Mark Green Posted October 19, Lots of discussion this week about energy production from federally controlled areas — onshore and offshore — as a subset of an overall rise in U. Some charts to consider, developed from data in the U. As you can see, U. Remember, the oil production timeline is a long one.
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Offshore and onshore projects can take up to a decade to develop, from leasing to actual production. Broken out by area, crude production on non-federal lands Since crude production from areas controlled by the federal government has fallen green line. Overall domestic natural gas production blue line has climbed sharply — owing to advances in shale development through hydraulic fracturing and horizontal drilling. Look at the red line. Production from non-federal areas parallels the top line, indicating overall growth is being driven by production from areas not controlled by Washington.
Petroleum products exports averaged 4. The bulk of these petroleum exports went to Mexico and Canada. In December of , the year general ban on crude oil exports was lifted, and crude oil exports have been on the rise since. In , the US exported an average of 1,, barrels per day of crude oil. By October of , the US was exporting an average of 1,, barrels per day of crude oil. In light of the shale boom, the light, sweet crude derived from shale formations, which is not well-suited for the US Gulf Coast refineries, represents a particularly attractive commodity to export.
The determination of a legal and organisational framework applying to oil and gas activities depends in part on whether the underlying resources are owned by the government or private parties and whether the location is onshore or offshore. The development of oil and gas reserves on federal lands occurs through leasing programmes managed by the Department of the Interior DOI.
The BLM reviews and approves permits and licences for companies to explore and develop oil and natural gas on federal lands, and, once projects are approved, it enforces regulatory compliance. At the state level, public agencies generally regulate oil and natural gas development and production, while the leasing of private land for oil and natural gas development is generally left up to each individual landowner.
The regulation of transportation of oil and natural gas in the US is divided between the federal government and state authorities. FERC is the primary federal regulatory agency governing oil and natural gas transportation. State regulatory agencies have jurisdiction over retail pricing, consumer protection, natural gas facility construction, and environmental issues not covered by the federal agencies.
The EPA continues to study the potential environmental risks of fracking. In December of , it released a report which linked fracking to water pollution in some circumstances. However, uncertainties and data gaps remain in the studies. The role of fracking in earthquakes also remains controversial. State and local governments are also involved in these controversies. In the US, rights to oil, gas and other minerals are generally held by the owner of the surface until and unless the mineral rights are severed and granted to others.
To the extent governmental bodies control those rights, i.
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These leases convey non-vested protectable property rights that may be regulated and their value diminished for a proper government purpose. Authorisations for the various stages of development are generally addressed in the oil and gas lease agreement. As a matter of law, neither the federal government nor individual state governments have an ownership interest or participate directly as a party in the development of oil and natural gas reserves, except under lands owned by such governments. The US does hold an ownership interest in the mineral estate under federal lands, except where otherwise transferred.
The situation is similar with respect to lands owned by the individual states. Pursuant to the Mineral Leasing Act and Outer Continental Shelf Lands Act, the federal government leases federal lands for exploration and production of natural gas, and collects royalties on the gas produced. Federal and state governments mainly derive value from oil and natural gas development through leasing mineral estates underlying federal and state lands and the collection of royalty payments.
Under the Mineral Leasing Act, for example, competitive and non-competitive leases are conditioned upon payment to the government of a royalty of at least In addition to royalties, leases are conditioned upon payment of annual rental fees. Income taxes as well as oil and gas production or severance taxes and the like are also imposed by various governmental bodies having jurisdiction over applicable reserves. Section 3 of the Natural Gas Act of , as amended, requires that anyone who wants to export natural gas to a foreign country must first obtain an authorisation from the DOE.
See additional details in the responses set forth in sections 4 and 5 below. There are currently no currency exchange restrictions or restrictions on the transfer out of the jurisdiction of funds derived from production. As a general matter, for privately owned lands, there are no restrictions on the transfer or disposal of oil and natural gas development rights or interests unless specifically provided for in a contract. Leases of privately owned lands may expressly grant or limit the authority of the parties to transfer or assign the lease.
