Slide 1

Constructive Partnerships:The BLM & NDPC

Present introduction and purpose

Opener ideas:The BLM has also seen a 500 percent increase in drilling applications over the past five years in this area half of which has occurred on Indian lands. (Jewell TPs)In 2012, BLM-administered oil and gas leasing, exploration and production contributed approximately $5.9 billion in total (direct and indirect) economic output to North Dakota and generated about 28,700 total (direct and indirect) jobs in North Dakota. (Jewell TPs)Allotted royalty revenues on Indian trust lands in 2008 totaled $1.8 million, and rose to $106.7 million in 2011. In 2012, royalties total over nearly $250 million. (Jewell TPs)We continue to enhance efforts to ensure efficient processing of oil and gas permit applications across federal and Indian trust mineral resources, and expedite the sale and processing of federal oil and gas leases following environmentally sound practices. (Jewell TPs)With the booming U.S. oil and gas production like we are seeing here, the Obama administration continues to invest in a sustained, all-of-the-above approach to American energy including expanding responsible domestic oil and gas production. The Bakken Formation here in the Dakotas and Montana is ground zero in our efforts to meet that goal. (Jewell TPs)

1

TopicsWork with the NDPC

APD issues

Flaring requirementsAfter initial 30-days/50 MMcf

Hydraulic fracturing rule update

Sequester effects on BLM MT/DKs

3North Dakota Petroleum CouncilBLM and NDPC MOA Signed February, 2013-Donation of funding to the BLMFacilitated increased staffing to process APDsRenewable annuallyMOA utilized Bureau-wide as a template by other BLM offices

APD Priority Lists-Third Party Contractors for EAs-USFS & Tribal lands

North Dakota Petroleum CouncilBLM/NDPC MOAProviding APD priority lists to help BLM and FS increase process efficiencyProviding 3rd party contractors for EAs completed on NFS lands (Tribal too)

!! More notes below: Keep? Delete?

Memorandum of Agreement (MOA) with North Dakota Petroleum Council (NDPC): The Eastern Montana/Dakotas District, which includes the Miles City, North Dakota, and South Dakota Field Offices, has entered into an MOA with the NDPC to provide the BLM the capacity to:

Complete timely processing of: Applications for Permit to Drill (APDs), Communitization Agreements (CAs), Sundry Notices and Well Completion Reports; Complete required environmental analyses for APD or Realty Actions for Federal or Tribal lands.

Under this Agreement, the NDPC, which has about 400 Industry members, has committed to contribute funding to the BLM.

Term positions hired with this funding will be BLM employees hired and supervised by BLM managers.

This Agreement is entered into under the authority of Section 307(c) of the Federal Land Policy and Management Act of 1976 (FLPMA), as amended, 43 U.S.C. 1737(c).

Prior to being signed by both the BLM and the NDPC, the Agreement underwent significant review by the local solicitor, as well as the Denver Regional Office of the Solicitor, and the Department of the Interior (DOI) Ethics office.

March 14, 2013: Mini APD workshop held 33 industry representativesAPD submission how to submit a complete and accurate APD discussed tips and highlighted important informationE-Commerce Pilot is completed all companies urged to utilize this means for submitting electronic APDs.Discussing O&G workshop for this summer that would be more inclusive of a variety of issues.4

Workshops with Industry

Attending BLM workshop for preparing a complete APD Attending BLM inspection and enforcement workshop

March 14, 2013: Mini APD workshop held 33 industry representatives; covered APD submission; how to submit a complete and accurate APD; discussed tips and highlighted important information.The first workshop on APDs was held on March 14, 2013 and offered many streamlining opportunities to aid industry in obtaining timelier permit approvals. (Jewell TPs)The workshop was deemed a success and industry is requesting additional workshop topics. The next planned meeting is scheduled to cover 'Inspection and Enforcement' while another is planned to cover 'Communitization Agreements.' (Jewell TPs)

5

Workshops with Industry

BLM APD WorkshopBLM Inspection and Enforcement Workshop

33 and 200 Industry RepresentativesBLM staff experts from all 4 Montana/Dakotas BLM Oil and Gas officesE-Commerce APD submittal

Bakken Executive Group BLM Montana State Director initiated in April 2012

Consists of State and Regional level Federal executivesWorking to collaboratively address challenges in the Bakken

Improving Permitting ProcessesImproving Environmental OutcomesDeveloping and Maintaining Human CapacityFort Berthold Working Group:Capitalizing on ProgressExecutive Order 13604Improve performance on Federal permitting, Infrastructure Review

Bakken Federal Executives GroupImproving Permitting Processes Improving Environment OutcomesDeveloping and Maintaining Human CapacityWill capitalize on the Fort Berthold working groups progress and together carry out the Presidents Executive Order 13604, Improving Performance of Federal permitting and Review of Infrastructure Projects

EXTRA NOTES

EXECUTIVES GROUP An Executives Group was established for the Bakken to provide regional coordination on issues and challenges Federal Agencies, which have natural resource responsibilities in the Bakken, are facing. Members include BLM, USFS, NPS, ONRR, FWS, COE, BIA, BOR, EPA, NRCS.

Action items addressed by the Bakken Execs Group:Work together to facilitate permitting and energy production.

Agreed to work collaboratively on establishing a path forward.

Plan to use lessons learned from the energy pilot offices established by the Energy Policy Act.

Will lead the way in revitalizing the Fort Berthold working group to assist in carrying out the Presidents Executive Order 13604, Improving Performance of Federal Permitting and Review of Infrastructure Projects.

Per diem rates: NPS petitioned the GSA for a review of per diem rates. As a result of the review, per diem rates for the area were increased. This was very helpful, however, the rates are still somewhat lower than available hotel government rates and exceptions and waivers still are being processed to cover the shortfalls.

Housing: BOR/BLM are working collaboratively through the NEPA to provide a location on Federal land for more BLM long-term, temporary housing for employees.

Interagency HR Subgroup: An interagency subgroup of the Bakken Executive Group was created, led by the BLM, to address geographic concerns in the area of recruitment and retention such as locality pay, and special salary rates. Conference Calls have been conducted and information shared across agency lines. A common objective was agreed upon to prepare a consolidated, interagency product that can be presented to local management officials, Departmental officials, congressional officials, and the Office of Personnel Management to request assistance with pay and retention concerns in the areas of locality pay and special salary rates. Currently, demographic and historical staffing information is being gathered by each agency to show statistics and hiring concerns by each agency over the last several years. Interagency action plan is being developed to address issues similar to exec group agencies.

Interagency environmental subcommittee: Provide a forum to discuss interagency projects/surveys and to address and coordinate interagency issues. Currently gathering information about environmental analyses and studies that are being conducted by various agencies. Long term goal is to develop an overall strategy for moving forward.

Potential Future TopicsReview the entire permitting process, and agencies work together to find solutions to common issues.Developing PET and NRS training programs with local colleges in ND or MT

7Permitting Workload Challenges: Embracing new processes

Continued assistance from other offices

Hiring, retaining and training additional staff

Resolving interagency permitting speed-bumps

Concern for continued availability to provide assistance by other offices. If workload increases in other areas, personnel will not be availableIf people leave the organization, potentially difficult to fill jobs due to sequestration and hiring restrictions

Still several unfunded positions on the TO for NDFO, and still significant training needs for existing staff

Also important: Tribal resolutions, State role in various permitting actions (coordination with tribes, BLM, etc.), USFS and other agency NEPA documents.Other agencies are also strapped capacity wise due to difficulties with budget/staffing.

82006, 2010 2013 BudgetsNDFO Staffing LevelsComparison of Budget to NDFO Staffing Levels 2006; 2010 - 2013Focus on core/key oil and gas positionsGeneralize budget levels and different funding sources

In 2005 68 APDs; August 2013 80 - APDs

2006 2 sups 1PE and 2nd PE (sup)1NRS1LIE4PET 5th PET (sup)

2010/2011 2 sups2PE and 3rd PE (sup)2NRS2LIE1Mineral Assistant5PET and 6th PET (sup)1PAT

2012/2013 4 sups2PE and 3rd PE (sup)4NRS4LIE2 Mineral Assistant6PET and 7th PET (sup)1PAT

9WO BIG THREE:APD Processing ProgressRecognition and tracking at WO Big Three NDFO last several yearsNationwide 2013

*Notice: Comparison is for previous 3 Fiscal Years. So far for Federal and Indian minerals, 2013 activity is slower than 2012 overall, but permits approved are ahead of 2011 and pending in 2013 are 778 below 2011. BLM-wide:7134 APDs approved, available for industry to drill, as of August 20133388 wells spud last year, so roughly two years of activity available in the 7134 approvalsLowest pending APDs since 1999, 3450 in the process of review, as of August 2013Ft. Berthold (covered by Dickinson) had 0 APDs in 2007, changed by the Bakken Play

10

Number of APDs2013 Total Received 540 Total Approved 438

441 Pending as of September 6, 2013 247/194 Fed/Trust Fed Pending are NFS Lands

2011 279 Pending as of September 30, 20112012 322 Pending as of September 30, 2012

11APDs Received-Approved-Pending

Top 10 Field Offices by APDs Received as of Period Ending August 18, 2013

Rank 1 UT Vernal 955 2 NM Carlsbad & Hobbs 785 3 MT Dickinson 518 4 WY Pinedale 351 5 WY Buffalo 253 6 CA Bakersfield 184 7 WY Casper 170 8 CO Colorado River Valley 156 9 CO White River 124 10 NM Farmington 106 ** MT Miles City 71** WY Rawlins 38

Top 10 Field Offices by APDs Approved as of Period Ending August 18,2013

Rank 1 UT Vernal 1,121 2 NM Carsbad& Hobbs 678 3 MT Dickinson 389 4 WY Pinedale 354 5 WY Buffalo 228 6 CA Bakersfield 159 7 CO Colorado River Valley 143 8 NM Tulsa (OK) 114 9 NM Farmington 109 10 UT White River 107 ** WY Rawlins 60 ** MT Miles City 30

Top 10 Field Offices by APDs Pending as of Period Ending August 18, 2013

Rank 1 UT Vernal 1,363 2 MT Dickinson 436 3 NM Carlsbad & Hobbs 363 4 WY Buffalo 327 5 WY Pinedale 168 6 WY Casper 166 7 MT Miles City 75 8 CA Bakersfield 71 9 CO Colorado River Valley 51 10 CO White River 50 ** NW Farmington 48 ** WY Rawlins 29

12Spudded - Completed

Top 10 Field Offices by Wells Spudded as of Period Ending August 18, 2013

Rank 1 UT Vernal 537 2 NM Carlsbad & Hobbs 489 3 MT Dickinson 326 4 WY Pinedale 211 5 CA Bakersfield 180 6 WY Buffalo 115 7 CO White River 72 8 CO Colorado River Valley 70 9 NM Farmington 58 10 WY Rawlins 53 ** MT Miles City 22

Top 10 Field Offices by Wells Completed as of Period Ending August 18, 2013

Rank 1 NM Carlsbad & Hobbs 465 2 UT Vernal 384 3 MT Dickinson 326 4 WY Pinedale 194 5 WY Casper 150 6 WY Buffalo 110 7 NM Farmington 97 8 CA Bakersfield 79 9 WY Rawins 52 10 CO Colorado River Valley 45 ** MT Miles City 16

13Workforce ProgressPer Diem Rates

Retention, Recruitment and Relocation

Student Loan Repayment Program

Increase in Labor and Operational Funding

Special Salary Rates/Locality Pay

Staff support from the Montana/Dakotas OrganizationAll HR related work for the North Dakota Field office has been determined to be the highest priority work for the BLM Montana/Dakotas HR Staff.Other State Office Support Services staffs are tackling issues regarding space and leasing, procurement, records administration, and Information Technology support for the Field Office.

14APD Permitting ProgressFollowing Existing Fee/Fee Policy Guidance

New Policy Processing Federal Wells Proposed from Adjacent Private Lands/Minerals

BFEG - Explore Options for Authorizing Drilling Permits from Adjacent Private Lands/Minerals

Notice of Staking and Application for Permit to Drill Processing

AFMSS 2.0 (APD Processing System)

Existing Guidance IM 2009-078 Processing Oil and Gas Applications for Permit to Drill for Directional Drilling into Federal Mineral Estate from Multiple-Well Pads on Non-Federal Surface and Mineral Estate Locations February 20, 2009

NOS and APD Processing IM 2013-104, April 15, 2013 Integrate this policy into the development of the new AFMSS 2.0 APD Processing System Required Offices to Develop a Plan to Ensure that Offices Fully Understand and Follow this Policy Consistently

New Policy replaces IM 2009 -078

AFMSS 2.0 APD Processing System System to Automate much of the APD process. This automation effort will make the BLM APD process an electronic process, helping the BLM maintain better data quality.15AFMSS 2.0 NOS/APD Processing Module is the first component in the new Automated Fluid Minerals Support System (AFMSS 2.0)

Utilizes the BizFlow Business Process Management (BPM) platform to ensure:Information is complete, accurate and auditableStandardization of permitting process across BLM field officesVisibility into process by BLM and OperatorsBLM control over internal bottlenecks

Expected outcomes:Faster processingFewer deficienciesReal-time awareness of permit status

OperatorsBLM StaffBPM SoftwareAFMSS II Database16What is the ScheduleImplement APD/NOS module1st office 11/4/2013Video training available ~ 11/20/2013 2nd office 12/2/2013All offices by 1/15/2014Paper APDsWill continue to accept, but may take longer since we will have to scan documents and enter data necessary for the workflowsWill require use of electronic interface about June, 2014 via NTL (will eventually update Onshore Order 1)Digital record will become Official Record (~June, 2014)BLM will not have to take time and resource to print and fileOperators will have electronic access to all their records

Flaring

Talking Points here:

-BLM requires SN to be submitted-BLM approval of flaring SN pending NEPA-NTL-4a still in effect-BLM will not purse operators for flaring if they have a SN pending with the agency

18Hydraulic Fracturing Rulemaking

BLM Hydraulic Fracturing UpdateTiming CommentsWorking with the State NDIC

We still plan to have the petro engineer SMEs from the field work with us on the comment analysis review beginning next week; roughly one PE from each of the major states (use same model as we did last December), and our staff engineers. We will coordinate with them by teleconf, and they will review the documents on our SharePoint.

HF update, comment period closed Aug 23, roughly 1.34 million comments/signatures/petitions/form letters, etcCombined with 2012 version, makes for over 1.5 million total responses.

Largely same areas of topics in the comments, states rights, water authority, wellbore integrity, chemical disclosure, FracFocus, fluid returns management, tribes Opt out, no need for reg given state rules already in place, Cement Evaluation Logs; also assertions that change surface casing setting depths - not the intent, must protect usable water (Order 2), but also with HF demonstrate competent cement/isolation for these protections (that part is new). Variances, and MOUs with states.

Other comments include beyond scope of the rule, such as emission reduction.

No timeline for issue final rule, must follow the process, last year took about 9 months from rule comment period close to issue rule.Will need to analyze substantive comments, address, revise as needed, prepare updated preamble, vet through DOI and SOL, other DOI agencies, then to OMB for major rule review and clearing of other gov agencies for at least 90 days, then finally issue rule, so it does not happen overnight.

Will always welcome further tribal consult as requested.Will reconvene with some of the state gov offices, as we did last month in Denver.

19Sequestration effects on BLM MT-DKs

Effect of Sequestration on BLM Montana-Dakotas

Hiring Freeze

% during 2013 and expected in 2014

Operation Budget

20THE PATH FORWARDMontana/Dakotas BLMInternal Responsive to a heavy/ demanding workload Seek additional funding for labor and operational costsUtilize hiring flexibilities Continue efforts on Inspection and Enforcement challenges

ExternalExplore an MOU between Federal and State AgenciesContinue workshops for permitting/inspection processesOctober meeting BFEG/Ft. Berthold Working GroupSupport amendment of the Energy Policy Act of 2005

To summarize Both Internal and External challenges, both short and long term fixescontinuing to work on allBLM Montana/Dakotas continues to support the Secretarys priorities. Our employees are pulling together as a team to support the nations energy policy while making significant contributions to the U.S. economy.

InternalIn order for BLM Montana/Dakotas to address the challenges of the Bakken, which we recognize is here to stay, we will:Continue to be responsive to the demanding workload. Coordinate within the Eastern Montana/Dakotas District, as well as Bureauwide, to facilitate our workforces ability to get the job done. Recognize that the size if our workforce in North Dakota must increase commensurate with the work.

Will pursue additional funding in any way possible so that we are able to hire additional positions, provide the necessary training, and ensure we have the skills needed to meet our needs and to be responsive to the work coming through our door.

Will continue to utilize hiring flexibilities in terms of the 3Rs, Student Loan Repayment, as well as utilizing all options for hiring that are available.

Will continue to strategy on our challenges related to Inspection and Enforcement-Recognize the importance of completing this work timely both for the Federal government and Tribes Need 5-10 additional PETs to carry out the work todayTraining needs are extensive and take 18 months to completeContinue to seek support from other offices within Montana/Dakotas as well as Bureauwide to help out with this workload

ExternalBLM is currently working with other agencies to gather information on environmental analyses and studies that are being conducted by us and other agencies hope to work together in the future to figure out a way to complete integrated EA documents. Would reduce the redundancy, increase efficiencies and speed up the permitting process. All agencies involved in the leasing and permitting process need to work together to focus on improving and streamlining these processes.Tribal Consultation/Coordination increased interest by many of the Tribes in difficult issues will continue to increase. Inspection and Enforcement Pursuing educational opportunities in terms of hiring (Indian Veterans Program) as well as curriculum with existing 2/4 year schools in the area around North Dakota. Also partnering with California BLM on their PET hiring program. In all efforts, we appreciate the support from our Washington Office and Department of the Interior.The BLM supports the amendment of the Energy Pilot Act of 2005 to expand the pilot office description to include all of Montana/Dakotas BLM, which would give us additional flexibility to utilize available funding to accomplish our mission in North Dakota. 21

Questions?

22