CHAPTER 6 EOR ON FEDERAL LANDS

• Jurisdiction: United States

Enhanced Oil Recovery-Legal Framework for Sustainable Management of Mature Oil Fields
(May 2015)
CHAPTER 6
EOR ON FEDERAL LANDS


Zeke J. Williams
Partner
Lewis, Bess, Williams & Weese
Denver, Colorado
Steven K. Imig
Partner
Lewis, Bess, Williams & Weese
Denver, Colorado
zwilliams@lewisbess.com; simig@lewisbess.com

[Page 6-1]

EZEKIEL "ZEKE" J. WILLIAMS is an attorney, partner, and the managing director of Lewis, Bess, Williams & Weese P.C. in Denver, Colorado. He specializes in oil and gas, energy, federal lands, and natural resources law and litigation. Zeke's clients include oil and gas companies, mining companies, midstream companies, renewable energy developers, ski areas, trade associations, and others. He counsels clients throughout the United States on how to obtain, develop, operate, and defend private interests in federal lands and federal minerals for energy and other natural resources development projects. Zeke helps clients obtain federal development authorizations, federal oil and gas leases, rights of way, Forest Service special use permits, records of decision, and environmental permits. Zeke has litigated disputes involving NEPA documents, federal land use plans, oil and gas leases, federal exploratory units, title issues, operating agreements, accounting procedures, gas gathering and processing dedications, coal prices, net profits interests, royalty obligations, produced water processing agreements, and exploration and development agreements. Zeke has extensive counseling and litigation experience with the National Environmental Policy Act, Federal Land Policy Management Act, National Forest Management Act, Mineral Leasing Act, Endangered Species Act, National Historic Preservation Act, Clean Water Act, Administrative Procedure Act, and other laws. Zeke teaches Administrative Law, Environmental Law, and Natural Resources Law as an adjunct professor at the University of Denver College of Law. He is a former Trustee in the Rocky Mountain Mineral Law Foundation, and frequently speaks and writes on energy and natural resources issues. He graduated with honors in 1994 from the University of Denver College of Law where he was the Articles Editor of the Law Review, and has an undergraduate degree from Montana State University. After law school, Zeke worked as a judicial law clerk for the Honorable Bobby R. Baldock of the United States Court of Appeals for the Tenth Circuit.

STEVEN K. IMIG is an attorney and director with Lewis, Bess, Williams & Weese, P.C. in Denver, Colorado. Steve specializes in natural resources, public lands law, litigation, and environmental law. His practice involves oil and gas and resource development, federal land use planning, ski area development, and litigation over various types of oil and gas agreements. Steve also helps clients navigate federal, state, and local environmental permitting and review processes. Steve has a B.A. in economics, magna cum laude, from Bates College; and a J.D., cum laude, from the Georgetown University Law Center. Steve has been a guest lecturer in environmental, natural resource, and administrative law at the University of Denver, Sturm College of Law, and frequently speaks and writes on natural resources and environmental issues. Prior to law school, Steve was an economic consultant specializing in energy markets.

I. Scope of EOR Development and Operations

II. Authorizations for EOR Development and Operations on Federal Land

A. On Lease EOR Development and Operations

B. Off Lease EOR Development and Operations

1. Mineral Leasing Act Right-of-Way

2. Federal Land Policy Management Act Right-of-Way

3. Comparison of Mineral Leasing Act and Federal Land Policy Management Act Right-of-Ways

4. A Mineral Leasing Act Right-of-Way Applies to Natural Occurring CO2; a Federal Land Policy Management Act Right-of-Way Applies to Anthropogenic or Industrial CO2

5. Common Carrier Requirements for Mineral Leasing Act and Federal Land Policy Management Act Right-of-Ways

C. Other Regulatory Requirements

1. Safe Drinking Water Act

2. Clean Water Act

3. Clean Air Act

4. Endangered Species Act

5. Other Wildlife Regulation

6. State Oil and Gas Commission Regulation

III. Federal Land Use Plans

IV. The National Environmental Policy Act

A. NEPA Timing

B. NEPA Connected Actions

C. Phased EOR Operations and NEPA Tiering

D. NEPA Alternatives

E. EOR Operations Spanning Public and Private Lands

F. Energy Policy Act of 2005 Categorical Exclusions

1. CE 1-Individual Surface Disturbance of Less Than Five Acres

2. CE 2 - Drilling at an Existing Well Location

3. CE 3 - Drilling Within a Developed Field

4. CE 4 - Placement of a Pipeline in an Approved Right-of-Way

5. CE 5 - Minor Maintenance

V. The National Historic Preservation Act

VI. Conclusion

[Page 6-2]

