CHAPTER 18 PERMITTING AN OIL AND GAS WELL LOCATION
| Jurisdiction | United States |
(Jan 1996)
PERMITTING AN OIL AND GAS WELL LOCATION
Heitzman Drill-Site Services
Casper, Wyoming
TABLE OF CONTENTS
Document Section
I Introduction
II Instances Where A Federal Drilling Permit is Required
A. Federal Surface and Mineral Estate
B. Federal Surface and Private Mineral Estate
C. Tribal Surface and Mineral Estate
D. Tribal Minerals and Private (non-tribal) Surface Estate
E. Federal Surface Estate and Fee or State Mineral Estate
III Administration of Federal Surface and Mineral Estate
IV The Permitting Process—Selecting the Proper Option
A. Advantages of the Notice of Staking Option
B. Disadvantages of the Notice of Staking Option
C. Advantages of the APD Staking Option
D. Disadvantages of the APD Option
V Preparation and Submittal of the NOS
VI Preparation and Submittal of the APD
A. Surveying
B. Cultural Resource Inventory of the Well Pad and Proposed Access Road Route
C. On the Ground Inspection of the Drill-Site and Proposed Access Road Route
D. Compilation of Data into an Administratively and Technically Complete APD
VII Mandatory Public Comment and Review Period
VIII Permit Processing Time Frames
A. Scheduling of the On-Site Inspection
B. Approval of the APD under the NOS Option
C. Approval of the APD under the APD Option
D. Obstacles to the Timely Approval of the APD
1. Cultural Resources
2. Threatened, Endangered or Candidate Species
3. National Environmental Policy Act Compliance
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IX Various Components of the Permitting Process Which are Often Overlooked
A. Right-of-Way Across Off-Lease/Unit Federal Lands
B. Unit Plan of Development and Unit Designation of Agent
1. Unit Plan of Development
2. Unit Designation of Agent
C. Bonding
D. Designation of Agent for Consultants
E. Hydrogen Sulfide Contingency (Safety) Plan
F. Special Lease Stipulations
X Miscellaneous Considerations
A. State Permits
B. County Permits
C. Changes in the Approved Plan of Operations (APD)
XI Damage Settlements and Access to Severed Federal Mineral Estate
A. Access Rights to Severed Federal Mineral Estate
B. Settlement of Damages on Split (Severed Mineral) Estate
C. Bonding Onto the Lease
XII Expiring Leases
A. Primary Term Leases
B. Secondary Term Leases
APPENDICES
APPENDIX A : Onshore Oil and Gas Order Number One
APPENDIX B : Example of a Notice of Staking
APPENDIX C : Components of a Complete Application for Permit to Drill
APPENDIX D : Example of a Complete Application for Permit to Drill
APPENDIX E : Example of a Right-of-Way Application and Plan of Development
———————
LIST OF TABLES
| Table Number | Description | Page |
| Table 1 | Federal Ownership in the State of Wyoming | 1 |
| Table 2 | Typical Surface Damage Payments in the Powder River Basin of Wyoming | 15 |
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I. INTRODUCTION
Onshore oil and gas operations on federal lands are subject to the provisions of The Mineral Leasing Act (MLA) of 1920 as amended and supplemented and Executive Order 12291 (46 FR 13193), Part 3160, Group 3100, Subchapter C, Chapter II of Title 43 of the Code of Federal Regulations.
The actual approval of oil/gas operations on federal lands is subject to Onshore Oil and Gas Order Number 1 (43 CFR 3162.3 ), which establishes the procedural, temporal and informational requirements of the permitting process on the federal mineral estate. Appendix "A" contains a copy of Onshore Oil and Gas Order Number 1 (Onshore Order #1). Following is a discussion of the step in obtaining an approved Application for Permit to Drill (APD) for operations on federal lands.
II. INSTANCES WHERE A FEDERAL DRILLING PERMIT IS REQUIRED
Following are examples of those instances where an oil/gas operator would be required to obtain prior approval from the appropriate federal agency prior to the commencement of drilling operations:
A. Federal Surface and Mineral Estate
In this situation, the United States owns both the surface and sub-surface mineral (oil/gas) estate. Throughout the west, a large percentage of the sub-surface mineral estate is owned by the United States and administered by the U.S. Department of the Interior (USDI), with a somewhat smaller percentage of the corresponding surface estate also in federal ownership. Table #1 provides a comparison of federal surface and mineral ownership in the State of Wyoming.
