased to 
appear before you this morning to discuss oil and natural gas 
development on public lands and the impediments to accessing those 
resources. As you know, the Energy Policy and Conservation Act (EPCA) 
Inventory, completed earlier this year, provides us with a 
comprehensive scientific inventory of these very issues. The Bureau of 
Land Management (BLM) is working to integrate the EPCA inventory's 
findings into its efforts to develop oil and natural gas and to protect 
natural resources on Federal lands. As BLM State Director in Wyoming, I 
will focus my remarks on BLM's oil and gas development activities on 
Federal lands here in Wyoming, and the EPCA inventory as it relates to 
Federal lands in Wyoming.
    On June 24th, Rebecca Watson, Assistant Secretary for Land and 
Minerals Management testified before your Subcommittee about the many 
challenges our nation faces in meeting our energy needs. She discussed 
how energy is the cornerstone of the nation's economy, and the value of 
strengthening our nation's ability to meet these needs with domestic 
sources of supply. According to the Department of Energy's Energy 
Information Administration (EIA), we currently import about 55% of our 
oil from foreign sources--a percentage that is expected to increase to 
68% by 2025. The natural gas picture has headed in a similar direction, 
as demand for clean-burning natural gas to produce electricity 
continues to accelerate, gas production from mature basins declines, 
and access to new basins fails to keep pace with demand. According to 
the EIA, over the next 20 years, U.S. natural gas consumption is 
projected to grow by more than 50 percent, while domestic production, 
if it grows at the rate of the last 10 years, will increase by only 14 
percent.
    In order to provide for our Nation's expanding energy needs, 
President Bush's National Energy Policy established a comprehensive, 
long-term energy strategy. Part of that strategy focuses on 
strengthening our nation's ability to produce oil and gas domestically. 
I am pleased to report that BLM Wyoming is actively working to 
implement the President's National Energy Policy and is contributing to 
the solution to some of these problems.
Oil & Gas Development on Federal Lands in Wyoming
    Federal lands in Wyoming play a significant role in providing 
energy to our Nation. Currently there are over 21,000 Federal oil and 
gas leases in the State, covering approximately 15 million acres of 
Federal land. In fiscal year 2002, the Federal mineral estate in 
Wyoming contributed nearly 61%--33 million barrels--of the State's 
total oil production and approximately 41%--723 billion cubic feet--of 
the State's total natural gas production. In fiscal year 2002, BLM 
Wyoming approved 1,764 Applications for Permit to Drill (APDs). As of 
May of this year, there were 13,407 producing Federal oil and gas wells 
in the State of Wyoming. Meanwhile, in fiscal year 2002, royalty income 
produced from Federal wells in Wyoming totaled nearly $73 million for 
oil and nearly $193 million for natural gas. The State of Wyoming 
received half of this royalty income, as required by law.
EPCA Inventory / Wyoming
    The President's National Energy Policy recognized the important 
role that the Congressionally-mandated EPCA inventory plays in solving 
some of our energy problems. The National Energy Policy directed that 
the EPCA inventory be expedited and constraints to Federal oil and gas 
leasing be reassessed and modified ``where opportunities exist 
(consistent with the law, good environmental practice, and balanced use 
of other resources).'' The National Energy Policy further directed that 
any reassessment of constraints be conducted ``with full public 
consultation, especially with people in the region.''
    The Departments of the Interior, Energy, and Agriculture released 
the EPCA inventory in January, 2003. The inventory identifies the 
technically recoverable oil and natural gas resources on Federal lands 
in five energy-rich basins of the western United States and analyzes 
the constraints from various existing lease stipulations to accessing 
those resources. Some 1000 lease stipulations were classified into 10 
broad categories in the EPCA inventory. It is important to note, 
however, that the inventory only addresses the leasing stage and 
whether lands containing oil and natural gas resources are open or 
closed to leasing, and the degree of constraint on development 
resulting from lease stipulations on open lands.
    Two of the five basins--the Powder River Basin and the Greater 
Green River Basin--examined in the EPCA inventory lie predominantly in 
the State of Wyoming. The key findings of the EPCA inventory for the 
Greater Green River Basin and the Powder River Basin are as follows:
     Greater Green River Basin--In the Greater Green River 
Basin, an estimated 57 percent of the technically recoverable oil 
(1,162 million barrels) and 61 percent (43.6 trillion cubic feet) of 
the technically recoverable natural gas are available under standard 
leasing stipulations, while 13 percent of the oil (258 million barrels) 
and 10 percent of the natural gas (7.35 trillion cubic feet) are 
totally unavailable. The remaining oil and natural gas are available 
with varying restrictions on development. Generally, land that is 
completely closed to development throughout the EPCA inventory contains 
comparatively little oil and natural gas potential. Among the five 
basins examined in the EPCA inventory, the Greater Green River Basin 
has the greatest total volume of oil (2.1 billion barrels) and natural 
gas (72 trillion cubic feet).
     Powder River Basin--In the Powder River Basin, an 
estimated 63 percent of the technically recoverable oil (620 million 
barrels) and 59 percent of the technically recoverable natural gas 
(4.82 trillion cubic feet) are available under standard leasing 
stipulations, and only four percent of the oil (35 million barrels) and 
nine percent of the natural gas (0.76 trillion cubic feet) are totally 
unavailable. The remaining oil and natural gas are available with 
varying restrictions on development.
Use of EPCA Information
    In accordance with the President's National Energy Policy, it is 
BLM's goal to provide optimal access to the resources from the public 
lands consistent with sound land stewardship principles and full public 
involvement. The information developed in the EPCA inventory will play 
an important role in advancing this strategy. With the EPCA inventory 
now completed, the BLM is taking several steps to ensure the report's 
integration into the land use planning process, approvals of 
Applications for a Permit to Drill (APDs), and other use 
authorizations.
    One of our Bureau's first tasks has been to conduct a review of 
possible conflicting management practices for similar resources in 
similar settings. Sound science has to be the critical factor in the 
design of operating restrictions. Operators should have a consistent 
requirement for resources, regardless of how many state or management 
unit boundaries they cross. Requirements should not change at invisible 
boundaries. As a result of the EPCA inventory, BLM is asking field 
managers to look beyond the boundaries of their units to ensure that 
the restrictions they impose on oil and gas operators for a specific 
resource are similar, if not identical, to those imposed in neighboring 
units with the same setting.
    It is important to note that any reassessment of these restrictions 
on oil and gas activities will occur in the public land-use planning or 
regulatory processes, both of which are fully open to public 
participation and debate over the appropriate balance between resource 
protection and resource development.
    On April 3, 2003, BLM Director Kathleen Clarke issued guidance to 
BLM State Directors and field offices regarding the Bureau's principles 
for integrating the EPCA inventory results into land use planning and 
energy development authorizations. Those principles are:
    1. Environmental protection and energy production are both 
desirable and necessary objectives of sound land management practices 
and are not to be considered mutually exclusive priorities;
    2. The BLM must ensure appropriate accessibility to the energy 
resources necessary for the nation's security and quality of life while 
recognizing that special and unique non-energy resources can be 
preserved;
    3. Consistent with the BLM's multiple-use mandate, sound planning 
will weigh relative resource values in accordance with the Federal Land 
Policy and Management Act;
    4. All resource impacts, including those associated with energy 
development and transmission, will be mitigated to prevent unnecessary 
or undue degradation of the environment.
    The BLM established two national teams led by State Directors to 
develop strategies to integrate the EPCA inventory into the land use 
planning and use authorizations processes. The Land Use Planning Team 
is responsible for developing guidance that will guide the BLM in 
integrating EPCA into land use plans (especially those designated as 
time-sensitive). In the long term, the team will be responsible for 
recommending ways to improve the planning process and allow for 
flexibility in making decisions that take into account current land 
conditions and scientific knowledge. Additionally, the process 
developed by the team will ensure Bureau-wide consistency in the 
application of stipulations.
    The other team, the Resource Use Authorization Team, is responsible 
for developing guidance that will address (1) how the EPCA results can 
provide flexibility and consistency in the use of stipulation waivers 
and exceptions to facilitate oil and gas development, where 
appropriate, and (2) use of the EPCA results to improve communications 
with operators, particularly with respect to APD processing. The teams 
are proposing to incorporate adaptive management principles using the 
most current science and information available. This means that the 
desired results would be stated and various approaches could be 
utilized to accomplish resource protection. Stipulations would be more 
outcome-based instead of prescriptive. We anticipate guidance developed 
by both teams will be approved in the near future.
Coalbed Natural Gas Development in Wyoming
    BLM Wyoming also is looking to new mineral sources to provide for 
additional energy supplies. A relatively new area of significant 
interest has been the development of natural gas from coalbeds in the 
Powder River Basin in Wyoming and Montana. On April 30, 2003, I signed 
a Record of Decision (ROD) and Resource Management Plan (RMP) 
Amendments for the Powder River Basin Oil and Gas Project that analyzed 
the effects of drilling up to 51,000 coalbed natural gas wells (both 
federal and non-federal) over a 10-year period, along with the 
continued drilling of an estimated 3,200 ``conventional'' oil or gas 
wells in the Wyoming portion of the Powder River Basin.
    This analysis represented the culmination of a comprehensive three-
year planning process. The alternative selected includes an emphasis on 
water infiltration to handle the water produced from coalbed natural 
gas wells, and it describes the management goals, objectives, and 
conditions of use that will guide future management of Federal oil and 
gas operations in the Powder River Basin. The Record of Decision itself 
does not authorize the drilling of wells, but it provides a framework 
for coalbed natural gas and conventional resource development. Before 
any specific drilling proposals are approved, the BLM will conduct an 
additional round of environmental review to identify site-specific 
environmental impacts and appropriate mitigation measures. In addition, 
other permits, such as those issued by the State's Department of 
Environmental Quality, will be necessary for most actions.
Improving Drilling Permit Processing
    BLM Wyoming also is continuing to work to make our drilling permit 
processes more efficient. BLM Wyoming processes more APDs on Federal 
lands than any other State. As noted earlier, we processed 1,764 APDs 
in 2002. The BLM is working hard to shorten processing times by 
examining the causes of delays.
    While we are working to improve our APD processes, our efforts are 
not designed to take shortcuts. They are designed to make improvements 
and find efficiencies within the requirements of existing laws and 
regulations. In that spirit, Director Clarke has issued new policy 
memoranda that examine ways to expedite permitting. These include, for 
example, encouraging block cultural surveys where appropriate, to cover 
entire project areas at once. Also, the BLM has a policy to encourage 
multiple APD submittals by operators for projects whenever it makes 
sense, enhancing our ability to look at projects as a whole under NEPA 
and to improve efficiency. For instance, BLM Wyoming's Buffalo Field 
Office has had great success in working with operators to group APDs 
into Plans of Development (PODs) of 30 or more proposed wells.
    We are also working to improve the way we handle cultural 
clearances required under the National Historic Preservation Act. To 
that end, in partnership with BLM, the Wyoming State Historic 
Preservation Office has recently posted on its website a template 
cultural clearance report format to expedite State and Federal review 
of such reports. In another partnership with the State, BLM Wyoming is 
working with the Wyoming Oil and Gas Conservation Commission to provide 
for electronic permit submittals by operators which satisfy both State 
and Federal requirements. Electronic permitting can greatly enhance our 
ability to process APDs more expeditiously.
Conclusion
    Madam Chairman, as we continue to work to improve our oil and gas 
development processes and implement the President's National Energy 
Policy in order to contribute to solving some of our Nation's energy 
problems, we are working within the framework of the BLM's multiple-use 
mandate. We also are committed to continuing to work within the guiding 
principles of Secretary Norton's 4 C's--Communication, Consultation, 
and Cooperation, all in the service of Conservation--as we pursue our 
mission to be good stewards of all of the resources of our Nation's 
public lands.
    Thank you for the opportunity to testify before you today. I 
welcome any questions the Subcommittee may have.
                                 ______
                                 
    Mrs. Cubin. Thank you very much, Mr. Bennett.
    And I would like to remind the panel that your full 
testimony will be entered into the record.
    And I'd like to start the questioning with Ms. Bower.
    What is the most important thing that the government can do 
to create a process that better facilitates responsible oil and 
gas development on Federal lands, in your opinion? And what can 
Congress do, as well?
    Ms. Bower. Madam Chairwoman, that's a--is a great question, 
and it's one that we're struggling with and we're looking into 
right now.
    One of the issues that I know is being talked about in 
Washington, as well as out here, is trying to stick to--under 
the current regulation for the BLM, there is a certain 
timeframe with which they are supposed to process applications 
for permits to drill and issue a decision.
    They're looking--one of the rumors that we've heard is 
possibly looking at legislation that would provide for a 
timeframe to get a decision to the operator on APDs. One of the 
things that we find troubling is indefinite delays. We cannot 
protest or appeal a decision if there is no decision. A judge 
will look at us and say, That's not ripe; you haven't exhausted 
your administrative remedies; therefore, you have to wait for a 
decision. There are all sorts of ways in which that decision 
can be delayed, particularly consultation with other agencies.
    So while we think that that--that to put legislatively a 
timeframe with which to issue a decision has merit, we would 
like to look into that further. We are concerned particularly 
about contingent rights, meaning that the agency cannot approve 
it--an agency will approve a decision to make sure that it's 
issued in a timely manner to comply with the law; however, they 
reserve the right later to apply more stipulations, and we're 
in the same position that we were before. So that is an issue 
that is hard.
    And the other issue is just trying to get the agencies to 
consult on projects as early in the process as possible so that 
we don't have a situation where late in the process an agency 
comes in which causes further delay.
    Mrs. Cubin. And do you have recommendations for what 
Congress can do?
    Ms. Bower. I think that we would like to think about that 
and probably provide you with some written recommendations at a 
later date.
    Mrs. Cubin. I would appreciate that.
    And by the way, please accept my apology for calling you 
Mr. Heilig. I knew your name was Mr. Heilig.
    Mr. Heilig. It's not a problem. I've been called worse.
    Mrs. Cubin. Not by me.
    Mr. Bennett, you--you referred to--I guess I should just 
go--go down the aisle. It would be easier for passing the 
microphone.
    Mr. Heilig, I've heard it said--and I have to tell you that 
there are times when I believe it--that there is an extreme 
radical environmental left just like there is an extreme 
radical right. And most people fall in between those areas. And 
what it seems to me is that there are people who simply don't 
want a human footprint on most public lands. They--the grazers 
in southern Wyoming were forced to get permits for every lease 
rather than a permit for the resource management area. And as 
Ms. Bower testified to, lawsuits and that sort of thing. Where 
does Wyoming Outdoor Council come down on those sort of issues?
    Mr. Heilig. I would have to say that Wyoming Outdoor 
Council, because of its base here in Wyoming, it's all Wyoming. 
It incorporated into the state in 1967. It's squarely somewhere 
in the middle. If--if clean air, healthy fisheries, abundant 
wildlife is an extreme notion, then I suppose Wyoming Outdoor 
Council could be called extreme. But we feel that those are 
mainstream ideas, mainstream values that residents in Wyoming 
and outside the state hold very dearly. And I think we're 
nowhere near that left extreme edge. I certainly do not deny 
that those elements exist, but my view is in Wyoming, the 
established groups are very reasonable and by no means extreme 
and always willing to sit down and talk with anyone who will 
listen, including industry and trade associations and so forth. 
That's certainly been the position of my group throughout its 
history, and it will remain so in the future.
    Mrs. Cubin. Something that I have picked up at a personal 
level is that different stakeholders accuse the others of 
things that are really not true. Industry, for example, will 
say environmentalists don't want us to do anything. 
Environmentalists will say, well, oil and gas wants to cover 
the whole state. We all know none of those things are true. And 
one of the things I'd like to do is to get away from those sort 
of statements and accusations, because we have an energy 
crisis. Do you believe that there are any opportunities to 
streamline the permitting process in terms of overlapping 
environmental requirements?
    Mr. Heilig. I do. And I also--before I provide that 
specific response to your question, I want to say that we agree 
at the Wyoming Outdoor Council that we need to get past the 
rhetoric and begin to focus our attention fully on resolving 
problems concerning the conflicts with multiple use management 
on the public lands.
    As you may know, I participated on a Federal advisory 
committee based here in Wyoming several years ago called GRBAC, 
the Green River Basin Advisory Committee. And that committee 
produced a number of recommendations that would streamline and 
expedite the NEPA review process. It's my view that there are 
many opportunities to move through that process more quickly; 
however, they're not, for unknown reasons, being explored or 
implemented. One of the most important being the ability to get 
together with the stakeholders and agencies that have authority 
and special expertise at the very beginning of a project, long 
before a draft EIS is published, to help identify the 
significant issues and explore various mitigation techniques 
that could be employed to reduce the significant impacts.
    Too much paper and environmental documents are spent 
addressing issues that, in my view, are not the most important 
issues. These EISs need to focus on significant issues and--and 
not waste words on matters that aren't relevant to anything, 
that haven't been raised in scoping comments and so forth. 
That's one, I think, very significant change that could be made 
to--to move the process, the NEPA process, forward more 
expeditiously.
    I have to say one of the reasons, perhaps the primary 
reason, Jonah did not draw any appeals from us was that we were 
operating in the spirit of GRBAC. You may recall that 
authorization was made shortly after the termination of the 
committee. And we made a sincere effort to demonstrate our good 
faith by allowing, without any scrutiny on our part, that 
project to go forward. It is--it is a significant project, and 
it has a very obvious impact on the land. And the same could be 
said about the Anticline project, as well. That record of 
decision contained what the BLM referred to as an adaptive 
environmental management component, a very important element of 
the decision. Yet a lawsuit brought by Yates Petroleum resulted 
in the BLM setting aside that portion of the decision and 
moving ahead with the development aspects.
    The adaptive environmental management was the reason why 
we--why our concerns were addressed at the time, and yet it was 
removed as an aspect of the project and because of BOCA 
(phonetic) claims and others.
    So I just want to make a commitment on behalf of my 
organization that we stand ready to work with industry, 
regulatory agencies, and others to--to facilitate the NEPA 
process and to ensure that it operates in a way that Congress 
intended, which is a full, complete, and accurate, 
scientifically sound disclosure of impacts and a very thorough 
exploration of mitigation measures that might be put into place 
to minimize the impacts.
    I want to note one other thing.
    Mrs. Cubin. Go ahead.
    Mr. Heilig. I'm beating a dead horse here. Uncertainty 
among public land users, I think, is a very significant issue 
here, as well. I know it's certainly an issue for the industry. 
The public is uncertain of the future of Wyoming's public lands 
because--
    Mrs. Cubin. You know, I don't want this to turn into an 
argument.
    Mr. Heilig. No, no, no. Not at all. I'm trying to offer--
    Mrs. Cubin. You get to rebut.
    Mr. Heilig. I'm trying to offer a solution. If the resource 
management plans could make specific allocations along the 
lines of--I hate to say it, the Z word--zoning. But if the 
public had some assurance that not every single acre was going 
to be developed, perhaps the concerns wouldn't be as acute as 
they are. I think it's the uncertainty, not knowing what the 
next five or 10 years of development will bring, that is 
really, I think, exacerbating the problem.
    Thank you.
    Mrs. Cubin. I think that's reasonable.
    One last question. In your written testimony, you 
recommended developing hydrogen as one of the major fuels. 
Where do you suggest we get the hydrogen? How are we going to 
do that? I'm a chemist by training, and I'm pretty familiar 
with hydrogen and its availability and its, you know, good 
points and bad points. I don't know how we can do that.
    Mr. Heilig. Well, I'm not a chemist, so I might come away 
with my tail between my legs at the end of this. But my 
understanding is that the hydrogen can be produced from a 
variety of different power sources. Power is required, of 
course, to produce power. In this instance, I understand the 
oil and gas interests have developed ways in which hydrogen can 
be produced from their activities. It's naturally occurring and 
can be drilled for. But I think the approach we would prefer to 
see taken is one where hydrogen is produced by less 
environmentally evasive means; for example, wind and solar 
power. But there certainly is an--an important role for 
industry to play here in producing the hydrogen that will be 
necessary to power the fuel cells.
    Mrs. Cubin. Thank you very much. Hydrogen comes from 
hydrocarbons. That's where you get it. So you have to produce 
the hydrocarbons to get the hydrogen out. And that's why I--I 
can't see a technical way to economically be--to be able to 
develop that. Plus the infrastructure that's needed for it, as 
well. I'm not saying I don't think we should do it. I think we 
have to do it. But we--we have to be reasonable in what we can 
achieve in the short term and medium term, as well.
    Mr. Cook, does Wyoming have the gas resources to make a 
significant contribution to our nation's energy needs, and 
how--for the record, how does energy production help the state 
of Wyoming?
    Mr. Cook. Wyoming has abundant gas resources that can be 
used in meeting the nation's needs. We estimate that at a 
stable price of $3.50 per thousand cubic feet, that in the 
relatively short timeframe of 5 years, we could increase 
production within the state by 50 percent.
    Mrs. Cubin. Would you repeat that for me, please.
    Mr. Cook. At a price of $3.50 per thousand cubic feet, in a 
timeframe of 5 years, we could increase our production capacity 
in the state by roughly 50 percent.
    Mrs. Cubin. How can we do that?
    Mr. Cook. By finding a mechanism of assuring the producers 
of a relatively stable gas supply. By building adequate 
infrastructure so that our producers are not subjected to a 
negative transportation premium.
    And as a side note, you know, within the previous year, 
while gas prices were 4 and 5 and 6 dollars around many parts 
of the country, our producers in Wyoming were receiving 
somewhere between a dollar and a $1.25 per MCF. So it's 
interesting that in the heart of gas supply country, we had 
this tremendous disincentive to produce gas. That certainly 
does not encourage the capital investment necessary to increase 
production. So we need the improvement in the infrastructure to 
help stabilize that gas price.
    And then, finally, we do need to improve Federal permitting 
processes. And when I talk about Federal permitting processes, 
I'm really not talking so much about leasing. I'm talking about 
drilling permits. EPCA just looked at leasing. EPCA did not 
look at the ease of obtaining a drilling permit.
    Mrs. Cubin. Now be careful here, because I was the author 
of the amendment that required EPCA to take place. And I really 
did want--what I asked for was the inventory plus impediments 
to production, but USGS decided not to do that.
    So just--just for you to know.
    Mr. Cook. OK. Thank you. As--as I have read EPCA, it 
appears to me that it underestimates the impediments to 
efficient production, because it does not address drilling 
permit delays. And while lands are, in many cases in EPCA, 
classified as available for leasing and producible, it doesn't 
look at the real world experience of can you physically get a 
permit and access the land to drill a well. And if the answer 
is you can lease it but you can't drill it, then why are we 
even--
    Mrs. Cubin. Then I've got a bridge to sell you somewhere. 
Right?
    Mr. Cook. That's right. And we certainly have that 
situation in many places across the state where there are 
leases. There are prospects. There are companies that want to 
drill wells. They cannot get access.
    Mrs. Cubin. I certainly agree with you that--that the 
report underestimated the effects of the impediments to getting 
the--I have to have somebody tell me what to do. We just want 
to make sure we get certain questions answered for the record, 
because this will--there will be a report drafted from this 
Committee, from this hearing, and it will go to the task force 
to be included in hopefully recommendations to do something 
about this. And, also, we--with your permis---not with your 
permission. I would ask you to kindly answer written questions 
that we aren't able to ask.
    And we'll get those questions to all of you in writing at a 
later date. We'll keep the record open, I think it's ten days. 
And so we'll get those to you soon. And so now I've got to go 
back to the guy who knows it all.
    Oh, right. We wanted to talk about the drainage problem.
    Mr. Cook. Oh, OK.
    Mrs. Cubin. And Ms. Bower referred to this in her 
testimony. It's our understanding that drainage of Federal 
minerals is occurring in the Powder River Basin. We know that 
to be true. Can you explain the situation to us and how it is 
affecting operators and the Federal Government?
    Mr. Cook. Well, drainage occurs when adjacent tracts have 
wells on one tract and no wells on the other tract resulting in 
the movement in the subsurface of minerals from the undrilled 
tract to the tract that is producing.
    Mrs. Cubin. Because gas--
    Mr. Cook. Gas is highly mobile.
    Mrs. Cubin. Yeah. It fills up the space that surrounds it. 
So if there's a hole, it's going to find its way out.
    Mr. Cook. That's correct. In the Powder River Basin in 
particular, where the coal seams are intensively fractured and 
highly permeable, allowing the--the easy movement of fluids in 
the subsurface, drainage quickly becomes an issue when adjacent 
tracts are at a competitive disadvantage to tracts that have 
been drilled. And that's what we have with the Federal estate, 
where we have a checkerboarded pattern of private and state 
lands versus Federal lands, and the private and state lands 
have been drilled. Those Federal lands are very definitely 
being drained.
    It affects the operators in a rather negative sense in that 
those operators that have leased Federal tracts are beginning 
to find that enough Federal gas has been drained that it's no 
longer economically viable to drill those Federal leases. We've 
had some operators that just recently appeared before the Oil 
and Gas Conversation Commission asking for upspacing; that is, 
going from 80-acre spacing to 160-acre spacing, because they no 
longer believe that enough gas remains to justify drilling an 
80-acre location. So certainly that is a negative incentive 
toward developing the Federal mineral estate in the basin if 
you can't get a timely permit.
    Mrs. Cubin. Thank you very much.
    Mr. Bennett, I've heard reports that different field 
offices interpret the same criteria several different ways. 
This has been a complaint that I have heard about the BLM in 
Wyoming and across the country since I've been in Congress. 
What can trigger an environmental impact statement or an 
environmental assessment in one area won't trigger an action in 
another. What actions will the state office take to ensure that 
the law is being implemented fairly across the board?
    Mr. Bennett. Thank you. I think your depiction is accurate. 
What we try to do is try to develop instructions that cover the 
whole state, leastwise at the state level.
    And, clearly, environmental conditions and social 
conditions vary across the state. So in some cases, an action 
in, say, the Powder River Basin would trigger an impact 
statement while in another location, it may not. Primarily it's 
because maybe the level of controversy may not be as high or 
the resources at risk may not be as significant. So in some 
cases, you're absolutely right. It is, but it's actually an 
assessment of what the--the consequences of an action are in 
trying to assess those relative to the resources at risk.
    So if you're talking specifically about what triggers an EA 
versus an impact statement, it is--it is a conscious decision 
that we try to go through in terms of one versus the other. And 
it's really a balancing of what's at risk and what the--what 
the level of controversy and those kinds of things are.
    You have to forgive me. You had a compound question. I 
forgot--
    Mrs. Cubin. And what the state office can do.
    Mr. Bennett. Sure.
    Mrs. Cubin. Because I wasn't necessarily referring to, you 
know, an area that requires an EA versus an EIS, but different 
offices just having different policy. I just wonder what--what 
the state office can do to resolve those kind of disputes.
    Mr. Bennett. We have--you know, clearly we have the 
responsibility for uniforming the program. At the state office 
level, part of our task is to do evaluations of programs 
between field offices and try to look at what's been done and 
what their record is. Do they, in fact, look at things the way 
that the instruction memoranda or the policy was intended? We 
have the opportunity to correct those things. And certainly--
and people are unafraid to do this. If they're--if they feel 
they're getting a conflicting set of instructions between one 
office and another, they're certainly free to elevate that, as 
well.
    We do have the responsibility at the state office level to 
try and look at each of those field offices and see if, in 
fact, they are interpreting within the policy. And, you know, 
policies--we try to give latitude to field managers, again, 
based on the resources and the proposal. So there is going to 
be differences, but we want to be sure that those differences 
are logical, make sense, and frankly they pass the red face 
test. And we do have that responsibility. Yes, ma'am.
    Mrs. Cubin. Do the recently issued instruction memoranda 
regarding processing APDs provide all of the policy guidance 
necessary to eliminate the processing backlog and prevent it 
from reoccurring?
    Mr. Bennett. You know, actually, I think they go a long way 
to help. They--you know, they're driven by inconsistencies and 
the opportunity to streamline. I think they're very, very 
helpful.
    I believe that probably our biggest problem here is, to 
some degree, the resources to be able to do it. We're in the 
process of wrapping up to meet the need that's really been 
talked about here this morning. And I--much of what everybody 
has said, I can certainly agree with. I think that, to answer 
your question fairly, there are other things that we can do. 
And we are, indeed, looking at those. They help very much, but 
there are additional things to do. But, again, you know, we 
have constraints in terms of processing that aren't our 
obstacles now. We have--some of those obstacles are in land use 
planning. It's going to take us time to get that land use--
those land use planning documents in those energy rich areas up 
to snuff. And, again, that's really a function of doing that 
while, at the same time, trying to process the APDs and do the 
operational kinds of things. And it's--they do help. There are 
more things we can do. And we are--we are trying to do some of 
those things right now, in fact.
    Mrs. Cubin. Is there anything Congress can do to help with 
those APDs? Not no, but hell no?
    Mr. Bennett. No, ma'am. As a matter of fact, what I need to 
do is I need to thank you and your colleagues in Wyoming, 
because you have dramatically helped BLM Wyoming. If you look 
at our budget--and that's where most people look--we have had a 
significant addition to our budget in oil and gas. I've got 
some figures that would reflect that at the time that we 
started to get the budget help, we were at around 700 APDs a 
year. And we're now at two and a half times that. Well, I would 
say that our budget hasn't gone up two and half times. And 
the--the APDs and the permitting, that's the leading edge of 
our workload. The rest of our workload is to manage the leases 
after they're in place, to do the--you know, to stay abreast of 
it. So there's--when we take on an APD, that's a lifelong 
project obligation for us. We've got to stay with it.
    So, you know, I know that the help we've got, a lot of it 
has been focused on the Powder River Basin. But as was 
suggested by Lance, Wyoming has a much broader contribution to 
make to the energy picture than the Powder River Basin. So we 
need to have the flexibility to be able to shift oil and gas 
dollars from the basin to other areas. And quite frankly, the 
demands on us are going to continue to grow. So I don't know if 
I was able to dance around that well enough or not, but--
    Mrs. Cubin. You need more money.
    Mr. Bennett. And--yes.
    Mrs. Cubin. We always do what we can.
    Are there any policies instituted by the BLM in the past 10 
years that, in your view, unnecessarily impede the BLM's 
ability to conduct lease sales and process APDs?
    Mr. Bennett. You know, we've had some--I remember as--and 
I'm talking generally now. When I was associate state director 
in Utah, we had actually a confusing handbook that came out 
relative to wilderness special areas. And that, I think, caused 
a lot more confusion. That has since been rescinded.
    You know, nothing immediately comes to mind. However, if 
you could--you know, if you would allow me the opportunity, I 
would certainly work with the staff and give you some--you 
know, some other ideas of things that may very well be out 
there.
    Mrs. Cubin. I would appreciate that.
    As I said, I do have further questions, but the time 
requires me to allow the next panel to come forward. But first 
I would like to invite any of you to make any remarks or answer 
any questions that weren't asked of you.
    Ms. Bower, did you have--
    Ms. Bower. I would, Madam Chairman.
    Mrs. Cubin. Uh-huh.
    Ms. Bower. Thank you, Madam Chairman.
    There's been a few things that I would like to address that 
have come up this morning. One is we are not asking--there are, 
in some instances, four different levels of NEPA analysis that 
take place before we get a decision on an application for a 
permit to drill. Each stage of that has the opportunity to put 
more restrictions on us. We are not asking to weaken 
environmental law. We are also not asking to weaken 
environmental policies. What we are saying, though, is 
somewhere in there we're overlapping a lot of different 
analyses. And we can certainly work on that. What I'd like to 
say is more is not better; sometimes it's just more.
    Another issue that has come up a couple times this morning 
is Jonah and that Jonah was never legally challenged. Jonah was 
not legally challenged. However, there are groups using Jonah 
as an example--because it is a highly intensive area, as an 
example of habitat destruction and the destruction that can be 
caused by oil and gas development and using that as an example 
to prevent further development in other areas. Jonah is very 
unique in its situation, and so it's certainly not an example.
    Another thing when you asked what can Congress do. I think 
if there is any way you can have language that would help 
prevent frivolous lawsuits from being filed that delay the 
process or allow any lawsuits where if the plaintiff does not 
prevail, that they reimburse the other party in those costs, 
particularly if it's a Federal agency, because they spend a lot 
of money trying to reply to all of these administrative costs 
and these legal challenges that are taken out of their budget 
that are never reimbursed.
    And the last thing I would like to say is that we also 
believe that there can be a balance between oil and gas 
development and environmental protection. And the industry is, 
more and more, assuming responsibilities that have historically 
been the financial responsibilities of the agencies. We now pay 
for monitoring. We pay for studies. We pay for surveys to be 
conducted, where that historically was the agencies' 
responsibility. So we believe there can be a balance, but that 
balance does not have to come at the exclusion of development.
    Thank you.
    Mrs. Cubin. Thank you.
    Anyone else?
    Mr. Heilig. If I may address two areas of interest.
    First, drainage from Federal leases. It's my understanding 
that in many instances, the lessee that occupies a state or 
private surface also owns the adjacent Federal lease. So in 
effect, he is draining or she is draining his or her own 
Federal lease. Without the--
    Mrs. Cubin. But the Federal Government isn't getting its 
share.
    Mr. Heilig. And we have asked BLM countless times to 
explain why it is not possible in those circumstances to 
collect compensatory royalties from the lessee, the operator, 
that is, in fact, draining the Federal gas estate.
    Mrs. Cubin. But you wouldn't go so far as to say that 
there's--that they always have the adjoining--
    Mr. Heilig. No.
    Mrs. Cubin. --Federal lease?
    Mr. Heilig. In that circumstance, I--I think the idea of 
compensatory royalty, or that opportunity, would apply in both 
circumstances. BLM is in a position to accurately estimate the 
amount of gas that is being drained and then to charge the 
lessee the appropriate amount. It also offers the advantage of 
removing Federal gas without associated surface disturbance. So 
I see it has significant environmental benefits.
    One point with regard to hydrogen. I'm remembering back to 
a high school chemistry class where we put a charge to water, 
and that released the hydrogen atom from the water.
    Mrs. Cubin. It exploded, didn't it?
    Mr. Heilig. That's why we--we enjoyed it very much. It was 
something very exciting.
    Mrs. Cubin. We don't want explosions.
    Mr. Heilig. Thank you.
    Mrs. Cubin. Thank you for your testimony. And once again, 
we will be sending questions and hope that you can answer--oh, 
Lance. Excuse me.
    Mr. Cook. Yes. Thank you, Madam Chairman.
    I have one final comment that I would like to make that 
really I think you should be aware of in terms of Wyoming's 
position within the greater picture of gas supply.
    Wyoming is the only state in the union that has managed to 
increase the production of gas every year for the past 18 
years. Our--our track record of growth in production is 
unparalleled. Because of delays both on the permitting as well 
as the regulatory side for NEPA, the three largest fields in 
the state, Jonah, Pinedale, and Powder River Basin coalbed 
methane play, those fields which contribute the bulk of growth 
in our production, are going to experience declines. In fact, 
the Powder River Basin coalbed methane production is in decline 
right now, even though we've produced less than 3 percent of 
the in-place resource. Pinedale only has a 105 day per year 
drilling window. Jonah Field is getting ready to stop drilling 
while a new environmental impact statement is prepared. Our 
growth has been coming from those three fields.
    When the CREG committee, which is the Consensus Revenue 
Estimating Group for the state of Wyoming--when we meet in the 
fall, it is very possible that we will be forecasting a decline 
in overall state production for the year 2004. And that is all 
due to Federal processes that are impeding production.
    Mrs. Cubin. Thank you.
    Bob, did you have any closing remarks?
    Mr. Bennett. Yes, ma'am. Let me--let me offer a couple of 
additional thoughts.
    I'd like to go back to the drainage issue. And I have to 
tell you that is of significant concern to me personally. I 
think there's a fiduciary responsibility of the 1920 Act. 
However, in addition to that, we also have the responsibility 
of adequate environmental assessment, as well. Drainage is not 
easily answered by compensatory royalty. Drainage is most 
easily answered by offsetting drilling. To make the argument 
for compensating royalty, you have to make an engineering 
assessment of that. That's not only time-consuming, but you 
have to have good data. And we can certainly make it, but it 
also goes into a contest.
    The easiest thing for us to do is to clearly ask for 
offsetting drilling. In order to do that, we've got to have--
again, we've got to have the planning documents done and the 
environmental assessment. So it's not--it's not an easy answer. 
But drainage is real. And in terms of the priority of the task 
that we've got in the basin, we're going to be--you know, 
drainage is the biggest thing for us, in our--in our minds.
    The other thing, of course, alluding to what Lance is 
saying--and, clearly, we're very concerned about Wyoming's 
position. But, again, we also have these competing requirements 
that we have to meet in terms of being fit for drilling and to 
authorize the drilling. So, again, it's not an easy, 
straightforward kind of thing. But I guess I certainly want to 
commit our agency to do the very best we can to continue 
Wyoming's rules and continue Wyoming's position.
    Again, I thought I better expand a little bit on the 
drainage, because it's--compensatory royalty is certainly an 
answer, but it's not necessarily the easiest answer. And 
whether you are successful or not is also arguable.
    Thank you.
    Mrs. Cubin. And, feasibly, people could be paying royalties 
on gas they didn't produce with compensatory payments.
    So with that, I thank this panel for their testimony and 
would like to call the next panel forward.
    Mr. Jeff Strange, who's the senior account representative 
for Halliburton Services Company. Steve Degenfelder, vice 
president for land at the Double Eagle Petroleum Company.
    Rick Robitaille, manager of public affairs of the western 
states of Anadarko Petroleum Corporation. Shaun Andrikopoulos. 
And Mr. Jim Magagna of Wyoming Stockgrowers.
    Don't sit down yet. If you would please stand to take the 
oath.
    Do you solemnly swear or affirm that, under the penalty of 
perjury, the statements that are made and the responses given 
will be the whole truth and nothing but the truth?
    [witnesses sworn.]
    Mrs. Cubin. I would like to begin this panel testimony 
recognizing Mr. Jim Magagna, Wyoming Stockgrowers Association. 
Oh, I could have started down there.

 STATEMENT OF JIM MAGAGNA, PRIVATE RANCHER, EXECUTIVE DIRECTOR 
              OF WYOMING STOCKGROWERS ASSOCIATION

    Mr. Magagna. Thank you, Madam Chairwoman.
    I very much appreciate the opportunity to appear before 
your Subcommittee today and particularly want to acknowledge 
our appreciation for your recognition that another important 
industry in the state, the agricultural industry, is intimately 
involved and both affected by and has the ability to affect the 
timely development of our oil and gas resources in the state. 
Sometimes I think that we feel like we are--we've become a 
stepchild in this fast pace to develop the minerals. We 
consider ourselves supporters of the mineral industry, partners 
with that industry, but at certain times adversaries of the 
industry. And I believe that this is an excellent opportunity 
to explore some ways in which that partnership can be 
strengthened.
    In my written testimony that I'll simply summarize for you 
today, I focused in three areas. And one had to do with that 
very issue of communication and partnership. As you're well 
aware, we've been working with the mineral industry over the 
past year developing a set of protocols to address split estate 
issues that have caused some significant concerns in the state 
of Wyoming. But I think this hearing provides an added 
opportunity to look at how the BLM can make landowners in the 
state of Wyoming and even grazing permittees in the state 
better partners in the process of expediting the development of 
our mineral resources. And it really comes down to the simple 
term communication and information.
    And as I've pointed out in my written testimony, I think 
there are some time specific opportunities for BLM in the 
leasing process, in the issuance of APDs, in field development 
plans to keep the private landowner in the split estate areas 
where there's Federal minerals, private surface and even the 
grazing permittees on Federal lands more involved in the 
process, more knowledgeable so that they can make timely 
decisions, they can establish timely communications with the 
mineral operators, all in the name of making the process work 
more smoothly both for the surface user and for the mineral 
developer. So that--that's an area that I think the Wyoming BLM 
certainly has an opportunity, and we would welcome the chance 
to sit down with them and work on expediting that communication 
that we feel is so necessary. And often we believe that our 
landowners, our members, become obstacles to the pace of 
mineral development simply because they have not been a part of 
the process. And that's just the typical human nature and their 
efforts to protect their private property rights which can be 
infringed upon if they're not properly involved.
    The second area that I've addressed in my written testimony 
somewhat more specifically is the issue of the perceived need 
by BLM to access private surface either for purposes of 
Endangered Species Act surveys or for the purpose of cultural 
resource surveys. And that authority, as I understand it in 
Wyoming, is based on the instruction memoranda that was issued 
by the previous Wyoming BLM director in 1999, which, although 
it's technically expired, to my knowledge, it still provides 
the guiding direction for activities that affect Federal 
actions but are located on private lands.
    And we recognize that we have, as private landowners, 
responsibilities under the Endangered Species Act. And I 
believe most of our landowners very much adhere to those 
responsibilities. But at the same time, we feel that it is not 
correct. It's an infringement on our private property rights to 
have a Federal agency say we have to physically access your 
land to do a survey in order to authorize a mineral company to 
conduct an activity. And this probably most often applies to 
roads, pipelines, power lines, those types of activities that 
cross both Federal and state land. That's not only an 
infringement on our private property rights, but more 
importantly to the purpose of your hearing today, Madam 
Chairwoman, is that it results unnecessarily often in 
significant delays. In many cases, our landowners have simply 
said no, that's not something that we're going to grant 
authority for.
    The instruction memoranda to which I refer in that scenario 
then puts the burden on the mineral operator to, if necessary, 
go to court to obtain for the BLM access onto the private land. 
And we don't believe that a private citizen, a private company, 
should ever be put in that position of having to take on in a 
litigation another private entity in order to provide an 
opportunity for a public body to conduct an activity that they 
have deemed to be necessary. We are hopeful that if the Wyoming 
BLM, in fact, has the authority to address that and make some 
needed changes, that they will do so; that if they do not, that 
this is something we would urge you and your Committee to take 
a look at and see how you might be able to change that process.
    Finally, the third area that I've addressed in my testimony 
has to do with access stipulations, which I know are a major 
concern of the mineral industry. And many of these are seasonal 
stipulations brought on by the needs to protect wildlife 
habitat. And here I'm not talking about endangered species, per 
se. I'm talking about wildlife in general. Our observation has 
been that the BLM has far too willingly accepted the Wyoming 
Game and Fish Department's determinations of critical habitat.
    And the specific experience that I've had just in the past 
several months that I'll briefly relate to you--I see my time 
is up, but I know you're very tolerant. There is a situation in 
the Rock Springs field office where a seasonal stipulation that 
was created for the purpose of mineral development, which was 
questionable in itself, but nevertheless, the office attempted 
to apply that to access or grazing on public lands where that 
grazing had taken place during that time period and in that 
given area for well over 100 years. And we think that is 
inappropriate, and we're very concerned of seeing expansion of 
that.
    Finally, in closing, one more area that I don't mention in 
my written testimony but has come up here today. And that is 
the planning process itself. Because of mineral development and 
the complexities involved and the public concern that's often 
expressed, the planning process in Wyoming has become 
increasingly lengthy and increasingly complex. We in the 
agricultural industry who depend on these lands for grazing 
have, to a great degree, become the victims of that. And the 
best example I can think of very briefly is the Jack Morrow 
Hills coordinated activity plan that's now been going on for, I 
believe, five or 6 years. It's focused on what level of mineral 
development is going to be permitted in the Jack Morrow Hills 
area. But as a result of that, we have activities, very 
proactive, resource friendly activities regarding grazing that 
have been on hold for that entire length of time, because the 
Bureau has been unwilling to act under existing planning 
regulations until that process is completed. That's an economic 
burden. It's a burden on families in the ranching industry. And 
it's something that very much needs to be addressed.
    So in closing, Madam Chairwoman, again, I appreciate the 
opportunity, the recognition that you have given to the role 
that we can play. And that's our desire, to be able to be a 
proactive contributor toward expediting the environmentally 
appropriate development of our mineral resources in the state. 
I believe our landowners, our Federal grazing permittees are 
all committed to that. And the practices that recognize us as 
full partners in that process and don't put up obstacles for us 
are the ones that will allow us to make that contribution.
    Thank you.
    [The prepared statement of Mr. Magagna follows:]

   Statement of Jim Magagna, Executive Vice President, Wyoming Stock 
                          Growers Association

    I appreciate this opportunity to provide testimony on behalf of the 
Wyoming Stock Growers Association (WSGA). A significant number of our 
over 1000 members are users of the public lands for livestock grazing 
and/or owners of private lands overlying federal minerals. They are 
often directly impacted by oil and gas development and, in particular, 
the manner in which access for such development is granted by the 
federal land agencies.
    My testimony today will be focused in three areas. First, I will 
address the general failure of the current public land agency practices 
to include the private surface landowner as a full partner in the 
process of leasing and developing federal oil and gas resources 
underlying private surface (split-estate). I will then focus on 
restraints being placed on oil and gas producers by the Bureau of Land 
Management (BLM) that constitute an infringement on the private 
property rights of landowners. Finally, I will offer observations on 
the expansion of access stipulations intended for mineral development 
to grazing on public lands.
    The Wyoming Stock Growers Association supports full development of 
the mineral resources within the state. We recognize the tremendous 
benefits that this mineral wealth continues to provide to Wyoming in 
jobs, education and infrastructure. In doing so, it removes a tax 
burden that might otherwise become destructive of Wyoming agriculture. 
Livestock grazing constitutes the primary use of most of the land, 
public and private, in Wyoming. The vast majority of agricultural 
operators want to be partners in fostering development of oil and gas 
resources. However, the failure to make us partners in this process 
often forces individual landowners to become perceived obstacles to 
development.
    WSGA recommends several actions that should be taken by BLM to 
enhance the opportunity for cooperation by landowners and grazing 
permittees, thereby facilitating timely industry access to federal 
mineral resources. Where split estate lands are involved, the BLM 
leasing process should provide for notice to the landowner when an oil 
and gas lease has been issued. This notice should include the name and 
contact information for the lessee. As field development plans and APDs 
are filed with BLM, all non-proprietary information should be copied to 
the surface owner. This process will encourage early communication 
among the parties and avoid the distrust that often results from time-
driven pressures to execute surface use agreements. While surface 
damage agreements are and must remain a matter of private sector 
negotiation, the BLM should assume a more proactive role in 
facilitating timely communication between the parties.
    On public lands, while the direct legal relationship between the 
oil and gas developer and the grazing permittee is lacking, the need 
for timely communication is not lessened. Unanticipated development 
activities can significantly impact livestock operations on public 
lands. The public opportunity to comment on Environmental Impact 
Statements and Environmental Analysis is inadequate to assure 
coordination between development and grazing activities. The BLM should 
assume a proactive role in keeping both parties informed so that, where 
appropriate, reasonable changes can be made in livestock management or 
oil and gas development operations to minimize adverse impacts.
    WSGA's concerns regarding infringement on private property rights 
stem to a large degree from policy enunciated by the Wyoming BLM in 
Instruction Memorandum No. WY-99-24 (Appendix I). This IM addresses the 
extent of federal authority over actions occurring on private lands 
affecting plants and wildlife. While the IM carried a scheduled 
expiration date of September 30, 2000, it appears to continue to guide 
BLM policy in Wyoming. This IM recognizes as a basic rule that ``the 
BLM has no direct authority over resource information gathering or land 
management activities taking place on non-Federally owned lands''. It 
then, in our opinion, proceeds to violate this rule in providing 
specific direction to Wyoming Field Offices. Under the authority of the 
Federal Land Policy and Management Act (FLPMA) and the National 
Environmental Policy Act (NEPA) this IM authorizes the gathering of 
information from private lands without permission using any ``legal'' 
means of inventorying short of actual on-the-ground trespass. Under the 
``interrelated and interdependent'' requirement of Section 7 of the 
Endangered Species Act the BLM will deny an application for a right-of-
way based on a potential impact on a listed species or its habitat 
located on private land.
    The application of this IM to split estate mineral development has 
had a significant impact on access to federal minerals. It has also 
been a major contributor to conflict between surface owners and oil and 
gas operators. According to the IM, if the landowner does not grant the 
BLM permission to conduct the inventory work deemed necessary, ``then 
the responsibility is placed on the operator wanting to conduct the 
mineral activity to acquire permission for the BLM specialist.'' This 
provision has been extended to plant and wildlife data beyond listed 
species. It has also been made applicable to the protection of cultural 
resources under the Antiquities Act. WSGA strongly objects to these 
provisions. We find them to be both a direct infringement on private 
property rights and an attempt to shift the burden for enforcement of a 
federal policy to the mineral operators. These requirements have 
resulted in significant delays in access to federal minerals. We urge 
Congress, if necessary, to take appropriate actions to remove this 
infringement and burden.
    Many of the seasonal stipulations which limit access to oil and gas 
resource development appear to be based on an unquestioned acceptance 
by federal land agencies of critical habitat designations by the 
Wyoming Game and Fish Department. WSGA recognizes that there are 
appropriate and necessary seasonal restrictions that should be imposed 
both for protection of wildlife and, occasionally, protection of 
domestic livestock operations. BLM resource specialists should exercise 
independent judgment in imposing these restrictions. We have become 
increasingly concerned by attempts to apply these same seasonal 
stipulations and areas of avoidance to livestock grazing. Potential 
conflicts between livestock grazing and wildlife needs bear little 
resemblance to conflicts between wildlife needs and mineral 
development.
    As members of this Subcommittee proceed with your analysis of 
impediments to oil and gas production on public lands, we urge you to 
broaden your analysis to include the effects that agency actions have 
on private landowners and public land grazing permittees. Policies and 
practices that recognize agricultural land users as full partners in 
successful mineral development will minimize conflicts that negatively 
impact timely development of federal mineral resources. I have attached 
for your information an editorial (Appendix II) that I recently wrote 
for our association magazine, Cow Country. I have outlined proactive 
steps that I believe can enhance relationships and foster oil and gas 
development in Wyoming. WSGA welcomes the opportunity to work with 
federal land agencies and the oil and gas industry in addressing the 
impediments that we have defined today.
                                 ______
                                 
    Mrs. Cubin. Thank you.
    I'd now like to recognize Shaun Andrikopoulos. I hope I got 
that name right.
    Mr. Andrikopoulos. Yes. It's one way to say it.
    Mrs. Cubin. Tell me the right way.
    Mr. Andrikopoulos. Andrikopoulos.
    Mrs. Cubin. Andrikopoulos. Thank you.
    Mr. Andrikopoulos. Thank you.
    Mrs. Cubin. And your big fat Greek wedding.
    Mr. Andrikopoulos. In my case, it was a Cuban wedding.

