Mr. BREAUX. Thank you, Mr. Siegert. STATEMENT OF RAY MIKOLAJCZYK, PETROLEUM ENGINEER Mr. MIKOLAJCZYK. Mr. Chairman, my name is Ray Mikolajczyk. I am a petroleum engineer consultant. My background has been in the supervision of drilling and completing wells. Permit applications and delays have cost the industry much. needed reserves. Oil operators and drilling contractors are financially penalized with these delays. Investors are turning away from directional well exploration because of the additional drilling risk. Expensive lease payments are being made to hold leases that would otherwise be held with drilling operations. Labor personnel assignments are dealyed or cancelled, causing unemployment. These and many more reasons are why we must satisfy delays and rejections of the permit applications. I believe the regulatory agencies should form a permit application panel made up of people from each agency who can make final decisions. The panel should be located in the same city and deal only with wetland permits. This panel should be set up to handle preliminary studies so as to assist the operator in his future planning. Regulatory agencies should understand the expenses, hardships and losses associated with a permit delay, alteration or rejection. The regulatory agencies must be furnished with as much geological information as possible. Thank you. Mr. BREAUX. Thank you very much, Ray. STATEMENT OF ROY FAULK, REPRESENTING JOHN E. CHANCE Mr. FAULK. Mr. Chairman, members of the panel, I am Roy Faulk, representing John E. Chance & Associates, an engineering and surveying company. In representing my company, I processed about 500 section 404 and section 10 permits since the new regulations became effective. About 2 years ago I felt very comfortable in assuring a client that a permit could be obtained in about 45 days, and in fact, when there were hardship cases involved that related to lease renewals and the like, I have obtained some permits in 31 days. That's unsual. It requires the corps have a light workload, and that they be able to get on it right away, but it certainly can and has been done. This assurance at that time did recognize the possibility of permit delays that would cause very substantial hardships such as the expiration of leases, stack time on a rig already under contract and unplanned and unbudgeted renewal payments to name but a few of them. Today, I give no such assurance of any kind to a client. I advise the client that he should plan on 90 days from the date of application, the date of clearance, to proceed with construction, should everything go well, but that permit processing times in excess of 80 days are the rule rather than the exception. Clients are also advised to prepare a position on the feasibility of directionally drilling the well. Two years ago, requests for extension of time beyond the expiration date of the Corps of Engineers' public notice was a rare exception. The frequency of such requests for extension are now commonplace. The uncertainty added to the planning process, particularly as it relates to lease expirations, lease renewals and contracting for rigs, imposes a substantial and, at times, highly costly burden on the industry. There are many examples and statistics I could generate to support the above statements. I don't intend to do that since I don't believe these observations really contribute constructively to the solution. They only deal with the symptoms and not the causes. Further, they would imply incompetency on the part of individually identifiable field personnel. I've generally found the field personnel involved in the Federal agencies to be both highly educated and highly motivated. They can generally arrive at a satisfactory compromise which recognizes the problems of both the applicant and the agency attempting to carry out what it feels is its mandate. The process required to reach this compromise is where I feel the problem lies. The first hurdle to overcome in preparing a position on directional drilling involves first, educating the client as to the requirement, because it's not a requirement he's familiar with. He's familiar with it from an operational point of view, which says essentially, you don't directionally drill unless you just operationally have to because of the costs and the risk. Justifying that position on paper is a requirement that most small companies are not prepared to respond to instantly. An example of some of the problems you encounter in trying to do that is that the geologist who prepared the structural map for the client may be over in Oklahoma City, while the client is in Lafayette, La. Getting the two together is necessary in order to provide this kind of response. It can be done. I am simply pointing out that it is a very difficult, time-consuming thing to do. This process, I know in my experience, can be handled sometimes in a matter of a few days and a few dollars if the client happens to be well prepared to respond. It has also taken several weeks and several thousand dollars to write a response. After the public notice is promulgated, then four environmental biological entities go to work, and the taxpayer's tab really takes off. The Louisiana Wildlife and Fisheries makes its assessment. The National Marine Fisheries contracts with the Louisiana Wildlife and Fisheries for a field trip and survey, another assessment. The Federal Fish and Wildlife may send its own staff or contract with graduate students competent in their field to do the field work. Then the corps has an environmental section which also has, as I see it, essentially the same responsibility. I'd like to reiterate that I believe, and I've dealt with these people closely and intensively for the last several years, that I'm totally satisfied as to their competence, and as to their dedication to what they see as a mandate to carry out the law. Yet, I don't believe we need four agencies to do what, I regard, as exactly the same thing. Perhaps they should all have their crack at it, but let's choose one biological entity and let it go look at the thing, make a report that should be satisfactory to the rest of them-they have telephones they can get in touch with each other to discuss the project. They can all get copies of the report. I really feel that in that area lies the problem as I see it, in processing that number of permits. I'd like to give you an example of how that applies. I had one well that I was processing for a client out of Oklahoma City, and in which environmental concerns were expressed. I think they were properly expressed. The production manager flew in from Oklahoma City, met me in Lafayette. We took another flight to Morgan City. We hired a floatplane, went out on the site and examined it with one of the agency people. The observations made were valid, and the solutions arrived at, I think, were valid also. They were substantial, and there were substantial changes. The client didn't object to the changes. After we completed that process, about 2 weeks later I had to go out with approximately the same sequence of events-taking a plane to transfer to a floatplane and meet another agency to look at the very same job, only to arrive at the same conclusions. Now, the conclusion was sound. Each agency was doing its job properly. But, I ask you, members of the panel, is it necessary that we have such duplication of effort and overlapping of responsibility? Perhaps the overlapping of responsibility-I don't know, but the duplication of effort that I see, I certainly cannot condone. One of you earlier mentioned mitigation. I have experienced mitigation with the field people I am discussing and I view it as very common in processing permits. The response that I have gotten, in my personal experience with the agency field people, is that they are very responsive to mitigation, and the kinds of mitigation that I refer to, and I am not competent to judge whether they are good or bad, I take the opinion of the people with whom I am dealing-they are experts in that field, but the kind of mitigation I am talking about is if we go out and build, say, a 3,000-foot boardroad, and that is considered off the cuff to be a substantial impact, and we can find a 1,500-foot boardroad that is abandoned, that's close to the location where the client can go in with the same construction effort while he's building his proposed job, and renovate the existing abandoned job, I have taken that kind of approach with a number of permits and had a very good response from the agencies, and we've arrived at what I consider a compromise suitable to both parties. I suggest that if that's a suitable solution where it's appropriate to the particular location, that it's one that's been used and worked. My bottom-line observation is that the fact that four agencies have to look at that from a biological point of view, is where the major portion of the time delays occur. My recommendation would be-with any variation of this recommendation, that an entity such as the Corps of Engineers select one and pass it around. I can appreciate the fact that Fish and Wildlife, in carrying out its responsibilities, must make some field trips. Louisiana Wildlife and Fisheries must do the same. So must National Marine Fisheries. I am not suggesting that one agency get the whole thing to the exclusion of all others, but why couldn't the corps simply assign on a planned basis, these agencies communicate with each other all the time anyway, one agency to examine one site, and that report gets sent to the other agencies. We have competent people making the report, they can take one another's word for it. That would be |