In the case of leases of federal lands, an entity may transfer its interest in the acreage in the lease, with approval of the Secretary of Interior, by assignment of the record title interest or by transfer of operating rights or working interests. At the state level, assignment of a lease, or transfer of rights thereunder, may require approval of state authorities.
The BLM may require an increase in the bond amount whenever conditions warrant. The BOEM also requires bonds in place for federal offshore lease activity. Offshore bonds vary depending on the level of activity on the lease and the number of leases covered by the bond. Secondary bonds may also be required by the BOEM where conditions warrant. States may also require the filing of a bond or alternative security. Specific lease terms, or applicable statutes, may restrict granting a security interest in development rights.
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Otherwise, such rights can normally be pledged for security. Some oil and gas-producing states have special statutory provisions relating to the perfection and priority of security interests in oil and natural gas. Oil and natural gas reserves can be booked for accounting purposes. A variety of interrelated statutes and agency regulations may apply to the development of oil and natural gas reserves in the US.
One of the more prominent sets of environmental regulations at the federal level is the National Environmental Policy Act NEPA , which requires a federal agency to prepare an environmental impact statement before any major federal action. As part of the NEPA process, the BLM may require that oil and natural gas developers comply with Best Management Practices to ensure that development on the public lands is conducted in a manner that prevents or lessens its environmental impact on public lands resources.
Additionally, the Federal Onshore Oil and Gas Leasing Reform Act prohibits certain types of oil and gas leasing on lands recommended for wilderness allocation. State regulations, such as compulsory pooling and well spacing, may also restrict development of oil and natural gas.
FERC may only permit the abandonment of natural gas facilities upon finding that 1 the available supply of natural gas is depleted to the extent that the continuance of service is unwarranted, or 2 that the present or future public convenience or necessity permits such abandonment. The plugging and abandonment of oil and natural gas wells are also subject to state regulation and, for federal lands and the Outer Continental Shelf, to regulation by the Department of the Interior.
Generally, absent an exemption, storage facilities must be certificated by FERC if the natural gas is transported in interstate commerce. Exemptions from FERC jurisdiction over storage projects apply in circumstances where transportation by interstate pipelines has not begun production, gathering or has ended, or where the company receives gas from an interstate pipeline within or at the border of its state, if all the natural gas so received is ultimately consumed within that state, and if the rates and service of the company and its facilities are subject to regulation by a state commission known as a Hinshaw company.
Storage projects that are exempt from the Natural Gas Act are regulated at the state level. Interstate pipelines that already hold blanket, open access certificate authorisations from FERC may test and develop potential new storage reservoirs over a three-year period without further authorisation. New companies will lack a blanket, open access certificate and thus cannot test and develop potential reservoirs unless FERC issues temporary certificates and exempts temporary operations from certificate requirements.
Under these temporary authorisations, storage developers may conduct activities that are necessary to support the certificate application or to prevent degradation of the field for storage operations. Prior to certificate approval, tariff and rates for storage services must be developed.
Rates can be cost-based or market-based. The EPAct allows FERC to grant market-based rates for new storage capacity even if a company is unable to demonstrate that it lacks market power as long as FERC determines 1 that the market-based rates are in the public interest and necessary to encourage the construction of the storage capacity, and 2 that customers are adequately protected. FERC requires that storage capacity be allocated to new customers on a non-discriminatory basis.
The certificate process also involves an environmental review, which may require the preparation of an environmental impact statement. FERC sometimes issues a preliminary determination on non-environmental issues in order to resolve these issues and provide some certainty so that the project may be financed or an open season held.
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If so, what are their key features? Development in hydraulic fracturing fracking and directional drilling technologies has enabled production of natural gas and oil from shale and other unconventional formations. Fracking is a well simulation technology that involves applying highly pressurised water, sand, and chemicals to fracture rock.