           STATEMENT OF SHAUN ANDRIKOPOULOS, RANCHER

    Mr. Andrikopoulos. Madam Chairwoman and members of the 
Subcommittee, thank you for allowing me to testify today. I'm 
here today representing myself and my family. We are ranchers 
in Sublette County, Wyoming, and are owners of surface lands 
that are affected by federally owned minerals. Our family has 
also long been participants and a part of the Wyoming oil and 
gas industry, as you may know.
    The United States' need for natural gas production today is 
greater than it has ever been. This is undeniable. According to 
the Cambridge Energy Associates, production will need to 
increase 40 to 60 percent over the next 5 years. This has been 
substantiated with the previous comments today. Categorized as 
a clean, inexpensive energy alternative to coal or fuel oil 
energy, the demand for natural gas by the American public is 
certain to remain strong for the foreseeable future. Coupled 
with the need for energy independence, it stands to reason that 
the United States should expeditiously develop its proprietary 
energy resources. Fortunately, dramatic advancements in 
technology are enabling us to exploit our reserves at an 
increasing rate and at a decreasing cost. It is the combination 
of these factors that has led us to the current natural gas 
gold rush in Wyoming.
    This gold rush, however, comes with inevitable costs not 
only to the environment but also to private property owners 
impacted by oil and gas development. There are few legal 
protections today for the landowners controlling the .6 million 
acres of fee surface that sits on top of federally owned 
minerals in the state of Wyoming. The way in which minerals 
will be developed and the way in which property rights of these 
landowners will be protected are public policy issues that 
transcend the boundaries of this state or this region and 
should be addressed by the Congress directly. It seems 
inequitable that the American society as a whole should benefit 
from inexpensive, clean energy at the expense of a few.
    In 2002, Wyoming produced 7.1 percent of the nation's 
natural gas output. At the same time, according to the USGS, 
Wyoming basins held 19 percent of the total recoverable 
reserves and 55 percent of the priority reserves in the nation. 
It is clear from these estimates that regardless of what we do 
as citizens or what you do as the Congress, the industry will 
be here to stay. This is where the resource is. We are at the 
beginning of this gold rush.
    Another economic trend that cannot be ignored is that of 
increased demand and the decreasing supply of open spaces 
across the west. According to the USDA, the average dollar 
value of agricultural land in Wyoming has increased nearly 50 
percent over the past 10 years. This increase in surface value 
is reflective of a recent and tectonic market shift in highest 
and best uses for the surface estate. The desire of the public 
to own large open spaces with important amenities such as 
hunting, fishing, and solitude is driving land value in our 
state to levels that far exceed agricultural production. Yet 
Federal current laws fall short, because they only require that 
surface owners be compensated for growing crops and 
agricultural improvements in the case of oil and gas 
development.
    If we place this region's modern day wealth in resources 
and American societal values in the context of current Federal 
statute, we find that there is an asymmetry in thinking. The 
concept that the mineral estate is dominant to all others dates 
back to 13th century English common law. This relic of the 
legal past has been perpetuated in the U.S. Statutes with such 
acts as the 1916 Stock Raising Homestead Act which severed all 
mineral rights from the surface homestead claims. At that time, 
it was impossible for the Congress to foresee the potential--
the potential and the impacts that we are experiencing in the 
21st century. It is time that this imperial thinking be 
modernized to reflect the 21st society--21st century societal 
values of private property right protection and capitalistic 
balance.
    One can only stop and ask why such a large portion of the 
American public is opposed to oil and gas development in the 
largely unpopulated Arctic National Wildlife Reserve, yet it 
seems that few are aware of the impacts on private property 
owned by American citizens here in Wyoming. According to the 
Energy Information Administration, Wyoming is ranked 45th in 
petroleum consumption, yet we're ranked second in natural gas 
production. With 43 percent of Wyoming's private surface 
sitting on top of Federal minerals, it is clear that the whole 
of the country will benefit as a few of us incur the cost.
    The petroleum industry has lived in relative harmony with 
the largely agricultural land base in Wyoming for many years. 
The custom and culture of the industry has been to accommodate 
other uses of the surface and to fairly and adequately 
compensate surface owners for their lost productivity, lost 
privacy, and lost land values. Recently, however, three key 
factors have driven dramatic change in the custom and culture 
of the local industry: Technological advancement, industry 
consolidation, and increased demand for natural gas. Under 
these conditions, the old custom and culture of working with 
surface owners has had little chance of survival. In the case 
of our family ranch, we are attempting to negotiate with a 
multinational company that has little, if any, long-term stake 
in our community or local environment.
    The Petroleum Association of Wyoming has collaborated with 
the agricultural industry associations in the state to 
establish voluntary protocols that can help alleviate some of 
the conflicts that exist between industry and landowners in 
Wyoming. While these are very positive steps, they are far from 
binding and reflect what the good players in the industry are 
already practicing. Voluntary measures do nothing to hold the 
bad actors in the industry accountable. Moreover, in a gold 
rush environment, voluntary accommodation will usually take a 
back seat to speed. This is especially true when the 
decisionmaking authority of these companies is located in 
another state or, worse yet, another country. In sum, the old 
rules simply don't work in today's environment.
    If this were an issue that affected only 10 percent of the 
split estate surface owners, we would not be here today 
discussing this issue. Anecdotally, we will discuss--as we 
discuss the interplay of the petroleum industry with our fellow 
ranchers, we are hard pressed to find split estate landowners 
that feel they have been kept whole by the industry today. 
Conversely--pardon me. Conversely, we do not hear about legal 
battles ensuing from the issue, either. This is because the 
legal gate swings decidedly one way, in favor of the petroleum 
industry. And few ranchers have time or legal resources to 
challenge unfair damage settlements.
    So what can be done to solve the inevitable conflict 
between mineral developers and surface owners? The mining 
industry is held accountable in Federal statute to give ample 
notice and to negotiate surface use agreements prior to being 
permitted for development. The oil and gas industry is 
specifically exempted from these requirements that were 
established in the early 1970's. Technology, demand, and 
economic factors have now created an environment where the 
petroleum industry needs to be held to the same standards as 
the mining industry. A double standard simply should not exist.
    The three components, in our opinion, necessary to solve 
the issues surrounding the split estate conflicts and to 
protect the existing property rights of surface owners are, No. 
1, to require detailed notice of operations to be provided to 
surface owners well in advance of operations.
    No. 2, to require mineral developers to compensate surface 
owners for their real losses, including the diminution in their 
lost real estate value.
    And, three, to provide a mechanism for solving conflicts in 
an equitable manner through arbitration or through the courts. 
These measures, appropriately drafted and implemented, will 
have limited impact on the timing or the magnitude of the 
extraction of our valuable Federal resources.
    In summary, it is time for legislative action now. The 
inequity that exists between Federal mineral leaseholders and 
the owners of private surface property can only be solved 
through Federal legislative action. Volunteer actions will do 
little to solve the problem in the face of accelerating 
development. Abdicating the responsibility to the bureaucracy 
of the BLM is not a solution. Congress should address the 
issue.
    In the early 20th century, our Congress did not have the 
benefit of knowing how much energy we would need as a nation of 
the 21st century, nor could they foresee the conflicts that 
would arise from the split estate situation. Fortunately, in 
2003, we can forecast the future and we can put in place the 
necessary protections for our private landowners so that the 
current gold rush does not come at the expense of the private 
property rights of the surface owners in the United States.
    Thank you.
    [The prepared statement of Mr. Andrikopoulos follows:]

          Statement of Shaun Andrikopoulos, Rimfire Ranch, LLC

    I am here today representing my family and myself. We are ranchers 
in Sublette County, Wyoming and are owners of surface lands that are 
affected by Federally owned minerals. Our family has also long been a 
part of the Wyoming oil and gas industry.
    The United States' need for natural gas production today is greater 
than it has ever been. According to Cambridge Energy Associates 
production will need to increase 40-60% over the next five years in 
order to keep up with increasing demand. Categorized as a clean, 
inexpensive energy alternative to coal or fuel oil energy, the demand 
for natural gas by the American public is certain to remain strong for 
the foreseeable future. Coupled with the need for energy independence, 
it stands to reason that the United States should expeditiously develop 
its proprietary energy resources. Fortunately, dramatic advancements in 
technology are enabling us to exploit our reserves at an increasing 
rate and at a decreasing cost. It is the combination of these factors 
that has led us to the current natural gas ``gold rush'' in Wyoming.
    This gas gold rush, however, comes with an inevitable cost not only 
to the environment but also to private property owners impacted by gas 
development. There are few legal protections for the land owners 
controlling the 11.6 million acres of fee surface that sits on top of 
Federally owned minerals in Wyoming. The way in which the minerals will 
be developed and the way in which the property rights of these land 
owners will be protected are public policy issues that transcend the 
boundaries of this state or region and must be addressed by our 
Congress. It seems inequitable that the American society as a whole 
should benefit from inexpensive, clean energy at the sole expense of a 
few.

    In 2002 Wyoming produced 7.1 percent of the nation's natural gas 
output. At the same time, according to the USGS, Wyoming basins held 
19% of the total recoverable reserves and 55% of the priority reserves 
in the nation. It is clear from these estimates that regardless of what 
we do as citizens and what the Congress does to put in place important 
checks and balances the industry is here to stay. We are at the 
beginning of the gold rush.
    Another economic trend that cannot be ignored is that of increasing 
demand and decreasing supply of open spaces across the West. According 
to the USDA the average dollar value of agricultural land in Wyoming 
has increased nearly 50% over the past ten years. This increase in 
surface value is reflective of a recent and tectonic market shift in 
highest and best uses for the surface estate. The desire of the public 
to own large open spaces with important amenities such as hunting, 
fishing, and solitude is driving land value in our state to levels that 
far exceed those supported by agricultural production. Yet current 
Federal laws fall short because they only require that surface owners 
be compensated for growing crops and agricultural improvements in the 
case of oil and gas development.
    If we place this region's modern-day wealth in resources and 
American societal values in the context of current Federal statute we 
find that there is an asymmetry in thinking. The concept that the 
mineral estate is dominant to all others dates back to 13th century 
English common law. This relic of the legal past has been perpetuated 
in U.S. statutes with such acts as the 1916 Stock raising Homestead 
Act, which severed all mineral rights from surface homestead claims. At 
that time it was impossible for the Congress to foresee the potential 
and the impacts that we are experiencing in the 21st century. It is 
time that this imperial thinking be modernized to reflect the 21st 
century societal values of private property right protection and of 
capitalistic balance.
    One can only stop and ask why such a large portion of the American 
public is opposed to oil and gas development in the largely unpopulated 
Artic National Wildlife Reserve, yet it seems that few are aware of the 
impacts on private property owned by American citizens. According to 
the Energy Information Administration Wyoming is ranked 45th in 
petroleum consumption, yet we are ranked second in natural gas 
production. With 43% of Wyoming's private surface sitting on top of 
Federal minerals it is clear that the whole of the country will benefit 
as a few incur the cost.
    The petroleum industry has lived in relative harmony with the 
largely agricultural land base in Wyoming for many years. The custom 
and culture of the industry has been to accommodate other uses of the 
surface and to fairly and adequately compensate surface owners for 
their lost productivity, lost privacy, and lost land values. Recently, 
however, three key factors have driven a dramatic change in the custom 
and culture of the local oil and gas economy: technological 
advancement, industry consolidation, and increased demand for natural 
gas. Under these conditions the old custom and culture of working with 
surface owners has had little chance of survival. In the case of our 
family ranch we are attempting to negotiate with a multinational 
company that has little, if any, long-term stake in our community or 
local environment.
    The Petroleum Association of Wyoming has collaborated with 
agricultural industry associations in the state to establish 
``voluntary'' protocols that can help alleviate some of the conflicts 
that exist between industry and landowners in Wyoming. While these are 
positive steps, they are far from binding and reflect what ``good 
players'' are already practicing. Voluntary measures do nothing to hold 
the ``bad actors'' in the industry accountable. Moreover, in a gold 
rush environment ``voluntary'' accommodation will usually take a back 
seat to speed. This is especially true when the decision-making 
authority of these companies is located in another state or another 
country. In sum, the old rules simply don't work in today's 
environment.
    If this were an issue that affected only ten percent of the split 
estate surface owners we would not be here today discussing this issue. 
Anecdotally, as we discuss the interplay of the petroleum industry with 
our fellow ranchers we are hard pressed to find split-estate land 
owners that feel that they have been kept whole by the industry. 
Conversely we do not hear about legal battles ensuing from the issue. 
This is because the legal gate swings decidedly one way in favor of the 
petroleum industry and few ranchers have the time or legal resources to 
challenge unfair damage settlements.
    So what can be done to solve the inevitable conflict between 
mineral developers and surface owners? The mining industry is held 
accountable in Federal statute to give ample notice and to negotiate 
surface use agreements prior to being permitted to mineral development. 
The oil and gas industry is specifically exempted from the requirements 
that were established in the early 1970's, a time when the surface 
impact from petroleum exploration was minimal relative to mining. 
Technology, demand, and economic factors have now created an 
environment where the petroleum industry needs to be held to the same 
standards as the mining industry. A double standard should not exist. 
Despite these more rigorous legal standards the mining industry has 
thrived over the past 30 years in Wyoming, one can only assume that so 
will the petroleum industry when held to the same standards.
    The three key components necessary to solve the issues surrounding 
split estate conflicts and to protect the existing property rights of 
surface owners are: (1) to require that detailed notice of operations 
be provided to surface owners well in advance of operations, (2) to 
require mineral developers to compensate surface owners for their 
``real'' losses including the diminution in the real-estate value, and 
(3) to provide a mechanism for solving conflicts in an equitable manner 
through binding arbitration or through the courts. These measures, 
appropriately drafted and implemented, will have little impact on the 
timing or magnitude of the extraction of our valuable Federal 
resources.

    In summary, the time for legislative action is now. The inequity 
that exists between Federal mineral leaseholders and owners of private 
surface property can only be solved through Federal legislative action. 
Voluntary actions will do little to solve the problem in the face of 
accelerating development. Abdicating the responsibility to the 
bureaucracy of the Bureau of Land Management is not a solution; the 
Congress must address the issue.
    In the early 20th century our Congress did not have the benefit of 
knowing how much energy we would need as a nation in the 21st century. 
Nor could they foresee the conflicts that would arise from the split 
estate situation. Fortunately, in 2003, we can forecast the future and 
we can put in place the necessary protections for our private 
landowners so that the current gold rush does not come at the expense 
of the private property rights of surface owners in the United States.
                                 ______
                                 
    Mrs. Cubin. Thank you.
    I'd now like to recognize Rick Robitaille, Anadarko 
Petroleum Corporation.

 STATEMENT OF RICHARD ROBITAILLE, WESTERN DIVISION MANAGER OF 
         PUBLIC AFFAIRS, ANADARKO PETROLEUM CORPORATION

    Mr. Robitaille. Thank you, Madam Chairman. As you 
indicated, my name is Rick Robitaille, with Anadarko Petroleum. 
My office and my home are in Casper, Wyoming.
    Anadarko is an independent oil and gas producing company 
with operations that are not only domestic but worldwide. We 
have a major presence in Wyoming and a major stake in Wyoming 
and a major interest in what's going to happen in Wyoming. We 
directly employ roughly 165 people. We account for several 
hundred contract jobs. We help support many of the service 
industries that are viable to our economy. We have offices in 
Rock Springs, Gillette, Rawlins--I'm pleased to say Rawlins--
Midwest, Powell, Casper, and some other smaller field offices 
around the state. We are very active in crude oil, natural gas 
production, coal production, trona production, and we also have 
an agricultural operation. So we are a very diversified company 
in our state.
    Our presence in Wyoming was magnified significantly in the 
mid--in mid 2000 when Anadarko merged with Union Pacific 
Resources, not to be confused with the railroad, but the 
resource company. In so doing, that transferred ownership of 
the original 1862 Railroad Land Grant to Anadarko Petroleum.
    As a result, we are now the largest private mineral owner 
in the state of Wyoming and one of the largest surface owners 
in the state of Wyoming. We made that investment as part of our 
company's future, because we believed that they had tremendous 
potential for energy development and other development, as you 
heard Mr. Cook and Mr. Bennett say earlier in the day.
    With approximately 4 million acres of minerals and a 
million acres of surface intermingled in a checkerboard pattern 
with the BLM or the Federal Government's lands, we have a very 
keen appreciation for the rules and the regulations and 
policies that you've been discussing today, including the split 
estate policy. The checkerboard land pattern--and it is simply 
that. If you visualize a checkerboard and you look at the red 
blocks, that belongs to Anadarko. And if you look at the black 
blocks, that belongs to the Federal Government. It is just 
that. It is a Federal section surrounded by private property 
and a private section surrounded by Federal property. And that 
in itself presents some really unique management challenges for 
both the private owner and the Federal Government. We 
understand those, and we appreciate those.
    We are in a situation where we have to work closely with 
the BLM, the beneficiaries of which work will be, as mentioned, 
the Federal, state, and local treasuries, the citizens of the 
United States, local businesses, and so forth, high on our 
priority list. Our primary challenges are twofold. One is 
access to our own land and the adjacent Federal leases. And the 
other priority is to do so in a reliable, predictable timeframe 
that does not discount the present value of money and cause us 
to look elsewhere.
    We agree with some of the statements previously made. The 
RNPs in this area are in dire need of update. We are concerned 
with some of the mitigation measures the BLM places on--
necessary in response to their laws and regulations that by 
default become actually placed on the private lands in the 
region. Effectively and unfortunately, we have become subject 
to some regulations that Mr. Magagna mentioned that we don't 
think are really appropriate.
    We are very concerned about the NEPA process. Some of the 
documents you've discussed today that govern our business and 
affect us on our private land holdings can take up to 5 years. 
That is very detrimental. We believe that that may, in fact, 
cause projects to be shelved and looked at investments to go 
elsewhere.
    We are interested in the debate now before Congress on 
trails and the current activity that is taking place with 
recognition and utilization of scenic and historic trails. We 
believe that there's got to be careful review of those policies 
to ensure that the trail concepts and the practices employed 
recognize the rights and protect the rights of private surface 
and private mineral owners in the vicinity of the trails. We 
think Congress needs to take some action so as to do that to 
ensure those protections.
    Predictability. You talked with Mr. Bennett earlier about 
some of the inconsistencies. I was very pleased to hear his 
answer. The timing of the drilling permits, the timing of the 
planning--to give you an example in this area, in order for us 
to access our own private surface and private minerals, we 
typically need a right-of-way across Federal Government land. 
That right-of-way can take several months, barring any 
unforeseen problems, just to get to our own piece of property. 
Then, of course, we, being naturally surrounded by the Federal 
lands, are very cognizant of the requirements and the 
stipulations and the regulations that are in place, some of 
which, as Mr. Magagna mentioned, narrow the window of 
opportunity appreciably.
    I'm thinking about a project we have going in the central 
part of the state where we're building a pipeline from Jeffrey 
City to Midwest, Wyoming, which isn't exactly Yellowstone Park 
or Grand Teton National Park, but it is indeed good Wyoming 
ground. Our window of opportunity in there is a very narrow 
band throughout the entire year due to the stipulations and 
regulations that are in place. Our concern is that planning in 
this area does not inhibit access to our own private land by 
opposing those same stipulations and requirements.
    In summary, Madam Chairman, let me say that we believe that 
these resource plans need to be looked at. Resources need to be 
provided to update those plans immediately. Those plans need to 
recognize private property rights. Revisions--and Mr. Bennett 
mentioned the staffing problems. Revisions should be based on 
areas of most activity or potential activity so that we can get 
the work done where the work will eventually be proposed. They 
need to be comprehensive. Those plans and their development and 
other plans and other documents somehow need to recognize the 
need for concurrent activity while they're in the stage of 
development.
    I liked the answers I heard on the earlier panel. I think 
we need to investigate how we can ensure and enforce 
predictable, reliable timeframes in the NEPA process and the 
FLPMA process so that investors have a definitive window in 
which they know they're going to get an answer to a proposed 
action.
    I concur entirely with Mr. Bennett. I think that Congress 
needs to look at BLM staffing in this area. I think they need 
to provide not only sufficient funds for staffing, but I think 
they need to provide sufficient funds to have qualified staff 
working and making the decisions upon which our business is 
based.
    The Federal Government in this planning process also has to 
recognize that while they have the authority to analyze an 
area, they don't necessarily, as Mr. Magagna says, have the 
authority to manage private lands. And we hope that the desires 
of the private landowners to manage their own property will be 
recognized and appreciated by the Federal Government.
    Thank you, Madam Chairwoman.
    [The prepared statement of Mr. Robitaille follows:]

Statement of Richard T. Robitaille, Western Division Manager of Public 
                Affairs, Anadarko Petroleum Corporation

