BOEMRE Improves Efficiency of Permit Review Process

- BOEMRE Improves Efficiency of Permit Review Process

Friday, June 03, 2011
BOEMRE

Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) Director Michael R. Bromwich announced that the bureau is putting in place significant improvements in the oil and gas permit application process. These improvements include the publication of a permit application checklist to assist offshore oil and gas operators in submitting complete applications to drill; the implementation of completeness checks by BOEMRE personnel before significant staff time is spent reviewing the application; and the development of clear permit review priorities that will expedite agency reviews.

"We are constantly looking for ways to create a smarter, more efficient, and more transparent permit review process," said Director Bromwich. "Our goal is to make the process of submitting permit applications easier, reduce the time it takes to review permits and improve BOEMRE's communication with operators during the permit review process. We will continue to search for additional ways to improve our processes without in any way modifying or relaxing the more stringent safety and environmental rules we have implemented over the past year."

Key improvements that are being implemented include:

• The publication of a "completeness" checklist for offshore oil and gas operators. This high-level checklist, which aligns with BOEMRE's review process, includes the main components that need to be submitted by operators to make a permit application complete. This checklist does not ensure approval of an application, but will clarify for operators what is needed in their submission. The development of the checklist comes after multiple meetings with operators who have requested such additional guidance.
• To improve the efficiency of the review process and reduce the number of permits returned to operators because of incomplete information, BOEMRE personnel will conduct completeness checks before beginning an in-depth, substantive review of the application. Bureau personnel will focus on identifying significant omissions during the initial review so as to quickly identify applications that are not ready for full review. Deficiencies and omissions will be communicated to the operator for correction at the same time. This does not guarantee that incomplete information will not be found later in the review, but the completeness check is designed to capture the major gaps in submission criteria early in the review process.
• In an effort to ensure efficiency, permits found to be complete will have a higher priority in the review process. The bureau has established priorities for reviewing permit applications as follows: 

o Permits for ongoing operations, such as sidetracks or deeper exploration of an existing well;

o Applications deemed complete; and

o If staff time allows, applications that are not deemed complete, such as those missing a required containment plan or the necessary professional engineer certifications, may begin to be processed. This category also includes permit applications without an approved exploration or development plan.

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Justice Dept Claims EPA Did Not Violate Range's Due Process Rights

Justice Dept Claims EPA Did Not Violate Range's Due Process Rights

Tuesday, May 10, 2011
Fort Worth Star-Telegram, Texas
by Jack Z. Smith

The Justice Departments contends in court papers filed Monday that the Environmental Protection Agency did not violate Range Resources' constitutional right of due process when it issued a Dec. 7 emergency order against the company related to methane contamination of two residential water wells in Parker County.

Range's due-process argument is "without merit," the department said, arguing that the Fort Worth-based natural gas producer "seeks to curtail the EPA's emergency powers" under the federal Safe Drinking Water Act "in a manner that would seriously harm EPA's ability ... to address risks to underground sources of drinking water and public water systems."

The department filed a 31-page brief in a Dallas federal court where Senior Judge Royal Furgeson is considering a Justice Department complaint, filed Jan. 20, contending that Range failed to comply with three of six provisions in the EPA order. The department is asking Furgeson to deny Range's motion to dismiss the complaint.

Range has also filed an appeal with the 5th U.S. Circuit Court of Appeals in New Orleans.

The department said Range is entitled only to a hearing on whether it complied with the emergency order and "whether any civil penalties should be assessed." Fines could be $16,500 per day per violation.

In its Dec. 7 order, EPA said Range "caused or contributed" to the methane contamination of the water wells, likely from two nearby Range gas wells. Methane is the chief component of natural gas.

Range's wells were drilled more than a mile deep into the Barnett Shale, far below the water wells, which are roughly 200 feet deep.

Range spokesman Matt Pitzarella said late Monday that the company is reviewing the Justice Department's brief and that its "position remains the same": that it did not cause the water wells' contamination.

Range argues that the EPA's findings represent "sheer guesswork" based on "threadbare-thin" reasoning. It noted that EPA enforcement official John Blevins, who signed the emergency order, later backtracked somewhat, saying in a sworn deposition that Range "may" have caused or contributed to the wells' contamination.

