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House Hearing Dissects Mancos Shale, Criticizes BLM

The turnaround in natural gas reserve prospects within the Mancos Shale of Colorado’s Piceance Basin gained further amplification Tuesday during testimony before the House Subcommittee on Energy and Mineral Resources.

The hearing, which included testimony by U.S. Geological Survey (USGS) energy resource program coordinator Walter Guidroz, underscored the shale’s increased potential but those testifying offered no indication of what action may result because of the increased reserves estimates.

At issue is whether the Bureau of Land Management (BLM) should expand exploration opportunities within the Thompson Divide area in western Colorado to tap an estimated 66 Tcf of technically recoverable natural gas reserves, 40 times higher than previous estimates (see Shale DailyJune 8). There were no BLM representatives at the hearing, although subcommittee chair Rep. Doug Lamborn (R-CO) said another hearing may be planned.

Guidroz said the updated assessment is part of an ongoing review of various resource basins, and all of the work is "unbiased and scientifically based."

The role for USGS, he said, is to "understand the processes critical to formation, accumulation and occurrence of geologically based energy resources and to conduct scientifically robust assessments of those resources.”

The higher Mancos estimate includes "resources yet to be found, but when found can be recovered using currently available industry technology and practices." Economic factors are not necessarily considered, but the assessment methods are "thoroughly reviewed and externally vetted."

Some who testified touted the reserves as a source for future liquefied natural gas (LNG) exports to Asian markets through the proposed Jordan Cove LNG terminal and connecting interstate pipeline, Pacific Connector, which would be through Oregon (see Daily GPIApril 19). Industry and congressional advocates also urged BLM to open up the Mancos for more gas development and argued that it could be done without harming the environment and with economic benefits for the Western Slope communities.

Since the new report was issued, Lamborn and industry representatives have argued that BLM should reopen a draft environmental assessment that has caused previously granted oil and gas leases to be revoked and targeted areas in the Thompson Divide as off limits to future development (see Shale DailyJuly 7; June 20).

Gunnison Energy LLC's Robert Downey, vice president for production/business development, and SG Interests Vice President Robbie Guin, said they remained skeptical of the federal government's approach to oil/gas development on federal lands. Guin accused BLM  of "hitting the pause button."

"Unfortunately oil and gas development on federal lands can be exceedingly difficult when land management plans abruptly change without any apparent legal policy or common sense explanations," Guin told the subcommittee. SG’s 18 BLM leases in the area may be canceled, "not for anything we have done or not done, but because BLM made a paperwork mistake when it sold the leases in 2003."

Downey said it takes about "10 times as long and costs 10 times as much" to get a permit on federal land. The environmental requirements for permitting on federal land, alone, can take up to five years and cost $5-$6 million, he said.

"The reason most of the oil and gas development today is on state and private lands is because getting access to federal lands is so difficult," Downey told the subcommittee. "We have had trouble getting the BLM to issue leases for our area, even when the new leases are surrounded by existing leases."

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