    Madam Chairwoman, members of the Subcommittee, I am Rick 
Robitaille, Western Division manager of public affairs for Houston-
based Anadarko Petroleum Corporation. My office and my home are in 
Casper, Wyoming.
    Anadarko is an independent oil and gas exploration and production 
company with operations in the United States, Canada, Gulf of Mexico 
and several other countries. In the United States, we are the seventh-
largest producer of natural gas and one of the most active drilling 
companies.
    In Wyoming, Anadarko and its subsidiaries directly employ 165 
individuals and provide additional employment opportunities for 
approximately 475 contractors. We have offices in Rock Springs, 
Gillette, Rawlins, Midwest, Powell and Casper and are active in crude 
oil, natural gas, coal, trona and agriculture operations. Anadarko is 
one of the state's largest mineral producers and taxpayers.
    In mid-2000, Anadarko merged with Union Pacific Resources. That 
transaction transferred to Anadarko the original land grant awarded to 
the Union Pacific Railroad in 1862. That land grant included every 
other section of land for twenty miles either side of the main tracks 
across southern Wyoming. With the addition of these holdings, Anadarko 
is now the largest private mineral owner and one of the largest private 
surface owners in the state.
    With approximately four million acres of mineral estate and one 
million acres of surface estate intermingled in a checkerboard pattern 
with lands owned and controlled by the federal government, we are 
keenly aware of the management role and regulations of the federal 
government.
    This checkerboard land ownership pattern, which results in private 
lands being surrounded by federal lands and federal lands being 
surrounded by private lands, presents many unique challenges for us as 
well as the primary federal agency, the Bureau of Land Management 
(BLM). In much of southwest Wyoming, private land owners and the 
federal government must work together to facilitate mineral 
development. The beneficiaries of a successful relationship include; 
federal, state and local treasuries; private enterprise; education; 
local employers; and, most important, domestic energy consumers.
    Anadarko's objective is to explore for and produce minerals in 
harmony with our private and government neighbors while preserving and 
protecting rights to our private property.
    Primary challenges we have identified in the area include: (1) 
access to our private property as well as federal oil and gas leases; 
and (2) reliable timelines for approval of proposed operations and 
required permits.
    Access to federal lands and leases for oil and gas development has 
become increasingly difficult with more stringent regulations, 
increased study requirements, expanded permit approval times, greater 
challenges from anti-development groups and antiquated limitations. 
Private surface and mineral owners are also directly impacted by these 
conditions.
    One of the governing documents influencing activities on federal 
lands and, as a result, the private lands located within the 
checkerboard pattern in southwest Wyoming, is the Resource Management 
Plan (RMP), which is required by the Federal Land Policy and Management 
Act (FLPMA). These RMPs are in dire need of updating before larger 
exploration and production projects can begin. We believe these plans 
must be written with increased consideration and recognition of local 
land ownership patterns and allow more timely access to private 
property rights adjacent to federal lands. To access much of our own 
land for exploration and transportation of production, we must obtain 
access rights-of-way (ROW) from the BLM. Obtaining these ROWs can take 
several months, barring any unforeseen complications.
    Many mitigation measures enforced by BLM essentially apply to 
private lands as well. When federal lands are restricted from winter 
seismic or drilling activity, by wildlife stipulations or threatened 
and endangered species, by default so too are the adjacent private 
lands. Furthermore, federal land management agencies use the pretext of 
``cumulative impacts'' of proposed activities on both federal and 
private lands and minerals as a tool to urge a commitment to 
``voluntary'' measures regardless of land ownership. Should the 
developer oppose application to private property, delays in the 
permitting process are all but assured to occur. These measures can 
reduce the window of opportunity for activity on private property to a 
few months each year. Many private owners do not want to provide access 
to conduct required surveys which may ultimately impede development and 
reduce land values. We recognize that federal agencies have the mandate 
through NEPA to assess for cumulative impacts regardless of 
landownership; however, the Act does not give the agencies the 
authority to regulate private property. Effectively and unfortunately, 
private property owners have been subjected to the same time frames, 
conditions and stipulations as those imposed on the management of 
neighboring federal lands and leases.
    The National Environmental Policy Act (NEPA) is a well-intended 
law. Over the years it has been converted from simple language to 
volumes of regulations, legal decisions and policy interpretations 
which serve to stifle exploration for and production of this country's 
needed energy resources. It appears some federal land managers have 
opted to insulate their agency from unfounded criticism and potential 
litigation by resorting to massive environmental assessments (EA) that 
resemble environmental impact statements (EIS) in extent. Furthermore, 
decisions are often made to prepare the more extensive EIS where 
heretofore they were not routinely required. This cumbersome process 
takes enormous amounts of time, often times up to five (5) years, and 
casts doubts on project timing and planning. It is also becoming 
routine for federal land management agencies to shift the financial 
burden of preparing these voluminous documents to the developer. 
Because of land ownership patterns in southern Wyoming, private 
property rights can be significantly affected by this burdensome 
process through lost opportunity. We believe there may be several 
projects that will not come to fruition because time delays discount 
the present value to unacceptable levels.
    Additionally, BLM, as a result of the EISs, appears to be shifting 
the responsibility to industry to provide all relative wildlife, other 
resource and cultural studies at the time of permitting. In an ever 
increasing fashion, BLM as a land management agency is unable or 
unwilling to provide resource information from which developers can 
plan activities to minimize environmental impacts. Year by year, BLM 
grows its reliance on industry to conduct this data gathering and 
resource inventories. This shift in responsibilities is evident when 
examining language contained in BLM's Onshore Order 1 which provides 
industry with direction on filing applications for permits to drill 
(APD). When originally drafted in 1983, the Order stated, ``the 
involved SMA (surface management agency) shall identify any threatened 
and endangered species and/or critical habitat problems or other 
environmental concerns . . . to minimize the possibility of drill site 
relocation.'' In recent years, documents which required assessments for 
wildlife have increased the study group from thirteen (13) species to 
seventy-two (72). Some studies are seasonally sensitive, which if 
missed, can delay permit issuance for up to a year. For an owner who 
would like to develop private minerals, these and similar requirements 
can have a chilling effect.
    As recognition of national scenic and historical trails increases, 
so too must the realization that every other mile of some trails in 
Wyoming crosses private property. While private owners with trails on 
their land have generally worked to protect this portion of our 
national heritage, most remain troubled over imposition of federal 
stipulations for certain uses around the trails. For example, while 
there do not appear to be any regulatory requirements for use of the 
trails by recreational enthusiasts, private mineral development 
proposed adjacent to a trail may be restricted or denied.
    Suggestions of land purchases by the federal government or creation 
of protective trail ``view sheds'' have the potential to severely limit 
private property rights and the development of associated resources. 
Visual resource restrictions for temporary structures appear overly 
restrictive in some areas. Further complicating the issue is the fact 
that management of ``view sheds'' is an inexact art replete with 
subjectivity whereby decisions for resource protection can be left to 
the whim of individual managers.
    We believe where Congress grants the federal government authority 
to acquire private land for trails, it should make clear that the 
government should do so by acceptance of an easement if the landowner 
prefers that form of conveyance. The grant of an easement--as opposed 
to a fee interest--allows the landowner to reserve the right to 
continue existing or to undertake future endeavors on the surface as 
well as the subsurface of his land adjacent to and upon which the trail 
is located.
    Predictability and consistency from the BLM is paramount. Whether 
it is in stipulations identified in an EA or EIS or in the timing of 
drilling permits and pipeline ROWs, owners and developers have to know 
what to expect so that they can plan effectively. Predictability and 
consistency should also apply across field office areas and within the 
agency's internal groups.
    Some federal agencies appear motivated to try to speed up the 
permit process, but are still hampered by lack of staff. Timing 
problems are likely to increase as much of BLM's senior staff qualifies 
for retirement within the next several years.
    As petroleum production technology and methodologies advance, the 
federal government should revisit existing requirements. For example, 
the federal chargeable acreage limitations do have merit and should be 
in place for protection of a monopoly on federal lands. However, the 
rules need to be updated to reflect current development practices. 
Chargeable limits need to be increased from 246,080 to 500,000 acres to 
reflect the need for larger land positions required for coal seam and 
fractured shale natural gas production. Larger land positions are 
required for economies of scale to make these projects economical. 
Producing acres should not count towards chargeable acres.
    Anadarko Petroleum is proud of its record and will continue to 
stress the importance of developing energy resources in a manner 
compatible with the environmental. We are not seeking to circumvent the 
laws designed to protect the environment. Anadarko is, however, very 
aware of the need to provide energy to the American public, and we 
remain concerned about the impact of federal actions on private 
property rights.
    We offer the following recommendations:
National Environmental Policy Act-
     To reduce excessive analyses, agencies must comply with 
the CEQ regulations at 40 CFR 1500 to 1508 (e.g., scope of 
environmental analysis, public participation and documentation) and 
relevant executive orders (e.g., energy impact assessments).
Resource Management Plans-
     Must recognize the need to protect private property 
rights and be updated as quickly as possible.
     Revisions should be prioritized based on most active or 
potentially most active areas.
     Need to be comprehensive plans that are flexible and 
timely.
     Should provide for concurrent activity while being 
revised and the fact that they are undergoing revision should not be 
the basis for delaying or denying access to private lands.
Improve Predictability-
     Ensure and enforce time specific agency action on NEPA 
required studies, oil and gas lease issuance, applications for permits 
to drill, rights-of-ways, cultural clearances, etc.
     Establish measurable performance standards and 
accountable deadlines for land management agencies and personnel and 
provide reports to the public.
Personnel-
     Federal land management offices should be sufficiently 
funded and staffed with knowledgeable professionals to meet increasing 
activities to develop natural resources.
Private Property Development-
     Federal management agencies should not dictate activities 
on private surface.
     Decisions by landowners for development on private 
property must be respected and not denied by federal agency actions.
    Anadarko Petroleum appreciates the opportunity to appear before you 
today and looks forward to working with you to address the issues 
contained in our comments.
                                 ______
                                 
    Mrs. Cubin. Thank you.
    I'd now like to recognize Steve--tell me how to say your 
last name.
    Mr. Degenfelder. Degenfelder.
    Mrs. Cubin. --Degenfelder. Thank you.

   STATEMENT OF STEVEN DEGENFELDER, VICE PRESIDENT FOR LAND, 
                 DOUBLE EAGLE PETROLEUM COMPANY

    Mr. Degenfelder. Thank you, Madam Chairman.
    Madam Chairman, my name is Steve Degenfelder. I'd like to 
thank you--is this on?
    Mrs. Cubin. I think you just have to pull that closer.
    Mr. Degenfelder. My name is Steve Degenfelder. I'm the vice 
president of land for Double Eagle Petroleum Company. We are 
headquartered in Casper, Wyoming. We employ six full-time 
employees. I'd like to thank the Committee for the opportunity 
to testify today.
    The foundation of this hearing should be to stress to other 
Members of Congress, whether they're from energy producing 
states or energy consuming states, that all the studies 
concerning natural gas--and there's been a lot of them. Mr. 
Cook could tell you the exact ones. But where new reserves are 
being found in the United States are in the Rocky Mountain 
area. Since the offshore east coast, offshore west coast is off 
limits, all the energy producing states down in the south and 
the gulf coast are merely keeping up with depletion. Where new 
reserves are being added is the Rocky Mountain region and 
Wyoming particularly.
    I'd also like to thank you for traveling all the way to 
Rawlins to hold this meeting. It's nice that you get out in the 
small towns. But more particularly, in my point of view, 
Rawlins is also the BLM's Rawlins field office. And so many of 
my peers get very disgusted that when a new president is 
elected or we see a new secretary of interior or a new state 
director, they're disappointed at times that they don't see a 
lot of change. And I think that where a lot of emphasis needs 
to be made is in these district offices, because the district 
offices are the place where policies are interpreted and 
implemented on a day-to-day basis.
    Basically--well, to let you know more about my company, our 
two main plays are the CBM play about 25 miles south of here 
and also on the Pinedale Anticline, which is in southwest 
Wyoming. We also have some exploratory projects.
    My comments throughout this testimony are based on comments 
on Federal lands, BLM lands, and US Forest Service lands. To 
boil down a business decision, I feel, comes down to time and 
money. And if something costs too much or takes too much time, 
you naturally look to an alternative to satisfy that investment 
of capital.
    With respect to Federal lands, I was thinking of five main 
areas that I'd like to touch on in my testimony. The NEPA 
analysis. The duplication of permitting and reporting. The 
lands that are available for leasing and conditions of approval 
or, rather, reporting to Congress of those--those two items. 
Drilling permits and right-of-way permits and just overall 
increased costs that we incur operating on Federal lands.
    The NEPA analysis is probably the biggest impediment to 
operations on Federal lands not because we don't want to adhere 
to the NEPA principles, but I feel like the intent of the 
legislation has gone far beyond its intended purposes by those 
implementing the various Acts. No one wants to not comply with 
NEPA. However, I believe that the BLM and the Forest Service 
have become so hopeful that by increasing the scope of the 
study of these documents, they will lessen opposition to a 
project. This isn't the case. There's a lot of groups that are 
very opposed to any activity that we want to do. They're never 
pleased, because they don't want the development to occur. And 
they use NEPA to their own benefit by creating a quagmire of 
studies to serve their purpose of at least delaying and 
increasing the cost of a project. An operation on Federal lands 
has one of three outcomes, either approval, denial, or 
continual study. Two out of three of those outcomes negatively 
impact me.
    To further demonstrate this process, on the small play that 
we have south of Rawlins here, the first four wells, the NEPA 
document was this size. On the next eight wells, I paid for the 
NEPA document, and it was this size. And this is the document 
that Mr. Heilig's group appealed. This is very costly to us, 
because it takes capital money that we could be spending to 
drill wells and puts it into legal actions, including Mr. 
Heilig's appeal, which initiated another round of attorneys' 
fees that we have to pay for in addition to BLM having to pay 
some of those costs for their own legal representation.
    I'll try to skip forward here some. Another interesting 
situation is that we have an exploratory project out in 
northeastern Utah on US Forest Service lands which we've been 
waiting for our--us and our predecessors have been waiting for 
NEPA documents to clear the way for leasing a 400-acre tract 
that is surrounded by 20,000 acres that we have under lease. 
The little white spot is the open tract. We've been waiting for 
20 years to get this issued, and it looks like it's going to 
happen here in probably the next 12 months. But I would draw 
your attention to something that happened just recently. And 
that was that the US Forest Service granted a categoric 
exemption to a group of individuals that wanted to occupy some 
land out--the same Forest Service lands, not close to this 
drilling prospect but on the same forest. And they were granted 
a permit very quickly to occupy that land with up to 20,000 
individuals. My company has asked for a no surface occupancy 
lease. And that's what we fight about today.
    I see my time has been all taken up by the first comment. I 
would like to emphasize to you, though, in closing that my 
statements and my written testimony are not unique to my own 
company. I can bring in so many of my peers you wouldn't 
believe it, and they'd have a list as long as their arm of 
situations like this that have occurred. It's very difficult 
dealing with these because of the process. And I hope that you 
and other representatives from other states can enact some 
legislation that will alleviate and streamline some of those 
processes.
    Thank you.
    [The prepared statement of Mr. Degenfelder follows:]

  Statement of D. Steven Degenfelder, Vice President of Land, Double 
                        Eagle Petroleum Company

