Washington – The Bush administration wants to charge oil and gas drillers to process permits to drill on federal land.
The proposal comes amid rising federal deficits, a shrinking Bureau of Land Management budget and a boom in drilling on Western public lands.
Currently there is no charge for “applications for permits to drill,” or APDs. Drillers do pay rent on leases, and royalties on the oil and gas they take out of the ground. But the BLM doesn’t charge for the administrative cost of processing permit applications.
The proposal is to be published in today’s Federal Register. It calls for a $4,000 fee per APD, to be phased in over five years, starting at $1,600.
“Our proposal is aimed at setting fair fees so our agency can recover reasonable costs resulting from the processing of minerals-related permit applications,” BLM assistant director Thomas Lonnie said.
More than 6,000 oil and gas wells were approved on public lands last year, BLM reported – three times the number of approvals in 1996. Companies drilled 3,696 oil and gas wells in 2004, most of them in Rocky Mountain states such as Colorado and Wyoming. That’s more than twice the 1,410 wells drilled in 1996.
The fee proposal is supported by environmentalists and opposed by those in the industry.
“From a policy standpoint, it’s not the way to go. These fees were never intended to be paid by the producers,” said Dan Naatz with the Independent Petroleum Association of America.
He said that despite the impression that oil and gas drillers have “deep pockets,” there are many small producers who will be burdened by the fees.
But environmentalists note that companies are getting more permits from BLM than they’re drilling and say those companies should share in the cost of processing the permits.
“Industry, which benefits from these permits, should bear some of the costs of their administration,” said Dave Alberswerth of the Wilderness Society.
Congress is finishing up work on the spending bill that covers BLM, and Alberswerth said he thinks industry-friendly lawmakers may insert a “rider” that blocks the proposed fees before they can be implemented.
Staff writer Mike Soraghan can be reached at 202-662-8730 or msoraghan@denverpost.com.