Range argues that "there is 5,500 feet of the earth's strata separating the bottom of the private water wells from the subsurface horizontal sections" of its gas wells. The company contends that the EPA "does not even set forth a theory how gas could migrate from Range's wells to the aquifer."

The Texas Railroad Commission found March 29 that the Range gas wells did not cause the contamination. Its members said they agreed with its staff hearing examiners, as well as with Range and its consultants, that the gas in the water wells likely migrated from the shallow Strawn geological formation, into which some gas wells were drilled in the early 1980s.

Copyright (c) 2011, Fort Worth Star-Telegram, Texas. Distributed by McClatchy-Tribune Information Services.

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Bering Begins Process for Operatorship for Tx. Field

Bering Begins Process for Operatorship for Tx. Field

Monday, April 25, 2011
Bering Exploration Inc.

Bering has begun the process to be licensed by the State of Texas to conduct drilling and operations in Texas. The company expects to receive the approval in the next thirty days.

Bering recently announced that drilling operations have begun on its Gulf Coast prospect with potential revenue valued at $29 million over the life of the prospect. Additionally, Bering announced that it will initially drill four test wells on its Eagle Ford shale play in Central Texas targeting $11 million in gross potential reserves and will utilize the results to help with the design and development of a more in depth drilling program for the remaining 116 potential well locations targeting gross potential reserves of more than $300 million. The figures above are based upon the current price of oil and gas and assume all wells are drilled and successful.

"We expect our application for an operator's license with the Texas Railroad Commission to be approved in the next thirty days," stated Steven Plumb, VP of Finance of Bering. "This license will allow Bering to enter the first phase of our drilling program on our Eagle Ford prospect."

Politicians Push to Revise Oil Project Review Process

Politicians Push to Revise Oil Project Review Process

Monday, April 11, 2011
The Bakersfield Californian
by John Cox

Kern County politicians are urging Gov. Jerry Brown to ease what the local oil industry sees as a clampdown on certain drilling-related activities that state regulators view as environmentally risky.

Members of the local delegation say inexperienced bureaucrats in Sacramento have held up job creation by withholding approval of numerous oil field projects rather than keeping to longstanding if informal collaboration with industry.

State oil regulators acknowledge a slowdown in project approvals, but they blame a combination of staffing limitations, complex engineering issues and the need to follow state and federal laws protecting California drinking water.

While friction between local oil producers and regulators has remained almost constant in recent years, this latest escalation stands out both for its timing and political reach. With oil prices approaching all-time highs and employment low, newly seated local politicians are pressing Brown to prod a department that many contend has taken a more cautious direction since a leadership change in 2009.

The specific activities at issue, underground injection projects, involve pumping nonlethal fluids into new or existing oil fields. Sometimes these projects reinject substances that already exist underground, such as water or hydrogen sulfide that come up during the oil production process. Other underground injection projects introduce steam and other materials that make oil easier to draw up from below.
Slow approvals

The state Division of Oil, Gas and Geothermal Resources says it received 55 underground injection project applications in 2008, and that 93 percent of them have since been approved. In 2009, 52 applications came in, 71 percent of which have won DOGGR's approval. Fully 100 projects were formally proposed last year; 27 percent of them have been approved. (One proposed project may serve 10 or more producing oil wells.)

Most of California's proposed injection wells are in Southern California. Only 30 percent of 158 pending projects are proposed in Kern County, according to DOGGR.

DOGGR says state worker furloughs account for much of the backlog. And while a division spokesman stated that staff are mindful of industry's impatience amid strong oil prices, such projects are discretionary and require engineering analysis to make sure what is injected does not spread to unintended surrounding areas.

Spokesman Don Drysdale also noted that the division must ensure that oil fields are not damaged to the point that future generations cannot continue to recover oil.

"The division is doing its best to balance the needs of this important industry with the needs of Californians for effective environmental oversight for public health and safety," Drysdale wrote in an email.