    Madam Chairwoman and members of the Subcommittee, my name is D. 
Steven Degenfelder and I am the Vice President of Land for Double Eagle 
Petroleum Company, an independent oil and gas exploration company 
located in Casper, Wyoming and with primary operations in the State of 
Wyoming. I would like to thank the Subcommittee on Energy and Mineral 
Resources of the Committee on Energy and Commerce for the opportunity 
to testify at this field hearing regarding ``Oil and Gas Development on 
Federal Lands.
    The foundation of this hearing should be to stress to members of 
Congress, whether they be from energy producing states or energy 
consuming states, that all studies concerning natural gas reserves 
point to Wyoming as the focal point of new reserves will be developed. 
With more than 60% of the minerals in the state being owned by the 
federal government, it is obvious that impediments to any production on 
federal lands is going to adversely affect the nation's ability to 
utilize its own natural resources and have a greater dependence on 
foreign countries resulting in greater costs and less stability. 
Basically, if we produce our own natural gas, we control our own 
destiny.
    I would also like to thank the Committee for traveling to Rawlins, 
Wyoming, and the site of BLM's Rawlins Field Office. It is extremely 
important for members of Congress to know these field offices are the 
most critical part of the Department of the Interior. People are 
disappointed because they don't see much change when a new BLM State 
Director or Secretary of the Interior is appointed or even when a new 
President is elected in Washington, D.C. This is because, the Field 
Office is where policies are interpreted and implemented, not at high 
management levels.
    My company is currently developing a coal bed methane play 
approximately 25 miles south of Rawlins as well as participating in 
many wells on the Pinedale Anticline in southwest Wyoming. I would like 
to emphasize that these two areas primarily produce natural gas and 
consist of development drilling, not exploratory. We also have one 
large exploratory project on United States Forest Service (USFS) lands 
in Utah, which I will address in my testimony.
    In every business, the issues basically come down to time and 
money. If something costs too much or takes too much time, it is 
replaced by another investment that is better. Today, I would like to 
focus my comments on five main areas of concern that I feel create or 
contribute to impediments to oil and gas production on federal lands.
    1) NEPA Analysis
    2) Duplication of Permitting and Reporting
    3) Land Available for Leasing/ Conditions of Approval
    4) Drilling Permits and Right-of-Way Permits
    5) Increased Costs
NEPA Analysis:
    The biggest impediment to operations on federal lands is the 
adherence to the National Environmental Policy Act (NEPA). The 
principles of the Act have been extended beyond their original intent. 
This process takes an incredible amount of time and is the single 
reason why more wells are not drilled and consuming states pay more for 
their energy. The two biggest plays in Wyoming are development in 
nature versus exploratory. In other words, the location of the gas is 
known, you just have to drill, produce and ship it to the consumer. 
However, these areas are where industry is encountering their greatest 
challenges.
    I am not implying I do not want to comply with NEPA. However, I 
believe BLM and the USFS has become hopeful that by increasing the 
scope of study in a NEPA document, they will in some way lessen 
opposition to a project. In most instances, the Agencies do not achieve 
their goal. Groups opposed to these projects are opposed to any 
activity. They will never be pleased because they do not want any 
development to occur. They now use NEPA for their own benefit by 
creating a quagmire of studies that serves their purpose of at least 
delaying and increasing costs of a project. An operation on federal 
land has one of three outcomes, approval, denial or continual study. 
Industry loses in two out of three of these outcomes. Environmental 
groups know that to prolong a study by creating endless possibilities 
and shadows of doubt, they increase the possibility of discouraging an 
operator and seeing the project cancelled. That's bad for energy 
consuming states.
    To further demonstrate the NEPA process, I would use our small play 
south of Rawlins as a good example. BLM prepared the NEPA document for 
our first four wells at the Cow Creek Field and the document was ten 
pages long. Double Eagle paid for the next NEPA document covering eight 
wells and that EA was over 150 pages and a bargain at $30,000. That EA 
is being appealed by environmental groups so we had to hire an attorney 
to intervene for another $10,000 to ensure that BLM would defend the EA 
with all their resources and protect our rights as well as their own. 
It is ironic how the same environmental groups did not appeal an EA for 
10 wells completed 1 mile east of my project.
    A similar situation, which demonstrates that the public process is 
used to delay a project, occurred when the Wyoming Department of 
Environmental Quality (DEQ) went through the public hearing process for 
my NPDES permit to dispose CBM water on the surface. Despite the fact 
that the same amount and quality of water had been discharged for four 
years prior to the public hearing of which no one commented. As soon as 
DEQ said this permit would now include CBM water, these groups 
including BLM expressed grave concerns. Where were their concerns 4 
years prior when the water initially flowed and BLM, Game & Fish and 
others built a reservoir to catch this well water?
    Another problem encountered by oil and gas companies is, having to 
pay for the NEPA documents, which BLM is actually supposed to do. BLM 
advises industry that because of time and budget constraints, if we 
want a decision any time soon we should pay a BLM approved third party 
contractor to prepare the document. This has been hard for me to 
explain to my superiors why BLM can't afford to do the NEPA documents 
in a timely manner, but do have enough staff to send, in some cases, up 
to 14 people to conduct an on-site inspection when in the past usually 
2-4 people have done the inspection.
    Since I have serious doubts that any efforts will result in a 
decrease of NEPA analysis from our present situation, I would simply 
suggest that Congress strictly order all federal agencies to require 
and document that all persons and companies using any federal lands 
operate under exactly the same NEPA process. I am convinced that if 
everyone in this country had to do what oil and gas companies are 
required to do, the public would be outraged and a change would finally 
occur. I can give you several situations, which we see where NEPA 
analysis is not being fairly implemented. One situation occurred 
recently on USFS lands in southwest Wyoming where a group was given a 
use permit through a ``categorical exemption'' to avoid a lengthy NEPA 
analysis. The permit would allow up to 20,000 people to camp, drive on 
and otherwise occupy USFS land. My company and its predecessors have 
been fighting with the same USFS personnel for 20 years to get a lease 
issued which carries a No-Surface-Occupancy stipulation, on a 400 acre 
tract surrounded by 20,000 acres of existing leases. Our NEPA document 
has been 10 years in the making. A detail I learned just days ago is 
that the USFS intends to ``take over'' the reclamation of these lands 
after an initial period of restoration by this 20,000-person group. Oil 
and Gas companies are required to complete restoration at their own 
cost regardless of how long it takes before their bond is released.
    I would also like you to require that BLM be a cooperating agency 
in the preparation of any NEPA document for the USFS since BLM will 
always be the agency charged with offering an oil and gas lease on USFS 
lands. This will help to prevent delays we are experiencing right now.
Duplication of Permits and Reporting:
    We currently submit applications for permit to drill, which 
includes information such as surveys, electric logs, completion 
reports, perforating intervals, pressure testing and other down hole 
information on wells drilled on BLM lands to both the respective BLM 
Field Office and the Wyoming Oil and Gas Conservation Commission 
(OGCC). On private and state wells we only submit this information to 
the OGCC. Once the information is received by the OGCC, it is kept in 
paper form and also digitized and available on the Internet. BLM Field 
Offices have expressed difficulty in having space to store all these 
paper file copies. I would suggest you designate the OGCC as the 
central depository for all well information and other records. The OGCC 
already administers spacing of wells in the state including those on 
federal land and is greatly respected throughout the nation for its 
Internet access of well file information.
Land Available for Leasing / Conditions of Approval:
    First, you should know that the information and testimony you have 
received in the past hearings about lands ``available for leasing'' and 
``lease stipulations'' is very inaccurate. This information is usually 
taken out of context and in a practical manner, does not represent 
reality.
    For example, when you hear testimony saying that only a small 
percentage of lands are unavailable for leasing, you take the 
percentages at face value and probably have a hard time arguing in 
public based solely on the percentages. I encourage you to pay close 
attention to where these lands may be located with respect to other 
lands. For example, the attached map of the Table Top Unit shows where 
we have 98% of the land under lease and a 400-acre tract offsetting our 
drill site, representing 2% of the lands, has been unavailable for 
lease. This unavailable tract renders the entire project of 20,000+ 
acres of leases unavailable for development. This was the determination 
of the Interior Board of Land Appeals. However, you would just be told 
that 98% of the lands in this particular area are leased and only 2% 
are unavailable. Naturally you would question my complaints.
    Lease stipulations are another area, which can be manipulated. My 
company's activities in the Baggs and Pinedale area in Wyoming are 
taking place on leases which were issued in 1948 and 1951 and mentioned 
little about timing stipulations or other conditions for operations. 
These leases would be reported to you as lease with no stipulations or 
as ``standard stipulations''. However, once we apply for a drilling 
permit, the stipulations imposed do not distinguish between a lease 
that was issued 50 years ago or 5 months ago. Basically, when you buy a 
lease at the auction, the stipulations on the lease you purchased can 
and will change depending on what is going on and when you decide to 
drill. It makes me wonder why BLM spends so much staff time and money 
determining what stipulations to put on a lease before a tract is 
offered for sale if the stipulations are bound to increase once someone 
submits an application to drill. These stipulations are non-negotiable 
and are supported by an old solicitor's opinion.
    Considering the above comments, I would suggest that you direct BLM 
and USFS personnel, when testifying before Congress about availability 
of lands for leasing and special leasing stipulations, they also 
include lands within a five mile ``buffer'' zone around these lands 
since those leasing areas within the ``buffer'' would also be 
questionable for leasing knowing the circumstances of neighboring 
lands. This analogy has been used to protect wildlife and historical 
resources for many years and should give Congress a better prospective 
on the real figures.
    Stipulations are nothing compared to the ``conditions of approval'' 
(COA's), which are attached to your drilling permit. The process begins 
by filing an application for permit to drill with BLM. The application 
is accompanied by a 4-page drilling plan and 11-page surface use plan. 
We have a registered surveyor stake the location and have an 
archeologist conduct a cultural inventory. When BLM approves the 
drilling permit, in some cases one year later, attached is what is 
called ``conditions of approval'', which are additions to the plans you 
have already submitted. These COA's are non-negotiable and can be 
appealed only to the State Director and to IBLA. Considering an appeal 
to IBLA can take up to 3 years for an answer. A company usually just 
accepts the COA's and goes on with their operation because of the time 
and money involved with an appeal, which most often doesn't make the 
decision worth contesting.
Drilling Permits and Right-of-Way Permits:
    The state OGCC will approve a well permit in 1-2 weeks. BLM can 
take up to one year depending on the NEPA analysis required. Couple 
that with the fact that many leases have wildlife stipulations that 
allow no construction, in some cases, from November 15 to July 31, with 
a very short window in which to conduct your operation. Couple that 
with the fact that everyone else is under the same stipulations, it is 
no wonder we have a rig shortage each summer. Then, the drilling 
companies have trouble-finding employees to operate the rigs because 
they laid those people off last November when things went dead.
    Right-of-way permits for access over BLM lands, especially to 
access a private drill site, has created a great concern because these 
requests have almost the same NEPA considerations as a well site on 
federal lands despite its being simply a 30 foot wide roadway. The 
requirement to conduct cultural and wildlife studies on the private 
land we are accessing federal lands to get to, stress our relationships 
with the private landowners, who are not too thrilled to find out we 
have to do cultural and wildlife studies on their land in order to get 
our BLM right-of-way.
    Authorization for surface water disposal and machinery involving 
air emissions has been under greater scrutiny. We are required to 
obtain permits from the Wyoming Department of Environmental Quality 
(DEQ) for air and water. Despite the DEQ having been given primacy by 
the Environmental Protection Agency (EPA) to implement the Clean Water 
Act and Clean Air Act in Wyoming, BLM makes it clear that having a 
NPDES permit or an air quality waiver does not entitle you to dispose 
of water on their surface or construct a compressor or generator 
station site. This is can only be authorized by the Agency through a 
right-of-way permit or sundry permit, which examines not only the use 
of the surface but also re-examines some of the environmental basis 
analyzed by DEQ. I would encourage you to let DEQ authorize these 
permits and not make a company go through another environmental process 
with BLM.
Increased Costs:
    I was amused recently at a conference I attended where an attorney 
said, ``fight `em'' by filling your own lawsuit. What a bunch of 
baloney. Where is the justification for fighting a 3-year battle at the 
Interior Board of Land Appeals (IBLA) about wildlife stipulations on my 
1948 vintage leases? I am much farther ahead if I take the COA's and 
get on with my drilling program. I know this perpetuates the problem 
but companies run on the bottom line. If you don't drill wells you 
can't produce the product, and if you don't have sales you don't get 
any money back.
    Basically, every time federal agencies increase their requirements 
it costs more in time and money both for industry and the federal 
agencies. A few instances, which stand out in my recent operations are:
     NEPA documents are now prepared by industry because BLM 
says they do not have the staff or budget to prepare them in-house. A 
small EA cost $50,000+. Large environmental impact studies cost several 
hundred thousand dollars to over a million dollars before a well is 
even drilled.
     Not receiving drilling permits until late in the year 
increases costs because days grow shorter and the temperatures drop.
     Requiring the graveling of access roads and locations 
prior to knowing if the well is productive. This has greater impacts to 
the surface and requires extensive restoration in the event of a dry 
hole not to mention the additional $13,000 per mile in costs (Rawlins). 
One the other hand, BLM's Buffalo Field Office directs operators to use 
existing two-tract roads and does not require even flat-blade roads.
     Requiring right-of-way permits instead of sundries in a 
federal unit. Federal Units were originally designed to give greater 
flexibility to the operator. This has not been the case.
     Conducting cultural and wildlife surveys on private land 
drill sites because access is gained across federal lands. A cultural 
survey for a one-acre drill site and access road typically runs about 
$1,500. A three-day black-footed ferret study costs $10,000. A complete 
wildlife study on a 100,000+/acre area can run several hundred thousand 
dollars.
     COA's that includes an on-site cultural observer during 
construction activities to ensure cultural resources are not ``buried'' 
even though the cultural survey conducted on the surface on the 40-acre 
surrounding our one-acre drill site showed no evidence of significant 
cultural resources on the surface. This costs about $1,000 per day for 
each occurrence.
     Surface inspection of drill sites by 14 BLM staffers. 
These wells are permitted to a depth of 1,500 feet and each well will 
only take 5 days to drill and complete. This is at a time when BLM 
tells us that they don't have the staff time or budget to do large NEPA 
analysis in-house. BLM incurs most of the costs associated with the 
inspections, but we reimburse BLM for costs of right-of-way inspections 
because of their cost recovery program.
     Strongly encouraging the use of injection wells for 
disposing of coal bed methane water, destroying its future usefulness 
as opposed to encouraging surface containment and surface application 
which is the desire of the grazing lessee and the local conservation 
districts. Drilling costs of an injection well can exceed $500,000+. 
Equipping the well with pumps and tankage can cost another $250,000. 
Construction of reservoirs would be much less expensive and a valuable 
use of the water resource for livestock and wildlife in a region that 
receives 6-9'' of rainfall per year. (Rawlins)
     Denying a two and one-half mile pipeline right-of-way to 
get gas to a sales line because, in BLM's opinion, there was sufficient 
capacity in existing competing lines, regardless of the transportation 
costs (Pinedale).
     Obtaining an air quality permit for a generator from DEQ 
and then receiving a COA's that would requires housing around the 
machine to make the noise level of the generator be similar to a vacuum 
cleaner at the location and not heard 1,600 feet away. BLM later 
withdrew this COA after we filed a complaint.
Conclusion:
    Many of my peers and I have lamented that this is not the business 
we got into 25 years ago. We do it because it's our profession not 
because we are having loads of fun. Our industry is also having 
problems sustaining itself where the attendees at luncheon meetings of 
landmen, geologists, geophysists or engineers are all over 40 years 
old. This is the group Congress and the Federal Reserve Chairman are 
looking at to solve energy needs and speed the nation's economic 
recovery. One bright spot for us however, is that as these impediments 
grow, we will realize a greater value for our existing reserves. The 
opposite is true for consuming states where their costs will continue 
to grow. We can have good jobs, profitable companies and a reliable 
source of oil and gas for consumers. I hope you will share my comments 
with your counterparts from other states, especially the energy 
consuming states. Thank you again for the opportunity to make these 
comments.
                                 ______
                                 
    Mrs. Cubin. Thank you.
    I'd now like to recognize Mr. Jeff Sarge of Halliburton 
Services. Oh, excuse me. I said--Jeff Sarge is my nephew's 
name. It really is.
    Mr. Strange. I thought that would be an easy one for you.

   STATEMENT OF JEFF STRANGE, SENIOR ACCOUNT REPRESENTATIVE, 
                  HALLIBURTON SERVICES COMPANY

    Mr. Strange. Good morning, Madam Chairwoman. My name is 
Jeff Strange, and I am employed by Halliburton Energy Services 
based out of Rock Springs, Wyoming. We provide services to five 
counties of southwest Wyoming and also northern Colorado. 
Currently we employ 480 full-time employees out of the facility 
of Rock Springs, plus many subcontractors. I want to thank you 
for letting me bring my testimony to you today and appreciate 
the opportunity.
    In my 18 years in the oil and gas industry, I've seen the 
boom and bust cycles. And companies such as the one--the major 
service companies I've worked for are able to survive these by 
layoffs, transfers, moving equipment in and out of areas. But 
it's the--it's the small, private, and family owned businesses 
and the local communities that suffer the most from these--from 
these boom and bust cycles.
    Without efficient and timely permitting and access to these 
natural resources, the effects to a community such as Rock 
Springs and to the entire state of Wyoming will be devastating 
not only to our economy but to our custom and culture. People 
leave, don't come back. People move on.
    You know, as an avid sportsman and outdoorsman, I fully 
understand the responsibility we have to protect our air, our 
water, our habitat and wildlife. I've seen firsthand the 
processes--I'm a field person. I go to the field every day. 
I've seen firsthand the processes and commitments not only my 
company but the other major service companies and these 
operators have brought forth to protect the environment that we 
live, work, and recreate in. We spend millions of dollars every 
year to ensure that that environment is protected.
    To achieve the level of production that our nation is 
currently demanding and will demand in the future, we've got to 
speed up the processes. We've got to put an end to the 
frivolous lawsuits, abuse of NEPA and the Endangered Species 
Act, and the tremendous time and economic burden that is placed 
on the operator before a permit to drill is issued. Drilling 
delays administered without proper scientific and factual 
evidence has got to stop. Federal land access and natural 
resource extraction is currently and will in the future play a 
vital role in oil and gas companies meeting the demand for 
natural gas for this nation.
    In closing, I want to commend this Committee and you, 
Subcommittee Chairwoman Cubin, for hearing the concerns of the 
grass roots and for taking not only our voices back to 
Washington but also by putting a face on the thousands of 
constituents that will be affected by your decisions.
    Thanks.
    [The prepared statement of Mr. Strange follows:]

 Statement of Jeff Strange, Senior Account Representative, Halliburton 
                              Services Co.

