Published on Sunday, August 12, 2001 in the Los Angeles Times
Bush Oil, Gas Bid Skirts Key Issues
Bush policy defers heavily to the industry's premise that large deposits of oil and natural gas were locked up by overzealous environmental protection
by Geoffrey Mohan
The Bush administration is moving swiftly to expand oil and gas drilling on millions of acres of Western lands, opening up some of the nation's last unspoiled mountains, canyons and badlands from the Great Plains to the Pacific Ocean.
But the push for more energy sidesteps fundamental questions about how much fossil fuel lies beneath these public lands, how much can be extracted profitably and to what extent rules protecting wildlife and wilderness currently hamper energy production.
The Bush policy defers heavily to the industry's premise that large deposits of oil and natural gas were locked up by overzealous environmental protection during the Clinton administration.
Interviews with federal land managers and a review of government maps and geological reports by The Times, however, offer a contrasting picture. They show that oil and gas companies are leasing increasing amounts of public land every year, are able to drill in recently established national monuments and continue to operate even where they are subject to environmental regulations.
Those arguments were all but lost in an energy bill passed last week by the House of Representatives that embodies the White House philosophy. The trail that led to the bill shows how the industry shaped a policy that may overestimate the energy to be gained on the public domain while glossing over the environmental risks.
The Senate will take up the House bill in September, resuming a debate largely centered around proposed drilling on 2,000 acres of the Arctic National Wildlife Refuge in Alaska.
But the issue, in fact, is far larger.
At stake are conflicting visions for the management of more than 300 million acres of public land, the bulk of it in 11 Western states.
The Bush energy policy calls for increasing domestic drilling to meet rising demand for fossil fuels, maintaining that this can be done without damaging sensitive lands.
Conservationists and many scientists counter that the access roads, pipelines and processing plants that come with oil and gas fields irreversibly damage America's open space and wipe out wildlife habitat.
The House bill gives the administration leeway to discard "unwarranted denials and stays" of federal oil and gas leases nationwide, and allows Bush appointees to decide if the reasons for previous drilling bans "are still persuasive."
"That, in essence, means nothing is really off limits," said Johanna Wald, land program director for the Natural Resources Defense Council in San Francisco.
One regulation that could be reconsidered is a 1997 drilling ban in Montana's Lewis and Clark National Forest aimed at protecting vital habitat for grizzly bears.
Pointing out that the vast majority of federal lands in the West are already open to drilling, environmentalists have drawn lines around about 13.5 million acres they say should be left alone. Most of that acreage lies in the Rocky Mountain region, where the energy industry has shown a keen interest in natural gas deposits that are ideally positioned to supply the West Coast market.
The industry argues that land classified as open is far from it in reality.
"You might be able to lease it--the federal government is glad to take money--but you'll never get a permit to drill or to put in the roads to get in and drill," said John Guy, deputy executive director of the National Petroleum Council, an advisory panel to the Energy Department.
"What our group found was 40% was unavailable when you get down to it, because of administrative decisions or due to lease stipulations," he added.
The petroleum council is made up almost entirely of executives from the energy industry who are appointed by the secretary of energy. It is not allowed to lobby or act as a trade group.
But, in its advisory role to the Energy Department, the council drafted a 1999 natural gas report concluding that regulation was becoming a barrier to meeting rising demand.
Cheney Among Those Who Oversaw Report
Vice President Dick Cheney, then chief executive of Halliburton, an energy services conglomerate, was among the petroleum council members who oversaw that report.
Paid for by the council's corporate members, the study became a frequently cited source book for policy debate in the days leading up to House passage of the energy legislation, records show. Cheney coordinated the administration's energy plan.
Although Cheney did not ask the petroleum council to advise him, "individual members from individual companies did go over and talk with the Cheney folks," Guy said. "I know for a fact some of them used our reports."
The Bush policy adopts many of the report's conclusions, including assumptions about the amount of natural gas in the Rockies, how much is economical to extract and how much is impossible to access because of environmental restrictions.
For example, the report assumes that about 343 trillion cubic feet of natural gas lie in the Rocky Mountains region and that 40% is under federally regulated land. That amounts to 137 trillion cubic feet, or enough to meet total national demand for about seven years.
The report's estimate of Rocky Mountains gas deposits is nearly 100 trillion cubic feet higher than the U.S. Geological Survey's calculation. The council made more liberal assumptions about geology and technological advances, according to Harry Vidas, managing director of Energy and Environmental Analysis Inc., the company that analyzed the supply data for the petroleum council.
"Their numbers are a more optimistic look, or industry-oriented look," said Frances Pierce, associate program coordinator of energy resources for the Geological Survey. "We understand our numbers are not God's truth. But we provide a neutral starting ground for the debate."
Geological Survey analysts also say that 90% of the natural gas in the Rockies is locked in tight formations of shale, sandstone, chalk and coal, and that only about 20% of the deposits can be extracted profitably under current prices.
"When you start getting into the weeds on that, there's a lot of gas out there, but it's locked in rocks that are hard to get at," said Tom Fry, former administrator of the Bureau of Land Management, an Interior Department agency that oversees oil and gas leasing on all federal lands.
The energy industry argues that it should at least be able to explore the federal domain to find out what it holds. Instead, the industry says, more and more public land is placed off limits.
The Clinton administration designated 3.6 million acres as national monuments and would have put 58 million acres of roadless national forest lands off limits had a federal judge not invalidated the designation.