A spokesman for the state Natural Resources Agency, which has oversight authority over the division, emphasized that DOGGR is only following the legal process, which he said is not supposed to be informal.

Special care must be taken to ensure that injected fluids do not spill out from abandoned wells nearby, spokesman Richard Stapler said.

Oil industry representatives say the state is being overcautious. Before the September 2009 arrival of Elena Miller, a lawyer who leads DOGGR as California's oil and gas supervisor, oil producers would appeal project rejections to a working group composed of various state regulators and industry representatives. They say compromises were usually worked out at such meetings.

But now, industry representatives say, not only has a wide degree of local discretion been replaced with micromanaging in Sacramento, but the division refuses to issue rejections, thereby removing the opportunity for appeal.

Les Clark, executive vice president of Bakersfield's Independent Oil Producers Agency, said a new state law governing oil spills, known as AB 1960, has complicated the review process. Still, he blames Miller for "overkill" with regard to safety, saying she insists on measures that make projects far too expensive.

Clark also said Miller and her staff have been inconsistent in what they ask of producers.

"Every time you talk with her it's a different story," he said.

Miller could not be reached for comment.

Several oil producers operating in Kern County declined to comment on the record. One that did, Chevron, cited progress in working with DOGGR.

"While we have experienced delays, we have provided extensive technical information that DOGGR requested and have began receiving permits and are getting people back to work," Chevron spokeswoman Carla Musser wrote in an email. "We are continuing to work with DOGGR on obtaining permits."
Politicians get involved

Local politicians have met with Gov. Brown's staff in an attempt to come to a resolution. They do not necessarily agree about what should be done, however.

Assemblywoman Shannon Grove, R-Bakersfield, suggested firing Miller outright.

"The governor needs to replace her with somebody who understands the oil industry," Grove said.

Two other local representatives -- State Sen. Jean Fuller, R-Bakersfield, and Sen. Michael Rubio, D-Bakersfield -- said they favor creating a clear path of approval for the industry.

Fuller said that if DOGGR's policy has changed, then the industry needs to know how.

"If it's not that, if it's a manpower issue, then we need to look at the manpower issue," she said.

Rubio said producers need to know how long the review process will take, and that more control should be given to DOGGR's local staff.

"I'm confident that very soon there will be a solution," he said, referring to comments made by the governor's staff. Fuller, Grove and the office of Assemblyman David Valadao, R-Hanford, also expressed expectations for a prompt resolution.

Efforts to reach the governor's office were unsuccessful.

KCA Deutag Finishes Refinancing Process

KCA Deutag Finishes Refinancing Process

Thursday, March 31, 2011
KCA DEUTAG

KCA Deutag announced the completion of a refinancing process. The successful conclusion of this process has resulted in a transaction that strengthens the capital structure of the Company and ensures the long term financial stability of the business.

KCA Deutag will benefit from a strong institutional shareholder base led by existing shareholder Pamplona Capital Management together with funds and accounts managed by GoldenTree Asset Management, EIG Global Energy Partners, and BlackRock Financial Management. Pamplona is the largest shareholder and will have a majority on the new board. The shareholders have equitized mezzanine debt and injected $550 million of new equity into KCA Deutag's holding company Turbo Alpha, of which $300 million will be used to pay down senior debt and $250 million to further develop the business.

Simultaneously, KCA Deutag also confirms that non-executive chairman, Tim Summers, has stepped down following successful conclusion of the restructuring and has been replaced by Alex Knaster from Pamplona Capital. Non-executive directors Chris Hughes and Bob Ellis, appointed at the commencement of the refinancing also step down.

John Halsted of Pamplona commented, "We would like to thank Tim Summers, Chris Hughes and Bob Ellis for their leadership and guidance in steering the Company through a prolonged and intensive refinancing period. The Company has emerged with a significantly strengthened balance sheet, growth capital in the business and an experienced and knowledgeable shareholder base, committed to assisting the Company grow and capitalise on the many opportunities in its core international markets. As shareholders we are very excited about the prospects of the Company in a strongly improving market sector."