TABLE #1
Federal Ownership in the State of Wyoming
| Total Surface/Mineral Estate | Federal Mineral Estate | Federal Surface Estate |
| 62,664,960 | 41,776,640 | 29,937,035 |
The majority of the 29,937,035 surface acres in Wyoming which are available for oil/gas exploration are controlled by either the U.S. Department of the Interior (USDI), Bureau of Land Management (BLM) or the U.S. Department of Agriculture (USDA), Forest Service (USFS). A small percentage of the federal surface estate in Wyoming is located within reclamation withdrawal areas adjacent to reservoir and/or irrigation projects. These withdrawn lands are managed by the USDI, Bureau of Reclamation (BOR).
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Nationwide, the United States owns approximately 650 million acres of surface and 570 million acres of mineral estate — of which roughly 6 million acres are currently occupied by oil, gas and mining activities.
B. Federal Surface and Private Mineral Estate
In Wyoming, the United States owns approximately 11,839,605 acres of mineral estate which has been severed from the surface estate. These severed minerals resulted primarily through the transfer (patenting) of federal lands into private ownership through the various Homestead Acts which were designed to promote settling and population of the west.
C. Tribal Surface and Mineral Estate
Comprised of federal lands set aside for Native Americans such as the Wind River Indian Reservation in Wyoming. These lands are managed for the overall benefit of each respective Native American Tribe by the USDI, Bureau of Indian Affairs (BIA).
D. Tribal Minerals and Private (non-tribal) Surface Estate
Typically, these were tribal lands which passed into private ownership through either an allotment to individual tribal members or through withdrawal(s) associated with federal undertakings (i.e., irrigation projects). On the Wind River Indian Reservation, tribal surface estate withdrawn in association with an irrigation project undertaken by the BOR ultimately reverted to non-tribal ownership upon completion of the irrigation (reclamation) project.
E. Federal Surface Estate and Fee or State Mineral Estate
There are isolated examples of this surface/mineral relationship throughout the west. This occurrence is most common in conjunction with BOR water and power projects — especially in those states which otherwise have very little federal in-holdings (such as Kansas, Nebraska and Oklahoma, etc.).
III. ADMINISTRATION OF FEDERAL SURFACE AND MINERAL ESTATE
As indicated above, the U.S. Department of the Interior administers the federal (non-tribal) mineral estate by issuing leases and approving APD's submitted for exploration and development activities thereon. In this regard, BLM administers the onshore federal mineral estate regardless of surface ownership and has final approval authority for all federal APD's. However, in those instances where BLM does not manage the surface estate, their authority is generally limited to reviewing the downhole aspects of the drilling operation and the ultimate approval of the application — ensuring that approval thereof does not violate any extant federal laws, rules or regulations.
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In those cases where another federal agency (i.e., USFS, BOR, etc.) manages the surface estate, the primary responsibility for review and concurrence with (approval of) the surface use plan rests with the affected SMA. Upon conclusion of the on-site inspection, the SMA will recommend conditions of approval (COA) for surface operations to the BLM, which will then be incorporated into the final approval of the APD.
In the case of split estate lands where the surface ownership is non-federal, BLM typically defers to the wishes of the surface owner concerning surface activities which will not affect adjacent federal lands. The surface owner is given the opportunity to voice concerns regarding surface conflicts, proposed siting of the road and well location, reclamation concerns and/or preferences, etc. Although the lands to be impacted by the drilling operation are privately owned, BLM still has a responsibility to ensure that no undue or unnecessary degradation of the private land will occur as a result of the proposal. Moreover, BLM is still required to comply with the various extant federal laws, rules and regulations which pertain to the environmental impact(s) of a federal undertaking.
In those instances where the surface owners wishes conflict with existing BLM policy, or where there is the potential for off-site damage to adjacent federal lands, federal mandates typically prevail and the BLM overrules the surface owner. In these instances, the operator often finds himself in the middle of a dispute between the surface owner and the mineral trustee.
IV. THE PERMITTING PROCESS — SELECTING THE PROPER OPTION
Onshore Order #1 provides the operator with two separate methods for initiating the APD process. These methods include: 1) filing a Notice of Staking (NOS), or 2) filing the completed Application for Permit to Drill (APD). Following is a brief discussion of the advantages and disadvantages of both methods.
A. Advantages of the Notice of Staking Option
1. The NOS option is particularly adapted to locations where the permitting process is under severe timing limitations such as lease expirations.
2. The NOS option may save the operator both time and money on locations which have critical resource concerns (i.e., severe topography, circuitous access road routes, other environmental considerations...
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