Minerals Council

Oil and Gas Summit reflects drilling activity

The Third Osage Minerals Council hosted its annual Oil and Gas Summit at the Hyatt Regency in downtown Tulsa Sept. 24-25. All 20 leases up for bid sold, but at the minimum price.

Approximately $93,700 was made at the sale with many producers and attendees whispering as to the possible causes of the low amount raised. About 125 people attended this year’s summit. In 2010, the Oil and Gas Summit earned $864,940.

Possible causes are the Donelson federal lawsuit against all the producers in Osage County which seeks to stop all drilling, environmental assessments the BIA is now requiring before drilling can commence, and the proposed new rules to oil and gas regulation in Osage County as a result of the Negotiated Rulemaking process.

According to the Bigheart Times: “Osage Agency Superintendent Robin Phillips balked at answering questions from producers and other attendees less than halfway through a scheduled question and answer session Wednesday afternoon after receiving several questions about new policies related to the suit over whether the Bureau of Indian Affairs has flouted the National Environmental Policy Act (NEPA) for a generation by not requiring environmental assessments on each individual lease.”

According to unnamed sources in the article, Phillips packed up and ordered all her employees to follow suit and leave.

Chaparral Energy LLC bought the majority of the leases. They purchased 16 leases at the minimum bid, only having to bid on one lease, and spent a total of $80,700 for 2,560 acres, according to The Journal Record.

On July 15, Phillips, who previously worked at the Anadarko Agency, issued a letter to all Osage Mineral Lessees detailing regulations required to be compliant under NEPA, effective Aug. 12. The BIA is now requiring environmental assessments and cultural resource survey reports before drilling can begin – even though NEPA has been around since 1969.

“Completed environmental assessments must be submitted to the BIA Osage Agency for approval prior to the submission of an Application for Permit to Drill (APD) as the environmental review document is a mandatory component of the permit application package,” according to the letter. “This order applies to all of the following BIA permit approvals including, but not limited to, drilling, plugging, deepening, plugging back, conversion, casing alternation, and/or formation treatment.”

Other requirements included completion of a cultural resource survey report, and the reports must be completed “by individuals with the minimum professional qualifications in archeology as identified in the Secretary of the Interior’s Standards and Guidelines for Archeology and Historic Preservation.”

According to The Journal Record, environmental assessments can take weeks to complete and can cost thousands of dollars. The Donelson suit is suing all the producers in Osage County for not following NEPA regulations.

The Third Osage Minerals Council meets for its regular meeting at 10 a.m. on Oct. 10. According to Councilwoman Cynthia Boone, BIA Superintendent Robin Phillips will not be there and is instead sending a representative to “listen only” and not answer questions.