Despite the tough economic and trading condition, 2010 was a year in which KCA Deutag delivered robust financial, operational and HSE performance. Compared to our international and US peer group, KCA Deutag mitigated the effects of economic and industry factors better than most, emerging from 2010 with:

• An improved contract backlog. In our platform drilling division almost every contract was extended by negotiation or competitive tender, securing a revenue backlog of more than $1.5 billion, with the major highlight being the award by AIOC in Azerbaijan of a six-rig, five-year plus options contract.
• Continued high utilization in our international land fleet with strategic awards in both northern and southern Iraq and increased activity in Algeria and Nigeria.
• Maintained and extended contracts for all three owned jack-ups.
• Major contract extensions and awards in our engineering division RDS, relating to the UK, Azerbaijan, Newfoundland, Australia and Brazil.
• Significant success in KCA Deutag sister Company Bentec, the specialist rig and drilling equipment manufacturer, with the successful introduction of it's top drive and six rigs currently under construction.
• Best ever company-wide HSE performance.
• Continuous improvement in our operating efficiency and equipment uptime.

Holger Temmen, CEO of KCA Deutag, commented, "We are pleased to have completed the refinancing of the Company and to have emerged with a strengthened balance sheet and debt position. Throughout this period, KCA Deutag's operational and financial performance remained very robust. This performance has been recognized in the many contract extensions and awards given by our clients and our shareholders and lenders also demonstrated their faith in our business plan by approving the build of five new land rigs during 2010 for key growth markets in Europe, Russia and MENA.

"KCA Deutag's strategic presence in the major international markets has allowed us to outperform the majority of our drilling peer group, especially those exposed to the US domestic market. The opportunities developing in markets such as Russia, Iraq, Algeria and the emerging unconventional oil and gas plays in Europe leave me very optimistic about our medium term growth prospects.

"I would like to thank all staff in KCA Deutag, our clients and suppliers for their patience and understanding as we have progressed through the refinancing process. I am delighted that we can now completely focus on delivering the business plan and continuing to meet and exceed our clients' expectations for safe, effective and trouble- free operations."

Bill to Boost State Engineer's CBM Water Permitting Authority

Tuesday, March 22, 2011

The Pueblo Chieftain, Colo.

by  Patrick Malone

 

A House committee unanimously passed a bill that seeks to grant the state engineer greater authority in the water permitting process for coal-bed methane gas extraction.

The House Agriculture, Livestock and Natural Resources Committee voted 13-0 to adopt HB1286, sponsored by Reps. Jerry Sonnenberg, R-Sterling, and John Becker, R-Fort Morgan.

The bill aims to streamline the decision-making process on water permits. A 2009 Colorado Supreme Court decision found that water used in coal-bed methane natural gas extraction is subject to the requirements of tributary water permitting. The ruling granted Water Courts authority over permitting conflicts and appeals.

The ruling added the state's 40,000 oil and gas wells to the rolls of water users subject to tributary water permitting process. Before that, about 8,000 water users were subject to it.

Nontributary water can be exempt from permitting, Following the court's ruling, the state engineer developed rules to govern permitting within the framework of the court's decision, and developed a map that reflects extraction operations subject to permitting under it. Among them were some wells in the Raton Basin near Trinidad.

Under HB1286, the state engineer's rules would be acknowledged in statute, appeals of permit decisions would be routed through the rule-making process instead of through Water Court and further appeals of those decisions to a Water Court would require a higher standard of proof to overturn earlier rulings in the chain of appeals.

The chief opponent of the bill to testify Monday was lawyer Philip Lopez of the firm White & Jankowski, which represents the plaintiffs who were victorious in the 2009 case.

He characterized the bill as an attempt to legislate around judicial decisions, argued the ruling has not led to the shutdown of any gas wells and said the state engineer's map confers by default a water right to the oil and gas industry that other water users must follow process to attain.

Supporters of the bill contend that the permitting process established by the court ruling leaves the door open to prolonged shutdowns of oil and gas operations if a water user challenges their water rights.

"This will make it a lot simpler," said state Rep. Wes McKinley, D-Walsh. "We don't know that it will, but it could get some gas wells back in operation."

Next, HB1286 faces debate in the House.

 

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