From Deseret News archives:

Uinta oil and gas firms take $4,000 fee in stride

Levy on applications to drill is the first of its kind on U.S. land

Published: Tuesday, Jan. 15, 2008 12:46 a.m. MST
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ROOSEVELT — If oil and gas companies in the Uinta Basin are at all indignant about the addition of a $4,000 impact fee tacked on to each application to drill on federal land, they aren't complaining.

"I haven't gotten any nasty letters or irate phone calls," said Bill Stringer, Vernal field office manager for the Bureau of Land Management. "I am sure they are not thrilled about it, but I am sure they figure this is what Congress wants and this is what Congress gets."

When President Bush signed the Fiscal Year 2008 omnibus appropriations bill into law Dec. 26, it required the BLM to begin charging a $4,000 processing fee for each new oil and gas drilling permit application.

The fee will raise an estimated $25 million nationwide — the BLM expects to process between 8,000 to 12,000 new permits this year. More than 1,000 of those will originate in the Uinta Basin.

The fees will cover a complex approval process that involves administrative labor, paperwork, environmental impact studies and related elements. The money raised through the implementation of the fee isn't considered new revenue, said national BLM spokesman Tom Gorey.

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Fee collections will be turned over as a reimbursement to the general treasury rather than being allocated to the BLM offices that shoulder the brunt of the workload of processing the applications to drill. Stringer said that's because those offices have already had the processing costs built into their funded budgets.

It's the first time such a fee has been levied on energy development on federal land. Right now the fee ends at the close of the current fiscal year, but it's anticipated that Congress may take measures to ensure it continues.

The Vernal BLM Field Office received 1,158 new applications to drill in 2007 and processed 1,240 permits, said Stringer, noting the number is higher than what came in due to the pre-existing backlog.

"We actually processed more than we got in, but we still have a backlog," he said.

The office ended the year with a backlog of about 1,300 permits — about the same backlog they faced at the end of 2006.

Prior to the implementation of the processing fee, Stringer said he anticipated that the same number of applications would be filed with his office in 2008 as were filed in 2007. But now he said, although he can't be certain, the filing fee may trim those numbers.

"I think folks will think harder about it," he said. "They may still end up submitting but will do it in several bundles and make sure they know what is downhole before applying for the next one."

Independent oil and gas producer Marc Eckels would like to think that will be the case.

Recent comments

You guys apparently don't understand economics very well. Look at...

The mind is a beatiful thing. | Jan. 15, 2008 at 12:18 p.m.

Higher energy prices are from corporate greed and the spec. market....

Bill | Jan. 15, 2008 at 8:44 a.m.

The companies don't pay the fee, the consumer does, it's called...

Dave | Jan. 15, 2008 at 8:09 a.m.

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