The Bureau of Land Management released long-awaited rules earlier this month to guide safe and responsible drilling on national public lands.
Oil and gas industry groups responded that the new rule could “quash development,” estimating that it will cost approximately $97,000 per well to implement. This estimate is nearly ten times more than what the Bureau of Land Management had determined the rule would cost.
Because of these vastly different cost estimates, the Washington Post’s Fact Checker examined both the industry and BLM’s numbers and shredded the over-estimates made by groups like the Western Energy Alliance. In assigning WEA two Pinocchios for significant omissions and exaggerations, the Post concluded that:
“…It is difficult to believe that the BLM’s casing requirements, modeled after industry standards, would be so detrimental to companies.”
The BLM’s new rule closely follows guidelines from the American Petroleum Institute, meaning that any company following the industry’s best management practices should not anticipate significant new costs when drilling and fracking on public lands.
Take, for example, the rule’s new cement casing requirements, which are protections to ensure there is a structurally sound barrier between drinking water supplies and the drilling chemicals, oil, and natural gas traveling through a well.
According to the WEA analysis, these “enhanced casing costs” alone could cost $87,000 per well (or close to 90% of their estimated $97,000 total cost of the new rule).
But as the Post describes: “…much of the cement casing requirements mirror industry guidelines set by the American Petroleum Institute.” Indeed, an oil and gas industry analyst confirmed that companies “are in compliance with ‘virtually everything’ that is required in the new rules.”
Despite these facts, the Post couldn’t validate the BLM’s cost estimate either, writing that the BLM assumes most companies are complying with industry standards, but the agency “does not have accurate data on companies that are voluntarily complying with the new requirements.”
It’s worth bearing in mind that the BLM is making the common sense assumption that the industry is following it’s own guidelines. If true, it leads to the logical conclusion that companies wouldn’t bear a significant cost from the agency simply codifying those rules.
That’s good news for the many companies committed to protecting groundwater supplies, safely capturing toxic wastewater, and reporting the chemicals used during the drilling and fracking process.