    Natural resources, primarily oil and gas are the lifeblood of the 
state of Wyoming and the Nation.
    The service/supply companies are the backbone of the oil and gas 
industry. There are over 100 companies located in southwest Wyoming, 
representing thousands of employees that receive high-end wages. In 
light of the fact that a single paycheck changes hands 7 times 
throughout a community, literally every faction of our society and 
economy is affected by the extraction and production of natural 
resources.
    As one of the major service companies in southwest Wyoming, 
Halliburton Energy Services (HES) currently maintains a workforce of 
480 employees, operating 250 tractor-trailer combinations and 120 light 
vehicles. Due to a downturn in activity in the mid 90's this same 
company reduced its workforce to 75 employees and considered closing 
their doors in Rock Springs. When you consider that their annual 
payroll exceeds $18M--the impacts to a small western community are 
irretrievable.
    Currently, HES is anticipating two major projects, Desolation Flats 
and Jonah Infill, will complete the NEPA process in a timely manner. 
The only way that the service/supply sector of oil & gas can 
effectively contribute to a continuous and adequate supply of natural 
gas is through uninterrupted exploration and production.
    A project the size of Desolation Flats (385 wells) would generate 
approximately 200 million dollars in revenue to a service company like 
Halliburton. This figure does not include the dirt work for locations, 
drilling rigs, pipelines, etc. Sales tax on this amount would be 
approximately 11 million dollars.
    Jonah Infill Project (1,250 wells) would generate approximately 550 
million in service company revenue. This also does not include dirt 
work for locations, drilling rigs, pipelines, etc. Sales tax on this 
amount would be approximately 30.2 million dollars.
    Many service/supply companies have felt the devastation of the boom 
and bust cycles of oil & gas development. The long-term effects to 
local businesses, schools, available work force, etc are possibly the 
most serious cumulative impact that should be addressed during the 
process of environmental studies. Down turn and prolonged interruption 
of production causes serious impact to the workforce--thousands of 
former oil and gas employees have left the industry to seek more stable 
employment elsewhere. Consequently, we are seeing many out-of-state 
workers coming into Wyoming to work a rotation and going back home to 
Texas, Oklahoma or other areas and are not moving their families to 
Wyoming. We have witnessed the loss of 2,000 school children over the 
passed 10 years and have seen the closure of 8 elementary schools in 
Sweetwater County.
    Just as rural America has suffered the total devastation of small 
communities that were dependent on timber harvest and sawmills, we too 
depend on guaranteed, uninterrupted production to ensure the stability 
and general health, safety and welfare of our Wyoming citizens. Without 
assurance that exploration and production will continue through timely 
and consistent permitting, we loose the confidence of investors that 
provide the capitol for the takeaway infrastructure. A disruption in 
supply and demand causes a domino effect that ripples from the service 
company to the grocery store, to the gas station, to the hospital, to 
municipalities and local governments, etc. etc.
    From the 1999 land management report submitted by GAO, I quote the 
following statement, ``In carrying out it's mission, BLM aims to 
provide the public with a wide variety of products and services 
including healthy productive lands; opportunities for a variety of 
commercial activities such as sales of materials, timber, or leasing 
mineral rights; opportunities for recreation and leisure activities; 
the preservation of significant cultural and natural features; the 
provision of land resource and title information; and the protection of 
public health, safety and natural resources.
    I submit to you that it should be the role of BLM and all federal 
agencies to provide integrated local leadership in partnership with 
stakeholders of the region. The oil & gas industry has proven time and 
time again that any and all concerns can be and have been mitigated to 
the point of the extreme. Industry is held to extremely high 
environmental standards as pertains to air, water, wildlife and 
habitat. The entire economy of Wyoming, and in fact America, is 
dependent on a firm commitment from federal agencies that common sense 
and fairness will once again take precedence over conflict and 
unsubstantiated hyperbole and rhetoric. I.e. - Drilling delays 
administered without proper scientific and factual evidence, ``I 
thought I saw a mountain plover, and if I did, it was probably 
nesting'', has got to stop. (Statement made by BLM personnel)
    There have been numerous complaints among industry personnel that 
agency staff is using arbitrary and erratic standards during permitting 
and generally throughout the course of the entire drilling process. It 
would be beneficial to industry if BLM personnel would communicate and 
cooperate with industry experts concerning proper operating standards. 
It is extremely difficult to manage drilling operations when agency 
personnel change methods of operation because of personal preference. 
E.g.: Onshore order 2 setting minimum standards for Plug and 
Abandonment of Oil and Gas wells it does not clearly define cement type 
(class G, H, A, etc.) weight or yield, yet the Pinedale office will 
accept one slurry, the Kemmerer office another and the Rawlins office 
another. I think if the BLM would use the industry standard, API 
testing procedures for oil well cementing, a lot of confusion could be 
eliminated.
    In summary there is a simple equation operating here: The citizens 
of the USA demand energy, Wyoming has numerous forms of energy 
reserves, Wyoming also has people who are willing to risk their capital 
and devote their own working energy to responsibly meet the national 
demand. Leadership and cooperation from federal agencies, based upon 
fairness and facts are urgently needed to respond to this demand. We, 
the service men and women for this industry are ready, willing and 
able. We urge the Congress to assist and encourage the federal 
agencies.
                                 ______
                                 
    Mrs. Cubin. Thank you.
    I want to announce that Wyoming State Treasurer Cynthia 
Lummis was invited to testify here today, but she did have a 
prior engagement and wasn't able to come. But she did stress 
the important role that minerals development plays in Wyoming. 
She emphasized that Wyoming's permanent mineral trust fund has 
now reached the 2 billion dollar mark.
    Revenues from minerals and production in the state keep our 
tax burden low and support education, health and family 
services, corrections, communities, and other vital services.
    I think a lot of times the energy industries don't get the 
credit that they actually deserve in terms of the actual taxes 
we would be forced to pay were it not for the energy 
industries. Treasurer Lummis warned that the way in which 
resource management plans are updated in future years and the 
way in which NEPA is interpreted could have a major effect on 
Wyoming's future. I think we all would agree with that.
    I would like to start the questioning with Mr. Magagna. You 
mentioned that--you mentioned seasonal stipulations based on 
unquestioned critical habitat designations. Can you elaborate 
on how these designations are unquestioned?
    Mr. Magagna. Thank you, Madam Chairman.
    Yes. These are seasonal stipulations developed by the 
Wyoming Game and Fish Commission, very broad-based area 
overlays on a map that say, well, this area, we view to be 
critical to winter elk herd, this area is critical to elk 
calving, et cetera, et cetera. Those are presented to the BLM. 
And at least as an outside observer, it's been my experience 
that in virtually every case, they are accepted as a legitimate 
need of that particular wildlife species and then become a 
seasonal stipulation for mineral development. And as I 
indicated, we're very concerned that they are increasingly 
becoming or being attempted to be used as seasonal stipulations 
for other uses of the public lands.
    Mrs. Cubin. Are you aware of any ranchers who choose to put 
produced water from coalbed methane production toward 
beneficial agricultural uses?
    Mr. Magagna. Very much so. In the eastern part of the 
Powder River Basin, where the quality of the water is 
unquestionable, a number of ranchers have developed a rather 
extensive system of water storage working with the mineral 
companies to meet their needs and to improve their ranches.
    In fact, one of the fears there is what's the negative 
impact going to be when the CBM production stops and the water 
no longer flows. So there are those opportunities.
    I would hasten to say that I think there are a number of 
those opportunities that are being missed because the private 
landowner or the rancher and the mineral operator are not 
sitting down together early in the process. And for this to 
work right, not only does the mineral company need a 
development plan for the gas, but the rancher needs to be 
encouraged and provided assistance to develop a long-term 
development plan for the ranch. And then those two can be 
appropriately merged so that to the greatest extent possible, 
it's not just a matter of mitigating negative impacts with this 
water; it's a matter of creating positive impacts from the 
presence of the water.
    Mrs. Cubin. So it's fair for me to paraphrase what you 
said, at least one part of what you said, that early 
communication is very important.
    Mr. Magagna. Yes.
    Mrs. Cubin. Does that require Federal action, in your 
opinion?
    Mr. Magagna. I think it can be helped by Federal action. 
And there's a careful line that has to be drawn here, because 
part of the process in the split--and I'm talking about the 
split estate scenario right now primarily--is negotiation of 
the surface use agreement. We do not feel that there should be 
a Federal role in that negotiation. That's a private sector 
negotiation. But I think that the Federal Government, BLM in 
particular, can be very helpful in the process of promoting the 
communication prior to that by giving the--among other things, 
giving the surface landowner as much notice and information up 
front about what's taking place. Typically when mineral leases 
are granted on split estate, the landowner had no knowledge of 
that. They become knowledgeable--unless they go down and search 
the records. They become knowledgeable that--of that at the 
point in time when an operator shows up and says, you know, 
we're wanting to come in here and stake locations and begin 
drilling. By then there isn't time to build those communication 
lines to do that advance planning.
    So one thing that I think would be very helpful and perhaps 
not too much of a burden on anyone would be if the BLM could 
develop a system so that when a mineral lease is issued on 
split estate lands, a notice of that leasing is automatically 
sent to the surface owner providing information as to who 
leased the land. And that may well not be the developer, of 
course, but at least it gives them some advance notice that 
there is a potential for some activity in the next few years on 
that piece of land.
    I think there are several steps there where we're just 
providing information. And from discussions I've had with 
mineral industry operators, it's my understanding that most of 
the information they file with the BLM throughout that 
predrilling point is not proprietary information. It's public 
information. So it would just be a matter of setting up a 
system that would generate a copy of that information to be 
forwarded to a surface landowner.
    Mrs. Cubin. So you're not calling for Federal legislation 
to do this, are you? Or are you?
    Mr. Magagna. Madam Chairman, in that area, I don't believe 
that Federal legislation should be necessary. What I'm calling 
for, I think, are processes that would fully be within the 
scope of the authority of the agency. Now, whether funding, 
additional funding, might be necessary to assume that burden, 
that's another matter.
    Mrs. Cubin. Mr. Andrikopoulos, what is your impression of 
the Wyoming state legislature--the effort that the Wyoming 
state legislature did to--or has done or hasn't done to study 
the split surface issue, and do you feel that legislation is 
necessary? I think you said you thought legislation was 
necessary. Federal? State?
    Mr. Andrikopoulos. Well, I think in both cases we have the 
same situation. And that is, No. 1, landowners are not given 
notice. In the case of Federal minerals, as Mr. Magagna just 
pointed out, unless you've got a landman on staff or want to 
become a landman, you don't know who the--the mineral holders 
are, the lessees, or even the operator in the case of a unit 
formation. That's one thing that I think should be legislated.
    The second thing is the notion of updating what are 
considered to be damages. If you look at Onshore Order Number 
1, the 1916 Act, you will find that today developers are only 
required to compensate landowners for growing crops. For those 
of us that graze cattle, grass does not constitute a growing 
crop, so we do not get compensated for that. We do get 
compensate based on some very arbitrary payments that the 
industry comes up with, but we do not get paid market value for 
other improvements that we've done to our property. Or in some 
cases, ranchers are planning to subdivide. The fact that the 
developer may come in and put in a system of roads, pipelines, 
well pads, this sort of thing would prevent that landowner from 
seeing the value of his real estate exploited.
    And then, finally, at the state level--and then I also feel 
that this is important at the Federal level--there have been a 
couple efforts, as I'm sure you're aware, to amend the energy 
bill. There needs to be an equitable means for dispute 
resolution. There are very few ranchers that have the resources 
to hire the attorneys and to, frankly, spend the time necessary 
for defending themselves in light of a large company coming in 
and wanting to develop resources very quickly. So it all, in my 
opinion, hinges around those three elements.
    Mrs. Cubin. I don't disagree with what you say.
    I--on the other side of the issue, however, I am aware of 
situations where basically a landowner or landowners are more 
or less extorting the energy companies. I use that word, and 
it's probably not right, but demanding far more than the value 
or--not based on crops, but the value of the mineral and so on. 
And I've seen that happen in different industries, in coal and 
coalbed methane, oil and gas, where private property owners 
really can demand and just become rich overnight.
    Mr. Andrikopoulos. Well, I think--pardon me. May I respond 
to that?
    Mrs. Cubin. Sure.
    Mr. Andrikopoulos. I think that--you know, I've definitely 
heard of those instances, as well. And the way in which a 
landowner may view his or her surface and what that landowner 
perceives the impact of oil and gas development to be on that 
surface probably differs greatly from what the mineral 
developer views as the value of that surface.
    In our experience, mineral developers have come to us with 
offers. And we ask them where they get their numbers for 
damages, and they say, well, this is an average payment that 
we've paid across the state. Well, I can assure you that an 
acre of ranch land in the upper Green River valley is worth far 
more than an acre of ranch land somewhere in far eastern 
Wyoming. So those old paradigms don't necessarily play.
    The second thing is you can look at good players in the 
industry, such as an Anadarko and UP Resources previously.
    You know, they've been very generous with their surface 
owners and have had a policy of compensating through a means of 
overriding royalties where if they're successful, then that 
landowner will be successful. I don't think that the form of 
payment should be legislated. I do think that the actual 
damages that are incurred do need to be broadened out from 
where they are today relative to Onshore Order Number 1.
    Thank you.
    Mrs. Cubin. Thank you.
    Mr. Robitaille, can you give me some examples of projects 
you say will not come to fruition because of time delays 
associated with preparation of EAs or EISs?
    Mr. Robitaille. Yes, Madam Chairwoman. If I said that, let 
me correct it. I said I believe that there may be projects that 
will not come to fruition.
    Mrs. Cubin. Thank you.
    Mr. Robitaille. Let me give you a couple of examples real 
quick. We are investigating a project very close to here that 
we believe has some potential, although the production from the 
wells may not be as good as we want. We are looking at the 
potential of needing 600 wells to develop this project. We 
believe that that will trigger an environmental impact 
statement. We then calculate the approximate 3 years or so it's 
going to take to complete this statement, evaluate that against 
the time value of the money. And I can tell you that in today's 
economy, that project will probably not likely happen.
    I can also tell you that we have been analyzing properties 
in the northern part of the state which, due to the ROD, the 
resource requirements, the time delays that were associated 
with the NEPA documents--and, you know, that issue is still not 
over. Those--those properties in the northeast part of the 
state, some of them have no longer any interest to us, and we 
will not pursue those. So there is a time value of money 
associated with this, and that's very critical. If, for 
example, we looked at this project down here and we based it on 
the 3-year study process. If that 3 years were condensed to 12 
months or 14 months or even 16 months, that project would be 
economical and we could perhaps proceed.
    We did an analysis of a very, very similar project. Same 
production, same reserves potential. And I've got the numbers 
here somewhere. In a state that didn't have the Federal 
requirements and the NEPA requirements and the study 
requirements, let me give you a couple of real quick 
indicators. The rate of return--and let's be honest about this. 
We made a sizable investment in Wyoming. We anticipate to get a 
return out of those investments. The rate of return in the 
other state was four times that for the investment in Wyoming. 
The cost of finding and producing the gas in the other state 
was one half of what it was in Wyoming. And the payout, which 
is extremely important. We are a publicly owned company. It's 
extremely important for our stockholders. The payout for that 
investment in the other state was one half of the time it would 
have taken in Wyoming. So those studies--those delays are not 
just the cost of the study and delay in themselves. It's also 
the time value of money which an investor has to be 
particularly cognizant of how he invests.
    Mrs. Cubin. Well, let's go into those delays and deadlines 
a little bit. Your statement recommends that while a resource 
management plan is undergoing revision, that the BLM should not 
delay or deny access to private lands within the planning area. 
Can you provide us with examples of what--of where access to 
private lands was delayed or denied on the basis of the plan 
that was undergoing revision?
    Mr. Robitaille. Let me--Madam Chairman--Madam Chairwoman, I 
guess the--what really triggers our fear there--again, 
visualize that checkerboard with the red and the black boxes 
and the studies that we know are coming and the land plans that 
have to be revised. I believe it was May 2001 when there was an 
instructional memorandum issued by BLM that said we're not 
going to do any more leasing while we're undertaking this NEPA 
analysis.
    Now, to my knowledge, that instructional memorandum was 
eventually rescinded. But it raised a flag for us of great 
concern in that if we're in the planning process--and remember 
we're the little red box there surrounded by all the black 
boxes. If we're in the planning process where BLM has to, 
because of their law and their regulations, evaluate the 
proposed action on those black boxes and I need a right-of-way 
across one of them to drill a location on my own private 
property, I just think that we ought to be cognizant of the 
fact and be very aware of the fact and prevent any action that 
would delay or encumber my access to my private property rights 
while the NEPA process is pursuing.
    Mrs. Cubin. Thank you.
    Mr. Robitaille. Thank you.
    Mrs. Cubin. Mr. Degenfelder?
    Mr. Degenfelder. Yes, Madam Chairman.
    Mrs. Cubin. You showed me two different environmental--
either environmental impact statements or EAs. I'm not sure 
which.
    Mr. Degenfelder. It was an EA.
    Mrs. Cubin. EA. Can you explain how the cost of having to 
pay for NEPA work affects small, independent producers? And I 
want to go on with that a little bit. How would reimbursement 
for NEPA expenses through royalty credits affect your business? 
We have a provision in the energy bill that would allow 
recovery for your expenses because, as was stated in the 
earlier panel, that is traditionally how expenses were 
apportioned.
    Mr. Degenfelder. Madam Chairman, initially I'd like to say 
that the oil and gas industry has somewhat become accustomed to 
paying for the NEPA documents now, because we've been told if 
you want a timely decision, you better pay a third party 
contractor that BLM has approved to do it for BLM. So basically 
we're funding the subcontractor of BLM's. And it goes right 
down to the bottom line. What is spent on the environmental 
documents cannot be put into the ground to drill more wells. 
We're not saving up a bank account where once we hit that 
limit, we're out of here and vacationing on some desert--or 
ocean island. We're continually drilling wells to keep our 
production up, because every bit of production always declines. 
And so anything that we spend is money that we would be able to 
use somewhere else.
    You mentioned the royalty credit. Initially I think that's 
a very good idea. I would put in, I guess, two things that I 
thought of just quickly, words of caution. How that is 
implemented with respect to does it--if there is--if it's a dry 
hole, then there's no--there's no way to recover any--
    Mrs. Cubin. It's still more than you're getting now.
    Mr. Degenfelder. That's correct. And for development 
allowance, of course, you would be able to receive some sort of 
credit.
    The other point of concern I'd raise is that I would not 
want something that would be done by you in an attempt to 
alleviate some of the burden on the small operators and have 
that translate into an even larger document that everybody 
thinks, well, now we've got somebody paying the bill. And I 
think that relates back to the taxpayer, too, you know, the--
everybody in the United States.
    So those are just two concerns that I have about that. But 
the general idea is very well warranted.
    Mrs. Cubin. I think those concerns are also well warranted.
    Could you give me an idea of how often your projects face 
litigation? Because you referred to that quite a bit in your 
testimony.
    Mr. Degenfelder. Well, I can only refer to our individual 
projects. And because we're a very small company, we own 
interests in about 350 wells in Wyoming, but our company 
operates, I'd say, about 20 wells. And being the operator 
consumes a lot of time. The operator is the one that takes the 
lead on the environmental documents.
    The documents that we had on this project south of here 
that included this eight additional wells that was appealed, 
that I mentioned in my initial response, cost us right in the 
ballpark of about $30,000 to pay for the--the EA. And when it 
is appealed, it's costing us another 10,000 or so to have legal 
representation in addition to BLM's legal representation, 
because we want to assure that the EA is defended properly, 
because our interests are at stake, not only BLM's. So I can 
only comment on that one.
    We're also involved with another project, the one that I 
mentioned in northeastern Utah, which has, I've been told, 11 
appeals filed on it. And that appeal process just ended July 4. 
So there is a lot of them. I'm such a small operator that maybe 
someone like Mr. Robitaille or a bigger operator in the state 
that has interests--or is operating in many, many areas can 
address that more precisely, because I'm about batting a 
thousand. I don't know if I'm entirely accurate.
    Mrs. Cubin. Given the current bonding situation, which is 
also a problem, it's been suggested by some people that an 
independent producer puts up a $20,000 per well bond. Is that 
in any way feasible?
    Mr. Degenfelder. I think that that would have a big 
detriment to any drilling. I've read where--especially in the 
CBM play, where, let's say, if an operator has 100 wells, which 
is not out of the question in the Powder River Basin, 100 times 
20,000 is--what?--2 million bucks that's sitting in an account 
drawing no interest and could be drilling new wells with.
    We do bond. We have to have--carry a statewide Federal 
bond. Or if it's on private land, the Oil and Gas Commission 
requires us to carry a statewide bond with them that's 
different than the Federal statewide bond. I would really look 
to the Oil and Gas Commission, because they do deal with, in 
some cases, some orphan well problems that they have a fund 
that is set up to deal with those. And they keep a very close 
perspective. But overall I think the $20,000 would be a great 
hindrance to a lot of independent producers.
    Mrs. Cubin. Thank you.
    Mr. Strange, can you explain to me how the Desolation Flats 
and Jonah Infill projects will impact local economies?
    Mr. Strange. There are 385 proposed wells in the Desolation 
Flats area. And, Madam Chairwoman, I can only speak on behalf 
of my services and what we will provide to those. But it would 
roughly equate to 200 million dollars to energy services 
companies. I'm talking about drill bits, drilling fluids, 
directional drilling, motors, open hole, cased hole logs, 
cementing service, fracturing service, and so on and so forth. 
Those 385 wells would provide roughly 2 years of net income for 
a service company such as Halliburton Energy Services, BJ 
Services, Schlumberger, and so and so forth.
    1,250 proposed wells in the Jonah Infill would be somewhere 
around the neighborhood of 550 to 600 million dollars of net 
revenue for a company such as ours. So you can see the impact 
that it has on a community the size of Rock Springs, Pinedale, 
Rawlins.
    Mrs. Cubin. I don't--I thank you for your answers. I'd like 
now to ask anyone to--for any statements that they would like 
to conclude with.
    Mr. Magagna?
    Mr. Magagna. If I might, Madam Chairwoman.
    As you've listened to the various scenarios that have been 
explained today, perhaps a little bit of an oversimplification, 
but it occurs to me that what we have is two extremes. We have 
the scenario of Federal minerals, private service, where the 
mineral interest is dominant and the operator can bond on with 
little delay, can come onto the land, develop the well, and the 
surface owner stands to be, in some instances, damaged by that.
    In the case of Federal minerals, Federal surface, where the 
Bureau of Land Management is the manager of that surface, we 
have just the opposite. They have the ability to indefinitely 
delay the operator's access to those lands through various 
planning and environmental processes.
    And what we ought to be seeking in reality is a ground 
somewhere in the middle where we can put some limits on the 
ability to delay access to Federal surface lands for 
development and, at the same time, grant some appropriate 
additional ability to the private landowner to assure that 
their interests are properly addressed before development takes 
place on the private lands. There should not be the tremendous 
chasm of difference between those two scenarios that we've 
heard here in the testimony today.
    Mr. Andrikopoulos. This is Shaun Andrikopoulos.
    I think that, as I've said before, a legislative solution 
is necessary to close this chasm, if you will. In the case of 
the Federal Government wanting to put a highway through our 
ranch, the laws of eminent domain apply. And I don't see this 
as really any different. If the Federal Government wants to 
extract its minerals, the same and similar concepts should also 
apply. They don't today. And, you know, ultimately it's going 
to take legislative action to level the playing field so that 
we feel as though we are kept whole as landowners.
    Thank you.
    Mrs. Cubin. Thank you.
    Mr. Robitaille. Rick Robitaille, Madam Chairwoman.
    I'll not belabor the discussion anymore. I just want to say 
that as one who has watched your political career, I want to 
commend you for the respect your colleagues have given you for 
elevating you to this position and your role.
    Mrs. Cubin. Thank you.
    Mr. Robitaille. And I especially want to commend you for 
allowing us to create this record in beautiful Rawlins, 
Wyoming, as opposed to being in Washington, D.C. So thank you 
very much.
    Mrs. Cubin. I would much rather be in Rawlins, Wyoming, 
myself.
    Mr. Degenfelder. Madam Chairman, Steve Degenfelder.
    My final comments just would be a general plea to you to 
take back this testimony, and you're very, very aware of the 
issues that are at stake in this state, and to continue to 
convey those thoughts to those states that are highly 
populated, that are--that do not have many public lands but do 
have all the--the lights--in the photograph of the United 
States at night, where all the lights are. In those states. And 
please push these issues to them, because they are the group 
that is ultimately affected by what happens here.
    Thank you.
    Mrs. Cubin. Thank you.
    Mr. Strange. Madam Chairwoman, Jeff Strange.
    I do want to thank you for showing up here today and for 
allowing us to let our opinions, our voices be heard. And we do 
hope that you take that back to Washington, expedite this 
procedure so we can do away with the boom and bust cycles.
    You know, it's not fun worrying about what you're going to 
be doing the next day. We appreciate it.
    Thank you very much.
    Mrs. Cubin. Well, I thank all of you for your testimony. 
And let me assure all of you that I will go back to Washington 
and represent what we have heard here today.
    When the Speaker established the task force, he requested 
that we provide a report to him by September the 30th. So that 
will be done. And you can expect that your input will be in 
that report.
    So I would like to thank the witnesses for their valuable 
testimony. As I stated earlier, there will be some questions 
that we'd like to submit to you in writing. And if you would 
respond before the record closes in 10 days, that would be 
appreciated.
    I want to thank everyone who came to the hearing today.
    It is very--it's such an important issue to the whole 
country but particularly Wyoming.
    And I want to thank the staff. Jack Belcher is the 
Committee staffer, my Subcommittee staffer. Kyra Hageman, my 
state director. Katie Legerski, in the back, a state field 
representative.
    Mr. Frances. Lucas Frances.
    Mrs. Cubin. I know. Lucas Frances. I was trying to--I knew 
it wasn't Luke. I didn't want to call you Luke. Lucas Frances, 
also from the Subcommittee.
    So thank you for everything. And if there's no more 
business before the Subcommittee, we are now adjourned.
    [Whereupon, at 11:48 a.m., the Committee was adjourned.]
    [Additional statements submitted for the record follow:]

