Secretary Salazar Visits North Dakota's Oil Boom; Unveils Initiatives to Accelerate Drilling Permits and Leases on Federal Lands

FORT BERTHOLD, N.D. – Concluding a two-day visit to areas in North Dakota benefiting from a major oil boom in and around the Bakken Formation, Secretary of the Interior Ken Salazar today unveiled new initiatives to expedite safe and responsible development of domestic energy resources on U.S. public lands and Indian trust lands in the Dakotas, Montana and states across the country.

As part of the Bureau of Land Management's (BLM) ongoing efforts to ensure efficient processing of oil and gas permit applications, the agency will implement new automated tracking systems that could reduce the review period for drilling permits by two-thirds and expedite the sale and processing of federal oil and gas leases. The new system will track permit applications through the entire review process and quickly flag any missing or incomplete information – greatly reducing the back-and-forth between BLM and industry applicants currently needed to amend paper applications.

These steps build on efforts to promote development of public lands, where total federal oil production – offshore and onshore – has increased by 13 percent during the first three years of the Obama Administration, compared with the last three years of the previous administration. Since 2008, BLM has processed more than 15,000 applications for permits to drill (APDs). BLM expects to process 5,500 APDs in fiscal year 2012. In addition, industry currently holds thousands of onshore permits provided by the BLM that are not currently being used for production related purposes.

“As part of President Obama's all-of-the-above energy strategy, Interior is committed to expanding safe and responsible oil and gas development on public lands and Indian trust lands,” Secretary Salazar said. “With the help of new technology, the Bakken play here in North Dakota is generating impressive energy production for our country and creating thousands of American jobs, as well as substantial royalty revenues for the state, tribes, and taxpayers. By upgrading and improving our oil and gas drilling permit processing systems and technologies we believe we can improve efficiencies while ensuring thorough reviews for safety and compliance. This is another significant step forward in the Obama administration's efforts to reduce the nation's dependence on imported oil, spur local economies and create jobs.”

During his two-day visit, Secretary Salazar toured oil and gas development operations on federal mineral estate in and around western North Dakota, where oil and gas production is rapidly expanding on federal, tribal, state, and private lands.

Yesterday, accompanied by U.S. Senators Kent Conrad and John Hoeven and Congressman Rick Berg, Secretary Salazar visited a drilling rig actively producing oil from federal resources; toured a crude oil production facility where oil is processed, stored, and transported via truck, rail and pipelines to refineries across the country; met with federal employees and heard about the work they are doing to safely expand domestic oil and gas production in the region; and toured private housing accommodations for workers from across the country who come to North Dakota for high-paying jobs.

Earlier today, Secretary Salazar, North Dakota Governor Jack Dalrymple, Senators Conrad and Hoeven and Congressman Berg met with Chairman Tex G. Hall and other leaders of the Three Affiliated Tribes of the Fort Berthold Reservation, where a partnership with Interior's Bureau of Indian Affairs has spurred oil production and generated massive increases in royalty revenues for the tribal government and individual land owners. Allotted royalty revenues on Indian trust lands in 2008 totaled $1.8 million, and rose to $106.7 million in 2011. In the first three months of 2012, royalties totaling nearly $60 million have already been collected.

Secretary Salazar also thanked BLM employees during his trip for their efforts in managing nearly 2 million subsurface acres of mineral estate in active areas of the Bakken play in North Dakota.

Processing Drilling Permit Applications Faster and More Efficiently

Currently, most APDs are submitted to the BLM in hardcopy and neither the public nor industry operators can access them on the current system or directly monitor the BLM actions, slowing the approval process. The new drilling permit system announced today, which is expected to be fully online by May 2013, will automate the process that tracks APDs, providing greater online accessibility and transparency. It will improve communication between the BLM and industry, resulting in more consistent APD processing standards and timeframes and a significantly reduced review period.

