One of anti-development environmentalists’ favorite weapons, the National Environmental Policy Act (NEPA), may actually be exacerbating this interest group’s greatest concern and increasing carbon emissions. This unintended consequence is the result of bureaucratic delay that forces oil producers to burn off, or flare, much of the natural gas contained within oil wells.
Oil deposits are usually surrounded by an
enormous amount of natural gas. When companies are extracting oil out of
the ground, they have a few options to deal with this natural gas. The
most logical thing to do with the natural gas is to collect it, process
it, and sell it. Doing so means more money for mineral rights owners,
federal and state governments, and the company actually producing the
oil and natural gas. The natural gas coming out of oil wells is
processed into methane, ethane, and propane, basically a variety of
energy sources Americans use to heat their homes, cook their food, or
turn their lights on.
What should be a manageable task is made
difficult by the snail-like speed at which the federal government issues
permits. Collecting the natural gas within oil wells means building a
gas gathering pipeline to connect the unprocessed natural gas to a
processing plant. If it sounds simple, it isn’t. NEPA requires the
Department of the Interior to signoff on these gas gathering pipelines
located on federal or Indian land. That is, the same law that has
delayed the Keystone XL Pipeline for 2000 plus days must be satisfied to
build simple pipelines from wellheads to processing plants.
Looking to remedy this problem, Senators Barrasso (R-Wy), Hoeven (R-ND) and Enzi (R-WY) have introduced the Natural Gas Gathering Enhancement Act which will expedite permits for natural gas gathering lines on federal and Indian land. These three Senators hail from two of the states that undertake the largest amount of flaring – North Dakota and Wyoming. The North Dakota Petroleum Council estimates that 40 percent of natural gas production is flared at oil wells on the Fort Berthold Indian Reservation, a percentage that is substantially higher than the amount flared on state and private lands within the state.
Since the Bureau of Land Management (BLM) does not keep specific statistics on right-of-way permitting timelines, it is hard to know to what degree the NEPA process forces companies to flare natural gas.
Anecdotes and extrapolation from data we do know can provide some insight. One large independent producer has said that it waited 2.5 years for the BLM to approve its gas gathering pipeline. More broadly, it takes an average of seven years to receive a NEPA-required Environmental Impact Statement in Wyoming. In Wyoming alone, SWCA Environmental Consultants estimate that the lost opportunity cost associated with the delay of oil and natural gas development is $22 billion in labor income and $90 billion in economic output over a ten-year period. Again, these numbers are illustrative of the real world impact an elongated permitting process can have due to NEPA, the same law that is preventing some natural gas from being collected from oil wells.
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