U. S. Department of the Interior Bureau of Land Management

Nick Douglas, Senior Advisor

Major Energy Sources

Crude Oil Natural gas/Shale gas Wind Solar Geothermal

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Bureau of Land Management

Mineral Estate Administered: 253 million acres of surface lands 700 million acres of sub-surface estate

Oil and Gas

Currently administers over 50,000 leases

totaling 54 million acres of land. 12.3 million acres of producing leases

(30% of total leased acreage) Generating:

6% of domestically produced oil 13% of domestically produced gas

Production and Revenue - 2010 112 million barrels of oil 2.9 trillion cubic feet of gas Generating $2.325 billion in royalties

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Onshore Federal Royalty Last Seven Years

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Renewable Energy Status

Wind • Programmatic EIS – June 2005 • 170 site testing authorizations • 31 approved development

projects (906 MWs) • 43 pending development

applications

Geothermal • Programmatic EIS – Oct. 2008 • 826 geothermal leases • 59 pending leases (1,300 MWs) • 20 pending development plans

Solar Programmatic EIS –Oct. 2011 17 Solar Energy Zones (285,417

acres) 9 Projects approved in 2010 (3,661

MWs) 2 Projects approved in 2011 (850

MWs) 81 pending development applications

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Type of Energy

% of Energy Production from

BLM Land

% of Energy Production from State and Private

Lands

Oil 6 94

Gas 13 87

Coal 40 60

Solar 0* 100

Wind 1 99

Geothermal 42 58

The U.S. Energy Production Profile

*The BLM has approved 4,500 megawatts of capacity yet to be installed (grid-connected).

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LEGISLATIVE BRANCH

CONGRESS

JUDICIAL BRANCH

Courts

EXECUTIVE ORDERS

EXECUTIVE BRANCH

PRESIDENT

LAWS POLICY

REGULATIONS

U. S. CONSTITUTION

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Statutory, Regulatory, and Policy Design

The Laws, Regulations, and Policies are designed to allow: Responsible Energy Development Timely and Reasonable Access to Lands and

Resources – Attract Investment/Interest Conservation of Resources Environmental Protection Public Health & Safety Increase Domestic Production Production Accountability Fair Return to the Taxpayers

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Advantages of Statutes and Regulations

Most of the laws and regulations have been in place for

a long time creating investment-friendly certainties. Regulatory certainty Legal certainty – Leases are legal contracts Fiscal certainties with royalty, rental, and fees Environmental Protection

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Major Laws for Energy Development

I. Mineral Leasing Act, 1920 Mineral Leasing Act for Acquired Lands, 1947

II. National Environmental Policy Act, 1969

III. Federal Land Policy and Management Act, 1976

IV. Federal Oil and Gas Royalty Management Act, 1982

V. Federal Oil and Gas Leasing Reform Act, 1987

VI. Energy Policy Act, 2005

VII.Geothermal Steam Act, 1970

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I. Mineral Leasing Act, 1920

The Mineral Leasing Act of 1920 and the Mineral Leasing Act for Acquired Lands of 1947 give the BLM responsibility for oil and gas leasing on 700 million acres of public lands, national forest, and other Federal lands, as well as private lands where mineral rights have been retained by the Federal Government.

The Mineral Leasing Act is “an act to promote the mining of coal, phosphate, oil, gas, oil shale, and sodium on the public domain lands.”

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II. National Environmental Policy Act, 1969 (NEPA)

Statement of national environmental policies and goals

“Action-forcing” provisions for Federal agencies to

implement those policies and goals NEPA requires a BLM Environmental Review and Public

Involvement for every BLM “action”

The establishment of a Council on Environmental Quality in the Executive Office of the President

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III. Federal Land Policy and Management Act (FLPMA), 1976

Protection of scientific, scenic, historical, ecological, environmental, air, atmospheric, water resource, and archeological values

Prevention of unnecessary or undue degradation of the land

Remediation of abandoned mine lands and energy development to meet the requirements of the Act, including reasonable safety of the general public

Land Use Plans Laying the foundation for land management Balancing resource use and protection Resolving resource conflicts

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IV. Federal Oil and Gas Royalty Management Act (FOGRMA),1982

Duties of Lessees, Operators, and Transporters Royalty Management for Oil and Gas leases on

Federal lands Liabilities and Bonding Inspection and Enforcement practices Production Accountability Civil and Criminal Penalties

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V. Federal Oil and Gas Leasing Reform Act, 1987

Federal Oil and Gas Leasing Reform Act requires quarterly lease sales wherever eligible lands are available for leasing.

Parcels based upon customer nominations or the BLM action

after internal review Parcels are posted 45 days prior to lease sale Competitive lease sales conducted quarterly Unsold parcels available for noncompetitive offers for 2 years Provides an opportunity for public protest No person or entity can hold more than 246,080 acres of

Federal oil and gas leases in any one state at any one time, 300,000 acres in Alaska excluding units

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Oil and Gas Lease Terms and Conditions

Lease term - 10 years (primary term) Rental - $1.50/acre first 5 years, $2.00/acre

subsequent years Winning bidder must pay the minimum bonus bid of

$2.00 per acre, first year’s rent, and $145 fee Royalty - 12.5 percent of value of production Lease size - maximum 2,560 acres outside Alaska,

5,760 acres in Alaska No person or entity can hold more than 246,080

acres of Federal oil and gas leases in any one state at any one time, 300,000 acres in Alaska excluding units

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Oil and Gas Bond Obligations

Bond is required before any surface disturbing activities for plugging of the wells, reclamation of lease areas, and restoration of any lands or surface waters adversely affected

Lease Bond

o Posted by lessee, operating rights holder, or operator o $10,000 minimum

Statewide and nationwide bonds o Posted by lessee, operating rights holder, or operator o $25,000 minimum statewide o $150,000 minimum nationwide

Unit bond o Operator may post bond for leases committed to an approved

unit agreement (in lieu of lease or statewide bonds) o A rider may be added to a nationwide bond

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Regulations

43 CFR 3160 Onshore Oil and Gas Operations

Most aspects of the conduct of operations on Federal oil and gas leases

Protection of the environment, conservation of resources, public health and safety

Production accountability

43 CFR 3161 Jurisdiction and Responsibility 43 CFR 3162 Requirements for Operating Rights Owners and Operators 43 CFR 3163 Noncompliance, Assessments, and Penalties

Onshore Orders Numbers 1 through 7

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Oil and Gas Operations - Protection

Proposed Plan of Operations sound from a technical (Engineering) standpoint and an environmental perspective

Operator’s Application for Permit to Drill (APD) 1. APD Form 2. Well Plat Map 3. Drilling Plan 4. Surface Use Plan of Operations 5. $6,500 Application Fee

Drilling Plan Well Plugging Plan to plug and cement well to protect all

zones of usable water, oil, gas, geothermal, or other valuable mineral resources.

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Onshore Oil and Gas Orders

No. 1 – Approval of Operations

No. 2 – Drilling Operations

No. 3 – Site Security

No. 4 – Measurement of Oil

No. 5 – Measurement of Gas

No. 6 – Hydrogen Sulfide Operations

No. 7 - Water Disposal

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Policies

A principle, plan, or course of action, as pursued by a government, organization, individual, etc. – Webster’s Dictionary

Manuals - Specific Instructions and Guidelines Handbooks - Standard Operating Procedures Instruction Memoranda -Time-limited Directives

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Ensuring Energy

Development is a

Temporary Use….

….not a Permanent

Use of the Land

1 2

3

3 years

17 years

THE END