Mismanagement of Oil & Gas Development isn’t a new thing

Recently the Office of the Inspector General completed a report entitled “Poor Management by BIA Has Hindered Energy Development on Indian Lands.”

The report stated the “Bureau of Indian Affairs' (BIA) management shortcomings and other factors—such as a complex regulatory framework, tribes' limited capital and infrastructure, and varied tribal capacity—have hindered Indian energy development.” The report was pretty intensive and thorough. There are also some other important issues that have hindered development.

An oil company in the 1980s was caught stealing oil from an Indian Reservations by reducing or removing the incomes of so many poor residents. (Ref: Oppose the Future Article)

Routinely, the Bureau of Land Management ("BLM") fails to honor their memorandum of agreement with the Department of Interior ("DOI") to provide close oversight of oil and gas development, including monitoring production and reported sales. BLM is only too motivated to contract these functions to tribes who mostly utilizes work forces that are lacking, mainly due to funding and training.

Staffing

Bureau of Indian Affairs ("BIA") and tribal staffing is woefully underfunded even though the oil and gas resources are vast and profitable to tribes and individual Indian mineral owners. Most agencies have no mineral appraisers available.

Title Recording

The BIA's Land Titles & Records Office is so overwhelmed with recording title conveyances and certifying title status reports ("TSR"), by the time a TSR is completed the price of oil and gas has decreased and many proposed wells in Indian Country have been postponed until prices climb higher, or not drilled at all. BIA agencies with the highest volume of leasing activity need to have their own TSR Certifying Officer on site so that the tribe and agency can convey what trust mineral tracts need to be given higher priority.

One Stop Shop

Interior should follow through and establish a service oriented office ("One Stop Office") where minerals owners could discuss issues directly with those agencies responsible for development, collecting and distributing oil and gas income. These agencies would include BIA, Division of Energy and Mineral Development ("DEMD"), BLM, Office of Appraisal Services, and Office of Natural Resources Revenue (formerly the Minerals Management Service, or MMS).

As we are seeing now, timing is everything. Interior has a Division of Energy and Mineral Development ("DEMD") Program. The Division assists tribes with the environmentally responsible exploration, development and management of their energy and mineral resources to create sustainable economies for reservations, generate new jobs and economic self-sufficiency. Fort Berthold Agency does have a DEMD staff located in the BIA agency office, but more is needed.

Wasterwater Monitoring

Monitoring of wastewater disposal is dangerously poor. Examples have been spills on roads, disposal in rural ditches, and contamination of valuable usable water acquifers. Some locations have so much activity and because of lack of adequate staffing and funding are not able to monitor these activities closer.

Plugging & Abandonment

Plugging & Abandonment (P&A") can be a major issue. Lessors are required to plug and abandon wells and return the surface area back to near as possible condition as it was before oil and gas activity was initiated. This is difficult because it may take up to three years to see restoration and by then the company may have cancelled their bond, or bond is less than today's current P&A costs, or dissolved the business entity. This leaves the DOI with the responsibility to find funding to plug abandoned wells.

 The June 2015 Science Magazine report identifies approximately 82,000 inactive or abandoned wells in the United States. There is no distinguishing fee or allotted wells, but, everyone knows that Indian lands don't receive the proper oversight to ensure proper P&A.

Information Technology Systems Outdated

BIA uses information systems which are somewhat inferior to those used by other agencies in the DOI. For years, whenever an agency implemented a new system of records and data, their older equipment was transferred to the BIA. Outdated, unwanted, and disposed of equipment was passed to the BIA and although it was better than what was in use, it was still not equipped to meet the needs. BIA had to make numerous repairs and replacements to keep those hand me down systems functioning.

Some things just don't change. The first oil well drilled on Indian land occurred in what was then called Indian Territory (Oklahoma) and completed April 1987. After more than 128 years, we are still experiencing problems and difficulties in oil and gas development on Indian land. Mismanagement is nothing new.

– Jay Daniels has 30 years of experience working in Indian Country, managing trust lands and is a member of the Cherokee Nation of Oklahoma. You can find resources and information at http://roundhousetalk.com.