Flowback consists of hydrocarbons in addition to the injected chemicals and brines, metals, radionuclides and other naturally occurring compounds. Directional drilling involves the drilling of non-vertical wells. Technologies like fracking and directional drilling have greatly increased domestic energy production, so much so that some experts predict US energy independence in the near future.
Because most unconventional oil and gas resources occur on non-federal lands, states are principally responsible for their regulation. Recent development in the drilling and fracturing technologies employed in producing these unconventional formations has caused many mineral rich states to regulate the technologies specifically, as opposed to relying on more general regulations governing the production of oil and gas. In general, features of these state regulations include requirements for disclosure of chemicals used in fracking and water resources protection measures.
However, the approaches for regulating unconventional mineral development vary from state to state, leading to a lack of nationwide uniformity. As a result, some interest groups and Congresspersons have pressed the federal government to play a larger role in unconventional mineral resource development. Conversely, other interest groups argue that varying geological, topographical and climate conditions from state to state make states uniquely qualified to regulate unconventional mineral development within their own jurisdictions.
Although unconventional mineral resource development is largely regulated by individual states, the federal government does exercise some control over unconventional oil and gas production on state lands through the provisions of several federal environmental acts. Notably, however, the SDWA UIC permitting programme excludes from its requirements the injection of fluids and other materials other than diesel fuels pursuant to oil and gas-related fracking operations. Under the Obama administration, the EPA actively pursued additional measures to regulate unconventional mineral production.
In , the EPA issued regulations under the Clean Air Act requiring producers to capture 90 per cent of emissions from hydraulically fractured gas wells. In , the EPA issued standards prohibiting the discharge of wastewater pollutants from onshore unconventional mineral production facilities to publicly owned water treatment plants.
Additionally, in the EPA released its study analysing the impact of fracking activity on drinking water. The federal government manages the production of oil and gas on federal and tribal lands, and the BLM is the main agency tasked with its oversight. In , the BLM promulgated regulations applicable to oil and gas related fracking activity on federal and tribal lands.
These rules sought to ensure the protection of water supplies by establishing stricter well construction standards, ensure environmentally responsible management of flowback, and require public disclosure of chemicals used in fracking operations. In Wyoming v. Jewell , several states petitioned a federal district court in Wyoming to enjoin the enforcement of these rules. The district court set aside the rules after determining that BLM lacked congressional authority to regulate fracking.
The Department of Energy authorises two types of natural gas imports and exports: blanket authorisations; and long-term authorisations. Blanket authorisations allow the authorised party to import or export for up to two years. Blanket authorisations do not obligate the holder of the authorisation to import or export natural gas, and no contracts are required to be filed with the application.
Long-term authorisations are used for natural gas imports or exports that will last longer than two years. Typically, holders of long-term authorisations have, or intend to have, a signed gas purchase or sales agreement in place for more than two years. Although FERC approval is not required for the actual import or export of natural gas, FERC does oversee the construction and operation of natural gas import and export facilities with corresponding jurisdiction for offshore terminal approvals resting primarily with the Maritime Administration and the Coast Guard and has the authority to review proposed rates for the interstate transportation and sale of imported natural gas.
However, after the Hackberry decision in , which was later codified in the EPAct of , FERC can no longer deny an application solely on the basis that the applicant proposes to use the LNG terminal exclusively or partially for gas that the applicant or an affiliate of the applicant will supply to the facility; nor can FERC condition an approval on the requirement that the LNG terminal offers services to customers other than the applicant, or any affiliate of the applicant, in order to secure the order.
FERC also has authority to grant Presidential Permits for natural gas import or export facilities located on the international boundary of Canada or Mexico. Currently, the North American Free Trade Agreement NAFTA allows for the free trade of natural gas among the US, Mexico, and Canada; exports to member countries are excused from export controls, and imports from member countries will not incur tariffs. A number of applications have been approved for the export of LNG liquefied from natural gas produced in the US.
Under the Energy Policy Act of , exports to countries with which the US has a free trade agreement are deemed to be consistent with the public interest, and applications for such importation or exportation are to be granted without modification or delay. Exports of refined petroleum products are generally permitted without restriction, but from the s through , export of crude oil was generally prohibited under EPCA. Who regulates what depends on land ownership and whether federal regulations or state laws apply.
In general, most drilling and production is regulated by the states. Federal regulations primarily safeguard water and air quality and worker safety, as well as exploration and production on Native American lands, federal lands, and the Outer Continental Shelf. Regulations are implemented by the executive branches of local, state, and federal government based on the laws enacted by local, state, and federal legislators. Public input is a formal part of regulation development. The Clean Air Act , the Clean Water Act , and the Safe Drinking Water Act , including later revisions to these laws, form the basis of most federal regulation of the oil and gas industry.
Exploration and production on state and private land are regulated by each of the 33 oil- and gas-producing states. States also regulate all oil and gas operations in state waters that extend from the coast to 3 to 9 nautical miles from the shoreline, depending on the state.
Local zoning may control some activities such as the minimum distance wells and other facilities must be set back from homes and businesses.
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State regulations vary from state to state and over time. Early state regulations were largely focused on preventing waste, ensuring the rights of mineral owners to develop their resources, and conserving resources to ensure the viability of future production. Environmentally focused regulations have become increasingly prominent over time, especially since the s. States enforce their regulations through permitting and regulatory inspections. Federal and Native American lands in the United States. Colors indicate which federal agency oversees and regulates activities on these lands.
Image credit: U. Geological Survey. The federal role in regulating exploration and production primarily focuses on environmental protection. The Bureau of Land Management BLM has jurisdiction over almost all leasing, exploration, development, and production of oil and gas on federal and Native American lands. BLM rules and standards for drilling and production 19 require all operations on federal land to comply with state and local regulations and protect life, property, and environmental quality. As of , some federal drilling and production regulations enacted, revised, or proposed since are being re-evaluated or rescinded by the current Administration.
The National Park Service regulates the small amount of oil and gas activity in National Parks roughly active wells in 21 , where the federal government owns the land surface but not the underlying oil, natural gas, or mineral resources. Federal decisions about specific constraints on drilling and production on federal land onshore and offshore are based on the National Environmental Policy Act The federal government regulates offshore exploration and production for the Outer Continental Shelf OCS , which extends from the edge of state waters either 3 or 9 nautical miles from the coast, depending on the state out to the edge of national jurisdiction, nautical miles from shore.
These two agencies, plus the Office of Natural Resources Revenue, which collects and disburses rents and royalties from offshore and onshore federal and Native American lands, were formed in the and reorganizations of the Minerals Management Service. BSEE drilling and production regulations have been extensively revised in response to the Deepwater Horizon blowout and oil spill and a National Academies assessment of ways to prevent such incidents in the future.
An advanced offshore blowout preventer BOP. A BOP is a large, heavy set of valves fitted at the top of the well; if high pressures in the well overcome all other barries, the BOP is designed to close off the well and the drill pipe to prevent oil or gas from escaping. BOPs of some kind are used on all oil and gas wells.
In offshore drilling, the BOP is set on the seafloor or below the drilling-rig deck. Onshore, the BOP is connected to the top of the wellbore below the drilling-rig deck. Image credit: Bureau of Safety and Environmental Enforcement. States regulate the operation of oil pipelines, as well as the construction and operation of natural gas gathering lines small pipelines that move gas from the well to a processing facility or transmission line.
The Federal Energy Regulatory Commission FERC 33 regulates the transportation of oil through interstate oil pipelines but does not oversee pipeline operations. FERC also reviews applications for the construction and operation of natural gas pipelines and liquefied natural gas LNG export and import terminals to certify their compliance with safety and environmental laws.
https://hukusyuu-mobile.com/wp-content/gear/333-how-to-set.php The Federal Railroad Administration part of the DOT is responsible for railroad safety, including rail transport of crude oil and refined products.