Currently, on average, approximately two-thirds of the time it takes to process an APD is spent waiting for more information from the operator-applicant. The new system will allow the public and operators to view the BLM processing status of APDs, enabling operators to more promptly address deficiencies in their applications. BLM's Carlsbad Field Office is currently piloting a similar system, which has resulted in a nearly two-thirds reduction in processing time for that region.

BLM estimates that automating the APD workflow could reduce the average review time across BLM offices to as few as 60 days.

New Steps Toward More Efficient Leasing Nationwide

Secretary Salazar also announced today the launch of BLM's new National Oil and Gas Lease Sale System (LSS) to provide a standardized format and electronic capabilities, improve workflow process and streamline the phases of competitive oil-and-gas lease sales. The system will electronically track the BLM's leasing process from initial public submittals of Expressions of Interest and pre-sale offers, through the issuance of leases.

The BLM state offices currently use varying methods and systems in developing their quarterly onshore oil-and-gas lease sales, making it difficult to provide consistent reports and statistics on oil and gas Expressions of Interest and pre-sale offers. The LSS will replace these numerous stand-alone systems and provide a consistent, easy-to-use electronic process for both the oil and gas industry and BLM employees. The system will improve communications, decision making and interactions with private and industry clients, BLM field offices and non-BLM land management agencies.

Ongoing Efforts to Encourage Safe & Responsible Production on Federal and Tribal Lands

The enhancements announced today come as part of Interior's efforts to continually meet increased demands for oil and gas development on public and tribal lands across the country, including the ongoing boom in the Bakken area. As the lead agency for permitting, inspection, and enforcement activities for both federal and tribal resources, the BLM is responsible for ensuring that appropriate measures are taken to maintain environmental quality and human safety.

These new initiatives build on efforts to encourage expanded development by BLM's Montana/Dakotas offices, which has taken steps to bolster their workforce through increased hiring and the transfer of staff from other offices to help in processing applications as efficiently as possible in recent years – often in partnership with Interior's Bureau of Indian Affairs which manages the leasing of tribal lands.

Drilling applications in the Bakken have seen a 500 percent increase over the past five years, half of which has occurred on American Indian mineral estate. Since 2007, applications to drill on Fort Berthold, in the heart of the Bakken play, have increased from 0 to 175. More than $3 million in drilling permit fees were collected in FY 2011.

BLM inspections also continue to rise. For example, in FY 2007 there were 4 inspections on Indian minerals; in FY 2011 a total of 429. For the same timeframe on federal minerals, inspections rose from just 200 to 718.

BLM conducts quarterly competitive lease sales, from which one half of the revenue is returned to the state. BLM Montana/Dakotas has contributed more than $1.3 billion annually to North Dakota's economy through BLM-administered oil and gas production. Last July, the BLM held its second highest grossing lease sale for federal minerals in history, garnering $66 million in revenue for leases in the Bakken. This trend continued with BLM's January 2012 lease sale, which produced nearly $36 million, including a bid of $10,600 per acre.

Updating Bakken Resource Assessments

The Bakken Shale Formation of Montana and North Dakota, which was relatively unknown only a few years ago, is now considered a “world-class” reserve that could enable North Dakota to surpass both Alaska and Texas in oil production within a decade. Improved technologies in horizontal drilling and the use of hydraulic fracturing have allowed access to substantial oil resources previously inaccessible. Industry experts believe the Bakken play will be active for at least the next four decades.

Interior's U.S. Geological Survey is currently updating its 2008 assessment of oil and gas in the U.S. portion of the Bakken Formation (the Williston Basin Province in Montana and North Dakota). The 2008 estimate was 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil, elevating the Bakken to a “world-class” unconventional accumulation. The estimate had a mean value of 3.65 billion barrels of oil and 1.85 trillion cubic feet of technically recoverable gas. The USGS routinely updates oil and gas assessments when significant new information is available, such as new understanding of a resource basin's geology or when advances in technology occur for drilling and production.

According to state statistics, oil production from the Bakken in North Dakota has steadily increased from about 28 million barrels in 2008, to 50 million barrels in 2009 to approximately 86 million barrels in 2010. For more information, visit www.blm.gov.

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