Oil industry eager for more drilling in the Rockies

HOUSTON -- Opening the Arctic National Wildlife Refuge to drilling is the hot button issue in the Bush administration's new energy plan, but the real prize for the oil industry is the prospect of increased drilling on federal lands in the Rocky Mountain region. Analysts and industry officials say allowing more federal land in the Rockies to be drilled for oil and gas would go much further to alleviate the nation's energy crunch in the near-term than opening the refuge, which would not produce commercially for five to seven years. Nor does the infrastructure, such as pipelines and processing plants, exist to handle production from the refuge.

The areas industry would like to see opened for drilling include national forest roadless areas, national monuments created by President Clinton and possibly protected areas of Bureau of Land Management lands. The term "wilderness" is often used in a generic sense to describe all federal lands in the Rockies, but in fact wilderness is a legal definition of an area that is protected by Congress. The Bush administration could not unilaterally open up designated wilderness areas to oil and gas exploration, said Rem Hawes, a spokesman for the Bureau of Land Management. There are existing oil and gas leases on designated wilderness areas that could be reactivated by the administration, he said.

"This could have a significant impact, but it's also important to streamline the bureaucracy," said Peter Dea, chief executive of Denver-based Barrett Resources, and president of the Colorado Oil and Gas Association. "About 85 percent of the natural gas in the Rocky Mountains is undeveloped and much of that is in active areas."

Getting permits for drilling and wastewater discharge in the Rocky Mountains currently can take anywhere from 30 days to more than six months, far more time than such permits take in less high-profile areas.

"There is an area in the Powder River Basin where we have been waiting over a year for permits," Dea said.

As part of the preliminary work done for the administration's energy policy, the secretary of the interior was required to conduct an inventory of all onshore federal lands and identify oil and gas reserves on the properties. There is an estimated 300 trillion cubic feet of natural gas yet to be developed in the Rocky Mountains, according to a study on energy policy challenges facing the nation done by Amy Myers Jaffe of the Baker Institute at Rice University and Edward Morse.

"Obviously we are not talking about Yellowstone, but there is a huge amount of natural gas there and it would not be difficult to lay a pipeline from Wyoming to Chicago," Jaffe said. "To put it in perspective, a 10 TCF field is considered a major liquefied natural gas project."

The Bureau of Land Management is one of the agencies that could help to streamline the permitting process, although, depending on the land where the federal land is and how it is being used, numerous other agencies as well as the states would have a say in this as well.

Environmentalists don't share the energy industry's enthusiasm for opening up more federal land in the Rockies. Most of the federal land is already open to oil and gas leasing, and opening more is a "gluttonous approach" to the stewardship of federal lands, said Jim Waltman, director of refuges and wildlife at The Wilderness Society in Washington.

"Not only would it damage these very pristine places, we would not get very much oil and gas out of it," Waltman said. "If you look at national forest roadless areas in the six Rocky Mountain states, you would get about 0.4 percent of the total known oil reserves in the United States and about 0.6 percent of the gas reserves," Waltman said. He asked why industry would want to damage "these very special places" for so little.

The pressure on the Bush administration to open more federal land to drilling is being driven by three key elements: high oil and gas prices that are slowing the economy and hurting consumers, increasing demand for natural gas to generate power and concerns about national security stemming from dependence on foreign oil.

There are also technology issues to consider. Much of the oil and gas in the Rockies was considered for years to be too costly to obtain for the prices it fetched in a relatively segregated market. There was no infrastructure in the way of pipelines to move Rocky Mountain gas and oil out of the region.

All of that has changed. New drilling technologies make finding and producing Rocky Mountain gas and oil economic, and the pipelines now exist that can move the oil and gas to markets where it can command higher prices.

An analogy could be made to the deepwater Gulf of Mexico, said Craig Van Kirk, head of the petroleum engineering department at the Colorado School of Mines.

Even if the ultradeepwater areas had been opened to drilling 10 years ago, the technology to explore for oil and gas there did not exist as it does today.

"It's one thing to have the acreage, it's another thing to have the technology to drill it," Van Kirk said.

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