NGI The Weekly Gas Market Report / NGI All News Access

Roan Plateau Sale Shows Producers Undeterred

In less than an hour's time Thursday the Bureau of Land Management (BLM) auctioned 31 parcels on 55,186 acres of the prized Roan Plateau in Colorado for natural gas and oil development. How soon development begins, however, is anybody's guess.

The sale raised almost $114 million from a half dozen bidders, according to BLM. The agency in June had 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 and was awarded to Denver-based Vantage Energy LLC. Vantage is headed by former EnCana Corp. executive Roger Beimans.

BLM requires that the Roan Plateau be developed in phases, a stipulation also urged by Gov. Bill Ritter. Under BLM's Resource Management Plan for the plateau, drilling is only allowed on 1% of the land on top of the plateau at any one time -- or no more than 350 acres at a time (see NGI, March 17). The restrictions could require energy companies to take several years to develop a lease.

"Those restrictions lowered the bidding prices," Kathleen Sgamma, director of government affairs for the Independent Petroleum Association of Mountain States, told the Denver Post.

However, BLM spokesman Steven Hall said the agency was "very satisfied" with the sale. BLM was willing to accept lower lease payments in return for ensuring that the plateau is developed in an environmentally responsible manner, he said.

The sale is the largest ever on BLM lands in Colorado, and it is among the highest among on-shore leases in the nation, he said. More typical lease sales average $20-40 million, he said. A lease sale held last week in Louisiana, which included acreage in the emerging Haynesville Shale, raked in $93.9 million Wednesday (see related story).

The Roan Plateau holds an estimated 9 Tcf of gas, according to BLM. Revenue from leases and royalties on gas sales could generate between $857 million and $1.13 billion over the next two decades, with Colorado receiving about half of it, according to the federal agency.

Development of the acreage sold Thursday may take some time. A lawsuit filed by environmental groups in July, as well as administrative protests by the state, remain unresolved, Hall noted. Ten environmental groups last month filed a lawsuit to block leasing on the Roan Plateau until federal officials evaluate alternative ways to develop the region's energy resources (see NGI, July 21).

©Copyright 2008 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus