Oil & Gas IQ

Oil, Gas Industry Increasingly Nervous as Government Shutdown Drags On

Representatives from the oil and gas industry are beginning to worry that the partial shutdown of the federal government, now the longest in U.S. history, could impact drilling on federal lands and blunt permitting for infrastructure, including pipelines and liquefied natural gas (LNG) export facilities.

The shutdown was in its 26th day on Wednesday, and there appeared to be no end in sight. More than 380,000 federal employees nationwide have been furloughed across nine cabinet-level departments, including the Department of Interior. Funding for the Environmental Protection Agency (EPA) has also been affected. An additional 420,000 federal employees have been deemed essential and are working without pay.

Western Energy Alliance President Kathleen Sgamma said Interior's Bureau of Land Management (BLM) was processing some drilling permits that were already in the queue, thereby ensuring that rigs are not idled.

"Operators request permits many months in advance because there are many steps along the way that can create delays," Sgamma told NGI. "A few weeks of shutdown are not going to be that impactful because companies already plan for months of processing time on permits."

Sgamma is concerned about what happens when situations change in the field.

"Oil and natural gas development is a dynamic process, and when circumstances change as drilling proceeds, operators contact BLM for approval of those changes," she said. "When no one answers the phone at BLM, the delays can hold up active drilling, or even raise safety concerns. That's where it's most important for BLM to be responsive during the shutdown, as an essential service."

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