Six years of turmoil were ended Friday with a federal-state settlement of the disputed oil/natural gas drilling leases on Colorado's Roan Plateau along a pristine portion of the Western Slope near Rifle, CO. The deal provides for protections, some drilling, 17 of 19 leases by one company to be rescinded, and other leaseholders in a designated base area to hang on to their holdings.
Last month a bipartisan group of Colorado lawmakers urged U.S. Interior Secretary Sally Jewell to sign off on an agreement (see Shale Daily, Oct. 23).
A 2008 auction by the U.S. Bureau of Land Management (BLM) leased mineral rights on thousands of acres of federally managed land on the Roan, garnering $114 million, a record at the time in the Lower 48 states for mineral leases. Half of the money went to Colorado local government to mitigate impacts from oil/gas operations.
No drilling has taken place, however, in the face of lawsuits by environmental groups against the BLM auction.
The focus of the long-sought agreement is on the Conservation Colorado Education Fund v. Jewell, a lawsuit filed by 10 conservation organizations in 2008 alleging that BLM’s 2007 and 2008 Roan Plateau Resource Management Plan Amendment (RMPA) decisions and oil and gas lease sales violated the National Environmental Policy Act (NEPA) and the Federal Land Policy and Management Act (FLPMA).
Proponents said the settlement will protect the “unique natural resource values” of the Roan Plateau, support the local economy with responsible energy development, and reduce the potential risk of future litigation.
All of the parties gathered Friday in Denver at the state capitol to underscore the support for the deal. They included: the conservation organization plaintiffs, Interior Secretary Sally Jewell, BLM Director Neil Kornze, Colorado U.S. Sens. Michael Bennet (D-CO) and Mark Udall (D-CO), Gov. John Hickenlooper, U.S. Rep. Scott Tipton (R-CO), and various local and other state officials.
Jewell hailed the agreement as “great news for the state of Colorado and for the local community, which has worked hard to strike a balance between protecting open space and energy development.”
“We are thrilled to see resolution for this decade-long controversy over one of Colorado’s most special places," said Hickenlooper, adding that the deal will protect fish and wildlife resources, while clearing the way for orderly development to take place elsewhere in the planning area.
“For the first time in decades, Western Colorado's natural gas companies are very close to securing responsible drilling on and around the Roan Plateau,” said David Ludlam, executive director of the West Slope Colorado Oil & Gas Association. “This compromise will provide decades of jobs and hundreds of millions of dollars for local communities.”
Bill Barrett, WPX Energy Inc., Occidental Petroleum Corp. and URSA Operating, he said, “worked hand-in-hand with county commissioners, municipalities and elected officials securing future drilling in the spirit of compromise. It’s a proud day indeed for our local organization."
Key terms of the deal include:
The company (Bill Barrett Corp.) would not challenge the cancellations but would, however, obtain a refund of approximately $47 million from the federal government for bonus bid and annual rental payments already made. The company would retain two leases on the Roan Plateau, pending the new RMPA decision;
BLM would use its best efforts to issue a new RMPA decision within 24 months and the supplemental EIS would present a new “settlement alternative;”
The companies holding leases in the designated base area would retain their leases, pending the new RMPA decision; and
Should the settlement alternative be adopted as the new RMPA decision, both the plaintiffs and the intervenors would agree to not challenge it in court.
The selective alternative would close the lands covered by the canceled leases on the Roan Plateau to further mineral leasing and development and place certain conditions on the two retained leases. "It also would allow the lands covered by the base leases to remain open to oil and gas leasing under the terms of the existing leases," an Interior Department spokesperson said.
At the original 2008 BLM auction, 31 parcels on 55,186 acres were sold off in less than an hour for natural gas and oil development (see Daily GPI, Aug. 15, 2008). The sale record amounts from a half dozen bidders, according to BLM. Earlier that year BLM said it would auction 46 parcels, or about 73,552 acres, in Garfield and Gunnison counties, which included the 55,186 acres on top of the Roan Plateau and around the sides.
Leaseholds offered below the rim of the plateau fetched the best auction prices, according to statistics. One parcel containing 2,139 acres grabbed the highest bid of $11,800/acre. Denver-based Vantage Energy LLC, grabbed most of the bids, according to BLM.
The settlement agreement was approved by the U.S. Department of Justice and can be found on the BLM website at www.blm.gov/co.