Message from Director John Baza – Fall 2018

When employed in the private sector of the petroleum industry in the 80s and 90s, I learned valuable business lessons about industry extractive operations that have remained with me throughout the years. I realized that my role as a company engineer revolved around three objectives: 1) increase the productive output of oil and gas wells, 2) reduce operational costs as much as possible, and 3) minimize future long-term liabilities to the company. These objectives were important for the cash flow and profitability of the organizations for which I worked, and their basis in corporate economic value was obvious.

As I transitioned into the public sector with state government employment, I learned that as a public servant, it was still important for me to provide value to my employer, the general public. But because of the diverse interests represented by the public, there was less clarity in a statement of objectives. I had to modify my fundamental economic lessons learned in the private sector to fit the expectations of the public.

Therefore, the first of the aforementioned objectives, rather than “increase production” could be translated to “foster, encourage, and promote the responsible development of mineral resources” to maximize the value of those resources to the general public for their good and for their greatest quality of life. The second objective of “reducing operational costs” could be restated as “minimize the public health impacts or the environmental impacts” of ongoing operations by ensuring compliance with established rules. And the third objective would translate from “minimizing future long-term liabilities to the company” to “minimizing future liabilities to the state or its subdivisions”.

The Division endeavors to achieve the last objective by ensuring that operating companies are complying with appropriate risk management rules including establishing appropriate financial assurance to provide the state with funds in the event those companies default. Both our Abandoned Mine Reclamation Program and our Oil and Gas Orphan Well Plugging activities also work to address legacy problems that occurred prior to the time of strident regulatory oversight on such operations. 

And finally, efforts are ongoing to require accountability of responsible parties when well sites or mines fall into a suspended or non-productive state of operations. In this manner, we continue to provide value to the general public of a sound regulatory framework for the extractive industries in Utah.