The Bureau of Land Management (BLM) has recently issued a new cost recovery agreement, which has raised questions and concerns in the public. The agreement applies to oil and gas development on public lands and aims to recover costs associated with reviewing and processing drilling permits.
So, what exactly is the BLM cost recovery agreement, and what does it mean for oil and gas companies?
In essence, the agreement requires oil and gas companies to pay for the costs associated with processing their drilling permits. These costs can include environmental assessments, site inspections, monitoring, and other activities necessary to ensure compliance with federal regulations. The BLM estimates that the average cost of processing a permit is around $9,500, although this can vary depending on the complexity of the project.
The cost recovery agreement is not a new concept – it has been used by other federal agencies, such as the Forest Service and the National Park Service, to recover costs associated with issuing permits. However, this is the first time the BLM has implemented such an agreement.
The BLM argues that the cost recovery agreement will help address the backlog of permits and improve the efficiency of the permit process. Additionally, the agency claims that the agreement will ensure that taxpayers are not subsidizing the costs of oil and gas development on public lands.
However, environmental groups and some lawmakers have criticized the cost recovery agreement, arguing that it will further incentivize oil and gas development and undermine the BLM`s ability to regulate the industry. Critics also claim that the agreement will make it more difficult for small operators to compete with larger companies, who may have the resources to absorb the additional costs.
Despite the controversy surrounding the BLM cost recovery agreement, it is scheduled to go into effect on October 1, 2021. Oil and gas companies that intend to drill on public lands will need to factor in the additional costs associated with the agreement when submitting their permit applications.
In conclusion, the BLM cost recovery agreement is a new measure that aims to recover costs associated with processing drilling permits on public lands. While the agreement has its supporters and detractors, it is set to go into effect later this year and will likely have an impact on the oil and gas industry`s operations on public lands. As always, it`s important to stay informed about any changes in regulations and policies that may affect your business.