I’m going to make what I think is the relatively safe assumption that most, if not all of you reading this did not attend last week’s energy summit in Uintah County, Utah. It was a day filled with presentations about new and environmentally friendly ways to extract energy, and about the jobs, economic advancement, and even tax revenue (yes Lefties you read that correctly: tax revenue) that the industry is ready to create.
One notable presentation in was that of Ute Energy. For those of you not familiar with the history of the western United States, the name Ute refers to several distinct groups of Native Americans that while related, have their own identities: The Southern Utes, The Ute Mountain Utes and the Northern Utes. Northeastern Utah is home to the Northern Utes who occupy the Uintah and Ouray Reservation. Also found on the Uintah and Ouray Reservation are abundant supplies of oil and gas. The Limited Liability Company Ute Energy was created in 2005 for the purpose of developing those resources.
Despite being a sovereign nation, the Ute Tribe has a government without a tax base. And despite the carping that Conservatives do about taxes, even we realize that a certain level of taxation is necessary. Without a tax base, development of tribal land is of paramount importance.
Ute Energy has drilled twenty-two out of the fifty-four wells it had planned for this year; thirteen of those are in production. Currently, Ute Energy is producing the equivalent of 1,417 barrels of energy per day. Ute Energy has even partnered with some of the bigger operators to for a net production of 4,300 barrels, with Ute Energy responsible for 30 % of that amount. This company provides the Tribe with jobs and with much needed revenue. Out of the 162 thousand acres it has available to it, 88 percent remain undeveloped, which means that Ute Energy is poised for tremendous growth, and members of the Ute Tribe will be the beneficiaries of that growth.
However:
Just because Ute Energy is a company that is within a sovereign nation does not mean gets it out of the constraints with which everyone else must contend. The company must still work its permitting through the Utah Division of Oil Gas and Mining, the Tribe itself, The Bureau of Land Management, the U.S. Fish and Wildlife Service, and it also cooperates with the nearby counties. It takes Ute Energy 60 to 90 days to work through the process with the Division of Oil, Gas and Mining. With the BLM, the company can expect a wait of up to 90 to 120 days. The process with the BIA can take between six to eight months.
The tribe is mindful of the need to preserve the landscape, and in fact has set aside large tracts of land that will not be disturbed. But Ute Energy still finds itself jumping through the regulatory hoops that non-tribal companies must negotiate. The Hookless Cactus is one such hoop as it has been classified as its own, endangered species, part from other similar cacti.
In a similarly aggravating vein, the BLM and the BIA do not coordinate on their permitting processes, and frequent reproduction of efforts occurs. That combined with inadequate staffing slows the permitting process. As Ute Energy and it operations are considered a “minor source” it is subject to the Environmental Protection Agency’s Minor Source Rule ( www.epa.gov/air/tribal/attachmts/NSRRulesIndianCountry110606.ppt) However, the wording in the Minor Source Rule is ambiguous and does not give the company a firm timeline for the permitting process. All of which provide obstacles for Ute Energy to extract energy, and provide an income for the Ute Tribe.
For those who think that a blow against oil and gas means that rich fat cats and robber barons will get their comeuppance, they would do well to think again. No one is exempt from the long regulatory arm of the Federal Government.
Or as Ute Tribal Business Committee Chairwoman Irene Cuch put it at a subcommittee hearing earlier this year: “If Indian tribes are going to make any progress economically, we need to be allowed to develop our own resources on our own lands. The fact is that a combination of outdated laws, an unhelpful federal bureaucracy and environmental extremism has served to keep Indian tribes from moving ahead with all manner of energy projects.”
John Ransom | Create Your Badge
Twitter http://twitter.com/#!/bamransom -See more top stories from Townhall Finance. New Homepage, more content. Be the best informed fiscal conservative.
Join the conversation as a VIP Member