American Oil and Gas Reporter - May 2015 - 131

cussions in a bipartisan way that we have
not seen in a long time. Unfortunately,
you still have anti-development groups
with a moral dislike of oil and gas. That
is fine, but when we talk about the broader
American population, we are starting see
some transitions in the thought patterns
about what this development means for
long-term energy independence and development in the United States."

Hydraulic Fracturing
A.J. Ferate, OIPA's vice president of
regulatory affairs, says several states are
responding to the fracturing regulations the
BLM finalized in late March by moving to
oversee its implementation in their borders.
"The nexus between the state and federal
governments is an opportunity for the states
to request primacy," he says. "OIPA really
would like to see the Oklahoma Corporation
Commission pursue that."
The OCC is likely to begin considering
an Oklahoma rule this summer, weighing
the possible impacts. He adds OIPA will
work with the commission as it moves
forward with its planning process.
While the BLM states the new fracturing regulations cover federal and tribal
lands, Ferate points out most of the Indian
lands in Oklahoma are under the authority
of the Osage Tribe, and so are supervised
by the Bureau of Indian Affairs, not
BLM. There are some federal acres in
the western half of the state, Ferate observes, although they mostly are checkerboard portions remaining from BLMmanaged railroad allotments, Ferate says.
Aside from adding another layer of
federal bureaucracy, Ferate says the new
regulations seem to rely on fuzzy math.
He points out the BLM estimates implementing the new fracturing regulations
will cost no more than $11,000-$12,000
a well.
"A closed loop system, which the
BLM hydraulic fracturing rule requires,
costs a minimum of $250,000," Ferate
says. "In some situations, companies pay
more than $1 million for those systems.
So, I really am not sure we are dealing
with clear numbers on this BLM rule. I
want to see how the agency gets to its
conclusion. I don't know if there are any
cost savings that reduce that number, but
maybe BLM thinks there are."
Endangered Species Act
Terry says operators working in the
habitat range of the lesser prairie chicken
continue to deal with the bird's listing
under the Endangered Species Act, but
the downturn in drilling activity is minimizing those impacts.
Following the U.S. Fish & Wildlife
Service's announcement of its proposal

to list the lesser prairie chicken as threatened, five states-Oklahoma, Kansas,
Texas, New Mexico and Colorado-worked
together to create voluntary conservation
measures that allow for continued land
use (AOGR, November 2013, pg. 16).
According to Ferate, in addition to the
lesser prairie chicken, Oklahoma operators
continue to work with ESA restrictions
because of the American burying beetle
and likely soon will be involved with the
northern long-eared bat.
Meanwhile, the Environmental Protection Agency's push to lower federal
ozone standards threatens not only oil
and gas activities, but the commercial
sector, Ferate warns.
"My perception has been that, for the
past couple years, Tulsa has been out of
compliance, and I know that Oklahoma
City has teetered on that edge," he says.
"As EPA looks to lower its number, definitely Oklahoma County and Tulsa County fall under that rule. But, Canadian
County has a lot of production, as well
as a gas processing plant. A lot of areas
in the state actually will fall under those
standards, particularly if EPA lowers its
parts per billion requirement."
If EPA does lower the ozone limit
from 75 ppb to 65 ppb, Ferate points out,
White House documents from 2011-
when the agency last looked at the standard-indicate most of Oklahoma would
be in nonattainment. He warns that consumers will see the direct impacts of that
status, with higher gasoline prices as only
one of the costs that will soar. If producers
can obtain drilling permits, Ferate predicts
operating costs will climb sharply.
OIPA will continue to work with its
congressional delegation to mitigate these
regulatory threats, and Ferate says the
association is relying on its strong relationships with the state's representatives
and senators.
"Republican victories in the November
elections made Senator James Inhofe, ROk., chairman of the Environment and
Public Works Committee," Ferate says.
"He now is in a position to help us control
some of these regulations, question the
issues a lot more, and help curtail some
of the overdone regulations. That really
is a good thing for us."
Ì

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