          Statement of Cynthia Lummis, Wyoming State Treasurer

Introduction
    In 2002, Wyoming ranked first in the nation in the production of 
coal; first in the production of trona; third in coalbed methane 
production; fifth in natural gas production; and, seventh in crude oil 
production. And yet, Wyoming has some of the cleanest air in the 
nation. We are one of the few states without a fish advisory on our 
waters. The majority of the North American antelope population is 
within 400 miles of Casper.
Technology
    Just over two years ago on May 16, 2001, President Bush unveiled 
his National Energy Plan. This plan is serving as the catalyst in 
promoting technologically advanced and environmentally sensitive 
exploration and development. A prime example of the vision expressed in 
the National Energy Plan deals with the emerging opportunities of 
carbon sequestration. The Plan established the ``President's Clean 
Power Initiative'' which recommends $2 billion over a ten year period 
to perform research and development and testing of new technologies to 
reduce power plant emissions and improve efficiency. The energy bill 
being debated by Congress contains this authorization. A portion of 
this initiative has a component that I feel will ensure the vitality of 
Wyoming's energy industry for years to come - research and support for 
carbon sequestration. Industry and the government have come together in 
promoting research to develop technology for sequestering carbon. This 
could very well be, value-added-research-and-development to energy rich 
states like Wyoming. In fact, the University of Wyoming is taking the 
lead in carbon dioxide sequestration research. Dr. Dag Nummedal is 
heading the recently formed Rocky Mountain Carbon Utilization and 
Storage Partnership (RM-CUSP). We have the coal resources to conduct 
the research here in Wyoming and we have the geological formations and 
depleted oil and gas fields to do the sequestration. Sequestration of 
carbon in depleted oil fields has great potential in revitalizing these 
fields. In addition, when we master sequestration, the demand for use 
of Wyoming coal will increase.
    Another component of the plan that could be very exciting for 
Wyoming is the creation of FutureGen. FutureGen is planned as a $1 
billion dollar investment by the federal government and a consortium of 
private companies to build a zero emission fuel power plant. This 
prototype plant will burn coal to generate hydrogen gas and 
electricity, and sequester the produced carbon dioxide. Again, Wyoming 
stands to benefit from this initiative. While site selection is many 
months off, Wyoming's coal fields, as well as sequestration sites, 
could make Wyoming a competitor for all or part of the FutureGen 
project. In any event, Wyoming coal stands to benefit regardless of 
where FutureGen is sited.
Mineral Revenues
    For the first time in its nearly thirty year history, the Permanent 
Mineral Trust Fund (PMTF) has hit the $2 billion mark - $2,023,000,000. 
The income from the PMTF is deposited in the State's general fund, 
thereby keeping Wyoming's tax burden low, and supporting education, 
health, family services, corrections, communities and other vital state 
programs.
    Minerals produced from federal lands generate federal mineral 
royalties, an important source of income in a state that is comprised 
of almost half of its surface in federal ownership. Wyoming's share of 
Federal Mineral Royalties totaled almost $350,000,000 in fiscal year 
2002 and almost $450,000,000 in fiscal year 2001. These revenues are 
shared with Wyoming schools, colleges and its university, local 
governments and highways, to name a few.
Public Land Planning Processes
    The Bureau of Land Management has just begun the process of 
updating all of its land use management plans. Twelve land use plans, 
called Resource Management Plans cover all of the BLM lands in Wyoming, 
approximately 18.4 million surface acres as well as all federal 
minerals and split estate minerals. Currently the Great Divide or 
Rawlins and the Pinedale RMPs are in the early stages of evaluation. 
This analysis will address 4,43 1,000 surface acres and 5,885,000 
mineral acres. An RMP is done under NEPA and will not only allocate 
what the uses of the surface and subsurface will be, but also the level 
of that use. Once an RMP is finished and a Record of Decision is 
reached, the RMP will serve as the over riding land use document for 
fifteen years, or until the identified level of use is reached. 
According to the BLM, several emerging issues over the last five years 
have required them to embark on this unprecedented effort. It cited 
examples such as increased .endangered species listings, increased 
rates of energy and mineral development, and changing population 
priorities putting increased demand on recreational values such as off-
highway vehicle use, landscape preservation and public use. BLM will 
also incorporate new policies such as the National Energy and National 
Fire Plans, Migratory Bird Treaty Executive Order and the Roadless 
Inventories into the revised RMPs. Additional issues that the BLM has 
already identified for analysis range from historical trails 
designation to air and water management decisions, to set back 
requirements. Wyoming will be involved in the RMP revisions. We have 
grave concerns over the endangered species and wildlife seasonal 
closures, for projects. We are concerned that mining operations, except 
for oil/gas development, would be so impacted that they could never 
expand or locate on the BLM lands. I'm assuming that current mines 
would be grandfathered. This would adversely affect our State's economy 
and education' s funding and for that matter, federal government 
income. I hope that you and BLM will be able to come up with a plan 
that allows for continued hard and soft rock mining while protecting 
wildlife and endangered species.
    The Great Divide and Pinedale RMPs are scheduled to be completed in 
about two years. The balance of the RMPs will be phased in through 
2010. Concurrent with this effort, the U.S. Forest Service is in the 
midst of revising its forest plans. The process is similar to the BLM's 
and the plans are in effect for a fifteen-year period after the Record 
of Decision. As I mentioned - this is unprecedented. Except for our 
national parks, monuments and refuges, all federal surface and 
subsurface acres will be evaluated over the next seven years, and the 
allocation of use as a result of that analysis, will last fifteen years 
after they are completed. To a large degree, Wyoming's future economic 
agenda will be formulated by these two federal processes.
NEPA
    I have one observation about the National Environmental Policy Act. 
Since the NEPA passage in 1969, subsequent regulations, policies and 
inconsistent application by overlapping federal agencies have burdened 
the process to the point that the courts have become the environmental 
decision-makers and managers. I believe that the remedies to NEPA begin 
with requiring agencies of the federal government follow the 
regulations and guidelines of the Council of Environmental Quality. 
Just begin with the length of the documents - if it's too much to 
tackle at once. The CEQ guidelines call for fifteen-page EAs, and not 
to exceed 150 pages for EISs, not the encyclopedic volumes produced 
today. I also believe in the importance of involving al l levels of 
local and state government as Cooperating Agencies as required by the 
Act and by subsequent CEQ directives to federal agencies. Although 
Cooperating Agencies cannot make the final decision, which is reserved 
to the lead federal agency, they can certainly influence the outcome. 
NEPA should be administered with substantive roles for cooperating 
agencies, goal-based flexibility, certainty, elimination of duplicative 
NEPA requirements, reduction of multiple agency oversight, recognizing 
the differences in the scale of economic, cultural and social impact 
and adjust accordingly, proactive management and finally use of sound 
social and natural science.
Conclusion
    Oil and gas producers operating in Wyoming today are at the leading 
edge of new technologies and processes - some driven by government 
regulations, but all driven by the need to look to the future and meet 
the emerging market demands. We must all continue to think our way to 
the future so that Wyoming minerals have a prosperous tomorrow.
    Thank you for permitting me the opportunity to present this 
testimony today.
                                 ______
                                 

    Statement of D. G. Mickey Steward, Ph.D., on behalf of the CBMC 
                               Coalition

    Considerations for Representative Cubin
               BACKGROUND--The Role of Local Government.
    Services--One job of local government is to provide services. While 
services may seem to be something that only residents need, services 
are also needed by the extractive and productive industries, and by 
visitors. The kinds of services that must be provided by counties to 
industrial producers, as well as to residents include: roads and 
bridges, law enforcement, emergency response, administration (records 
and licenses), waste removal, and social services.
    Good services depend on funding, scheduling, and continuity.--Most 
government funding comes from taxes, so full enumeration of taxable 
items, proper valuation of taxable items, timely notification of 
taxation, and complete collection of taxes are essential. Scheduling 
depends on knowing in advance when and where things are going to be 
happening. And continuity means that once a development project begins, 
it continues as long as possible in as predictable a way as possible. 
Booms and busts do not make for continuity or prosperity in the long-
term.
    Health and safety--In addition to providing services, local 
governments are responsible for protecting the health and safety of 
residents, workers, and visitors. Health and safety are best protected 
using the tools of foreknowledge and training. Knowing what is going to 
be happening, as well as when and where will help to protect both heath 
and safety.
SUGGESTIONS FOR IMPROVING LOCAL GOVERNMENT SERVICES TO DEVELOPMENT AND 
                    RATIONALIZING REVENUE COLLECTION
     County government should notified of when, where, and by 
whom O/G resources are leased so they can forecast potential revenue 
streams; of when, where, and by whom permits are applied for, so a 
dialogue on service needs and timing can be initiated with the 
producer; and to be notified at least 10 days before drilling commences 
of the exact location of drilling, so that special attention can be 
focused on the collection of sales and use taxes, and equipment 
licensing, as well as on road condition and emergency response.
     Using electronic communications for information sharing 
is an alternative to conventional means of communication between 
stakeholders. It has the benefit of being rapid and inexpensive. 
Alternatives for the presentation and submittal of information and data 
encompass include electronic alternatives such as GIS format. 
Electronically available information can lead to more accurate and 
rapid information transfer between affected parties.
        SUGGESTIONS FOR DEVELOPMENT OF RESOURCE MANAGEMENT PLANS
Considerations for Funding of Services
     Identify alternatives that will optimize revenue return 
to local government in terms of both amount and period of collection.
     Identify alternatives that will stabilize annual cash 
flow. For example, a strategy for sequencing of development to maximize 
long-term return may help in this area and thus should be discussed as 
part of the alternatives development.
     Identify alternatives that will help to maximize 
collection of all the taxes and licenses there are to be collected. For 
example, and as suggested above, notification of drilling will help in 
the collection of sales and use taxes, as well as equipment licensing. 
In addition, an accurate and full identification of the equipment and 
facilities associated with various O/G development alternatives will 
assist in forecasting the effort required for enumeration of taxable 
items.
     Identify alternatives that will maximize the period of 
revenue return. A clear plan for the sequencing of leasing and 
permitting forecast using the best available knowledge would be helpful 
in elaborating alternatives.
     Identify alternatives that will protect collateral 
revenue-generating activities. As an example, Carbon County in 
southwest Wyoming depends on O/G for a good deal of its revenues. 
However, because it considers fishing, snowmobiling, hot spring use, 
hiking, rafting, hunting, cross-country skiing, camping, scenic drives, 
rodeo, and cowboy poetry (that is, Western Heritage) fundamental to 
tourist income, these collateral resources should be protected and 
enhanced contemporaneously with mineral development. Equally important 
is the preservation of property value during and after the development 
phase. Optimum facilities siting and means to minimize the visual and 
audible effects of development should be considered as part of the 
alternative selection.
    Other resources that are important to development areas are 
agricultural production (primarily livestock and hay production), and 
water production, both in terms of protection of the rivers such as the 
North Platte and the Powder and their contributing drainages, and 
reservoirs such as Lake DeSmet, Seminoe, and Pathfinder, and in terms 
of taking all feasible opportunities for the utilization of produced 
CBM water. As an example, beneficial use of CBM produced water should 
be carefully considered as an alternative to disposal. Alternatives for 
consideration in the management of water resources could compare site-
specific water management plans contrasted with a regional water 
management plan, up to and including a conceptual water management plan 
for the development area as a whole, not just for sub-drainages.
    As well as the protection of revenue generated from the above 
sources, county infrastructure (roads and bridges) must be considered a 
collateral resource and must also be protected. Replacement, 
enhancement, and maintenance of county roads and bridges are expensive. 
Protection and enhancement of these collateral resources must be 
considered as part of any alternative. This means planning for ongoing 
resource utilization following the completion of O/G extraction as part 
of the alternative identification and selection process.
Considerations for Scheduling and Continuity
     Some form sequencing or timing should be evaluated in the 
selection of alternatives. For example, leasing and permitting actions 
could be allocated between areas not yet developed to look for 
promising prospects and areas that are proving to be productive. 
Whatever strategy is employed, even the strategy of ``first come, first 
served'' should be selected from a range of alternatives.
Considerations for Health and Safety
     Dust control has proven to be an important concern for 
widespread yet closely spaced O/G development. Alternative approaches 
to regional and local control of fugitive dust should be considered and 
identified in the RMP.
     Various scenarios of employment levels and the means for 
addressing their impacts should be considered in the selection of 
alternatives, as employment levels have considerable effect on 
community development and environmental impact. Particularly important 
are the effects of the ``boom and bust'' economy and the interpretation 
of those resource development alternatives that would increase or 
diminish those effects.

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