Reacting to a federal district court lawsuit settlement finalized last Friday, the U.S. Forest Service (USFS) has withdrawn its previous approval of a plan to drill five natural gas wells in the Gunnison National Forest in Colorado.
Industry sources said it is the latest example of environmental lawsuits aimed at ruining the economics of drilling through legal delays.
Conservationists had challenged the USFS approval of five new gas wells to be drilled near Little Henderson Creek, contending that the federal agency had not conducted a required analysis of environmental impacts. After the opening briefs by the challengers, the USFS agreed to withdraw its approval.
Under the settlement, the USFS and the Bureau of Land Management must conduct a joint environmental review. The process could add years of delay for the sponsor, privately held SG Interests, according to David Ludlam, director of the western slope chapter of the Colorado Oil and Gas Association.
"The transparent process is necessary to ensure that oil and gas development in the North Fork Valley undergoes the legally required hard look, fully analyzing impacts to the area's air quality and other treasured resources, such as clean water," said a spokesperson for the Western Environmental Law Center, Citizens for a Healthy Community and High Country Conservation Advocates.
"[The environmental groups] are trying all over Colorado and the West to extend, delay, and increase the expense of the NEPA [National Environmental Policy Act] process to make these projects uneconomic," Ludlam told NGI's Shale Daily on Wednesday. "When you take a categorical exclusion and turn it into an environmental exception, you're talking about millions of dollars of added costs."
The groups have been successful at forcing the use of environmental impact statements as opposed to less rigorous environmental assessments. The difference means three to four more years of processing, said Ludlam, who attributes the latest court settlement to part of a multi-state regional strategy deployed by the conservationists for slowing and stopping oil/gas projects.
"We've seen it on a higher profile on the Roan Plateau; we've seen it all over the place," Ludlam said. SG Interests still has a pathway to get its drilling permits, but it will take a long time, he said.
Houston-based SG Interests, formed in 1989, is primarily engaged in the oil/gas exploration and production business. It is managed and controlled by founder Russell Gordy. SG owns oil and gas, coal and other mineral interests throughout the United States with primary operations in the Piceance (Colorado), San Juan (New Mexico), and Southeast Texas basins.
A local Colorado USFS spokesperson declined to comment on the court settlement, referring NGI to a U.S. Justice Department spokesperson in Washington, DC, who was tracking the legal case. That spokesperson did not immediately respond to a phone call and written inquiry.
Late last year, federal officials proposed to limit future oil and natural gas development in the White River National Forest (WRNF) in northwest Colorado. In a USFS record of decision to amend the resource management plan for the WRNF, a final environmental impact statement was released last month, identifying which federal lands would be designated as available for leasing (see Daily GPI, Dec. 10, 2014).