The Voice of IPAMS

By: Al Pickett

Jan/Feb 2010
 
Independent operators in the Rocky Mountains must feel like they are in the crosshairs of the environmental movement and federal bureaucracy as they try to do business as natural gas and oil producers.
 

“We are definitely ground zero for protests and obstructionist tactics,” acknowledges Jon Bargas, director of public affairs for the Independent Petroleum Association of Mountain States (IPAMS). “Most of the gas in the West is on land owned or managed by the federal government, so it is easier to file lawsuits and protests when there is already a government bureaucracy involved. We do have a unique set of challenges that other regions of the country don’t face.”
 
IPAMS, formed in 1974 with its office in Denver, is a 13-state regional non-profit trade association, according to Bargas, representing more than 400 independent oil and natural gas producers, service and supply companies, banking and financial institutions, and industry consultants that are “committed to environmentally responsible oil and natural gas development in the Intermountain West.”
 
“We have been successful in the last several years reaching out to the media, getting the message out that the oil and gas industry is not just major oil companies. It is small business, too” says Bargas, who claims IPAMS answered nearly 500 media inquiries in 2009.
As proof that the oil and gas industry is indeed made up of small businesses, Bargas points out that the 400 association members average just 12 employees each and independents nationwide drill 90 percent of the wells in the United States and produce 82 percent of the nation’s natural gas. Bargas estimates that 85 percent of the production in the Intermountain West region served by IPAMS is natural gas, obviously making issues involving natural gas of prime importance to the association and its members.


Jon Bargas, Director of Public Affairs for IPAMS

 
While IPAMS, like other state and regional producer associations, is fighting President Obama’s budget that includes a proposed $80 million tax increase on the petroleum industry over the next 10 years, it is also working with lawmakers in an attempt to defeat cap-and-trade or global warming legislation such as House Resolution 2454 passed last fall that Bargas contends puts clean natural gas at a disadvantage to other fuels. Similar legislation is now being debated in the Senate.
 
Unlike other associations, however, IPAMS considers the biggest obstacle to continued development of oil and gas resources in the Intermountain West region to be access to public lands.
 
Bargas says IPAMS received a tremendous amount of media attention in November 2009 when it released a detailed analysis of the leases from the December 2008 Utah sale that were recommended for removal and deferral by the Department of Interior (DOI). The analysis, according to Bargas, showed DOI circumvented the public process, disregarded scientific evidence, and second-guessed the agency’s own professional land managers. IPAMS analysis revealed that DOI ignored sound justifications for leasing including aggressive environmental protections included in the Resource Management Plans (RMP) that were the result of seven years of environmental analysis by the Bureau of Land Management (BLM) with detailed input from the state of Utah, Native American tribes, federal and state agencies, local governments and citizen groups.
 
DOI Secretary Ken Salazar canceled 77 leases from the December 2008 Utah sale that had already been sold and then ordered a hand-picked team of DOI and Forest Service officials to conduct a review of the leases. That panel recommended eight leases for removal and 52 for deferral.
 
“Their team was in the field for just nine days,” Bargas claims, “and they thumbed their nose at the state of Utah, the Tribes, the BLM and every stakeholder, trumping seven years of the public process. One of our other issues with the Department of Interior is that it is treating proposed wilderness areas like they have already received that designation. They are pulling parcels, so a lot of it is becoming unavailable de facto.”
 
He says a Red Rocks Wilderness bill has been introduced in Congress every year for the last 20 years, even though it has no support from any of the delegation from Utah, including the Democrats. It would put millions of more acres of American land off-limits to domestic energy development.
 
“A Wilderness designation can only be made by Congress,” Bargas explains. “A Wilderness designation means no development, not even any motorized vehicles. The land can be used for hiking only. Sixty percent of public lands are already off limits to oil and gas development. A Wilderness bill would have a negative impact on the Utah economy.”
 
Although Bargas doesn’t expect it to pass, IPAMS is also keeping a close eye on H.R. 3534, which he contends threatens access to the vast amounts of natural gas that lie beneath the lands of the Intermountain West by imposing benchmarks for “diligent development,” creating a new federal bureaucracy, increasing fees and eliminating live lease auctions and non-competitive leasing, as well as repealing statutory Categorical Exclusions.
 
The “use-it-or-lose-it” provision in the proposed legislation is similar to the argument pertaining to the Gulf of Mexico leases that drew national attention during the 2008 Presidential campaign. Bargas claims such a provision would be disastrous because it already takes nearly 10 years from the time a company buys a lease to actually producing crude oil or natural gas from the lease.
 
“The lease is just the first step in a long, complicated process because of the permitting process,” Bargas adds. “In many cases, development hasn’t begun on a lease because it is being held up by lawsuits from environmental groups. The vast majority of leases that don’t have any development on it yet is somewhere in that 10-year timeline.”
 
H.R. 3534 would also repeal a provision in the 2005 Energy Policy Act that allows the BLM to forego redundant environmental analyses.
 
“When that has been used, it has worked well in speeding up the permitting process,” Bargas states. “We don’t expect this bill to get out of committee, but we are keeping an eye on it.”
 
IPAMS also received a great deal of media attention when it recently sent a letter to Congresswoman Diana DeGette, a Democrat who represents Denver. IPAMS asked DeGette to stop the spread of misinformation to advance the “Fracturing Responsibility and Awareness of Chemicals (FRAC) Act (H.R. 2766). The IPAMS letter was penned in response to Rep. DeGette’s letter to her colleagues on November 4, urging sponsorship of the FRAC Act based on a New York Times editorial that was “heavy on advocacy but light on facts,” according to Bargas.
Although DeGette told IPAMS she simply introduced the bill to prompt an Environmental Protection Agency study on the impact of hydraulic fracturing on ground water, she then sent the solicitation-for-sponsorship letter to her colleagues, prompting the response letter from IPAMS.
 
Hydraulic fracturing, which is a critical element in the development of natural gas in the Rockies as well as the nation’s shale gas plays, has been used for years in the oil and gas industry. H.R. 2766 would threaten nearly three million American jobs and result in decreased natural gas production and increased costs for consumers if it passed, according to Bargas.
 
“The demand for natural gas is increasing every year,” he claims. “If it takes as much as 10 years to develop a lease, at some time we are going to fall off the cliff if Congress keeps putting up these road blocks and obstacles.”
 
The IPAMS position paper on the proposed FRAC Act claims that more than “95 percent of the wells drilled in the Intermountain West are fraced, which is why another layer of regulation on top of state regulation would severely impact the ability of independent producers in the region to continue to provide 27 percent of the nation’s natural gas.”
 
Bargas points out that IPAMS’ work on these issues with the media has been a big service to its members. “We are still in front with our media outreach supporting that effort,” he says. “It is easier to talk to legislators when the facts are out there first.”
 
He adds that IPAMS President George Solich was successful in 2009 in meeting with the editorial boards of all the major newspapers in the Intermountain West region to deliver the message of the advantages of natural gas to the region’s and nation’s economy.