However, public land was opened to drilling at a brisker pace during the Clinton administration--an average of 2,708 leases on about 2 million acres annually--than in the administrations of Republicans George Bush and Ronald Reagan, according to Bureau of Land Management records.
Even within the national monuments designated by President Clinton, thousands of acres are leased for oil and gas, according to the BLM. One such monument, Canyons of the Ancients in southwestern Colorado, produced 2.1 million cubic feet of natural gas and 274,600 barrels of oil last year.
Regulations in those areas can cut down on the duration and the type of drilling allowed.
Much Extracted Despite Restrictions, Data Show
In the Rockies, for instance, 9% of the gas under federal land is off limits, and nearly a third of it is subject to lease restrictions, according to the petroleum council. Many in the industry have painted these conditions as de facto bans on drilling, and congressional testimony this spring was replete with such assertions.
But government and industry data show that large quantities of fossil fuels have been extracted from public lands despite these limitations. About 60,000 wells now provide 32% to 35% of U.S. production, according to the Department of the Interior.
The vast majority of lease stipulations temporarily halt new drilling activities during months when, for example, elk migrate through well fields. The mandatory breaks are considered critical to the survival of numerous species. The temporary suspensions do not shut down wells already in production.
No one knows for certain how many wells cannot be drilled because of time limits. But the petroleum council concluded that the stipulations "delay development activity by an average of two years and add measurably to the cost of drilling wells on these properties."
Despite the regulation, some in the industry say they have been able to drill and make substantial profits.
Ultra Petroleum endured two years of environmental review before obtaining permission to drill in western Wyoming's Pinedale Anticline.
"Would I have liked to start drilling two years earlier? You bet," Ultra Chief Executive Michael D. Watford told a House committee. "But today the reality is that Ultra and several other operators are now successfully doing our business, which is drilling natural gas wells; we are earning a return on our invested capital and time; and we are working with the bureaucratic agencies."
The agency Watford referred to, the BLM, last year approved up to 900 wells in the 200,000-acre Pinedale Anticline, a sagebrush mesa in the heart of migration paths for elk and pronghorns.
With other nearby fields, that region produces about 600 billion cubic feet of natural gas annually, according to the Gas Technology Institute, an industry research group.
But that production could be greater if federal regulation did not interfere, the petroleum council says.
Last year, several legislators from Rocky Mountains states responded with a bill asking the secretaries of Interior, Energy and Agriculture and the Geological Survey to map oil and gas deposits, show where they intersect with public lands, and figure out how environmental restrictions impede drilling.
The inventory is supposed to be finished by November 2002, but the agencies charged with the task are not optimistic.
"There are certain things we don't have resources to do, and this is one of them," said Rem Hawes, spokesman for the BLM in Washington. "It's a daunting task."
The U.S. Forest Service, part of the Department of Agriculture, is faring little better.
"We don't have very detailed information on the national level," said Forest Service spokeswoman Heidi Valetkevich. "On the individual forests, we do."
In the meantime, the Energy Department followed the lead of the petroleum council. The department retained one of the same consultants the council hired for its 1999 report. The consultant, in turn, expanded on data he generated for the council to produce a report on lease limitations in Wyoming's Greater Green River Basin.
Few other parts of the West are as important to both sides of the energy debate as the Green River area.
Covering a broad swath of western Wyoming and Colorado, the Greater Green River Basin sweeps down from high sagebrush to sand dunes and painted mesas on the Colorado border, and harbors bears, wolves, elk, mule deer, sage grouse and the nation's longest migration corridor for pronghorn.
The basin is also the most active natural gas exploration and development area in the Rockies.
The Green River report concluded that more than two-thirds of the gas in the basin was subject to bans or leasing restrictions--far more than the petroleum council had said was restricted in the Rockies in general. That conclusion prompted a flurry of calls from the Rocky Mountains region's congressional delegation to overhaul leasing rules.
"I have disputed claims made . . . that 95% of our public lands are available for energy production," Rep. Barbara Cubin (R-Wyo.) said after the Green River report was released in May. "The results of this Green River Basin study strongly support my arguments."
Cubin, whose top campaign contributor was the energy and natural resources industry, began drafting measures to cut into the environmental regulations and delays imposed on drillers.
Jeff Eppink, the consultant from Advanced Resources International who prepared the Green River report, conceded that "people are taking this issue and couching it in the terms they want."
The report can be read another way: It shows that more than half of the natural gas is open to drilling for six months of the year or longer. How much well activity has to be canceled or postponed as a result of the time limits was not calculated, Eppink said. But drillers say the seasonal restrictions are an imposition.
"You just have such a short window," said Neal Stanley, senior vice president of Forest Oil Corp., which has drilled extensively in the Green River Basin. "You drill one well that's successful and you want to drill a well next to it, and you have to wait until next year."
The few environmentalists who have examined the Green River report and run their own analysis scoff at its conclusions.
"I think the whole thing was politically motivated," said Pete Morton, a resource economist for the Wilderness Society. "If you look at the people who were advisors--Texaco, Amoco, you name it--they influenced it from the beginning. . . . They've been after the Greater Green River area for a long time. It just looks suspicious."
Tom Fry, BLM director in the Clinton administration, said he was not surprised at the broad range of interpretations given to the land access data.
"I read enough of it to know I can tell it round or I can tell it flat," he said.
Copyright 2001 Los Angeles Times