Federal public lands make up about 643 million surface acres of the 2.3 billion acre land mass of the United States. The Bureau of Land Management ("BLM") within the United States Department of the Interior manages about 247 million surface acres. The largest federal land management agency other than the BLM is the Forest Service, an agency within the United States Department of Agriculture that manages about 193 million acres of federal public lands.¹ Federal real property includes federal subsurface minerals (as distinct from federal surface), including split estate federal minerals under private fee surface. The BLM manages a total of about 700 million acres of federal minerals.² Those minerals are under surface lands managed by the BLM, under surface lands managed by the Forest Service and other federal agencies (for example, the Department of Defense), as well as about 57 million acres of split estate subsurface federal minerals under private fee surface.³

Federal public lands and minerals exist in nearly every state, but are concentrated in the thirteen western states.⁴ Energy and mineral development projects in the western states routinely involve federal lands and minerals because those lands and minerals are extensive and widely distributed. For example, federal lands make up 41% of New Mexico, 36% of Colorado, 42% of Wyoming, and nearly 30% of Montana.⁵ The 57 million acres of split estate subsurface federal minerals under private fee surface in aggregate are about the size of Kansas, but those minerals are scattered throughout the western states.⁶ State, tribal, and private lands are interspersed with federal lands and minerals. Significant development projects in the western states - for example oil and gas pipelines, oil and gas fields, and electric transmission lines - may involve a checkerboard of federal, state, tribal, and private lands.

Energy and mineral development on federal lands is subject primarily to federal regulation and control, as well as to state and local regulation and control to the extent federal regulation does not preempt state and local law.⁷ Enhanced oil recovery ("EOR") on federal lands is no different. EOR on federal lands is subject to significant federal regulation and control - primarily, but not exclusively, by the BLM - as well as to state and local regulation to the extent that regulation it is not preempted by federal law.

This paper addresses EOR development and operations on federal lands. It is not possible to cover every facet of the topic in a single paper of this length. In order to limit the

[Page 6-3]

scope to a manageable extent, this paper addresses EOR development on federal lands and minerals managed by the BLM, as well as on federal surface managed by the Forest Service. Regulation of EOR development and operations on lands managed by other federal surface management agencies such as the Army Corps of Engineers, National Park Service, and Bureau of Reclamation is beyond the scope of this paper. This paper addresses carbon dioxide ("CO2") EOR and does not address thermal recovery or other forms of EOR. The legal-principles applicable to CO2 EOR, however, apply to other forms of EOR on federal lands.

Part I summarizes attributes of EOR development and operations that are of particular relevance to the regulation of EOR on federal lands. Part II identifies federal and state authorizations typically required for EOR on federal lands. Part III addresses federal land use plans. Part IV discusses public environmental review of EOR development under the National Environmental Policy Act ("NEPA"), a significant regulatory consequence of EOR on federal lands, as well as the NEPA provisions of the Energy Policy Act of 2005. Part V summarizes the National Historic Preservation Act ("NHPA"), a federal statute that may play a significant role in the development of pipelines and other facilities necessary for EOR operations on federal lands.

I. Scope of EOR Development and Operations

EOR development and operations differ from conventional oil and gas development in significant ways. Consider conventional oil and gas development. At the outset, when no development has occurred, little is known about the extent of future development and operations. One cannot know whether there will be a discovery in an unproven area before conducting wildcat exploration and development. If there is a discovery, it may - or may not - prove economic to produce and market the production. If it is economic, it may - or may not - be economic to develop additional wells and facilities. At least at the beginning, uncertainty and speculation characterize conventional oil and gas exploration and development.⁸

Conventional full field development stands at the opposite end of the spectrum, particularly in recent shale oil and gas resource plays. Full field development may involve a familiar array of development wells, gathering lines, oil tanks, compressor stations, pipelines, gas processing facilities, produced water handling infrastructure, roads, and other production and operations facilities.

...