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BLM Northwest Colorado Lease Sale Nets $1.24MM; 15 Parcels Unsold

In some of the most remote areas of the state for oil/natural gas development, the U.S. Bureau of Land Management (BLM) operations in northwest Colorado on Thursday sold oil/gas leases covering 63,268 acres, garnering $1.24 million in revenues.

BLM offered 85 parcels in four counties -- Jackson, Moffat, Rio Blanco and Routt -- receiving bids on 70 parcels. Most of the unsold parcels were in Routt County.

Originally, the federal agency was planning on offering more than 100,000 acres, but in the weeks leading up to the sale, parcels covering 27,500 acres in Grand County west of Rocky Mountain National Park were dropped in response to local concerns about potential impacts on tourism/recreation, agriculture and the environment. Industry sources at the time warned that this cutback could have a dampening effect on subsequent lease sales.

In anticipation of the sale for potential oil/gas exploration and production (E&P) development on public lands, the environmental group WildEarth Guardians criticized the sale, contending it was another example of the Trump administration "pulling out all the stops to put our public lands into the hands of the oil/gas industry."

This sale of 82.35% of the parcels that were offered comes within less than two months after the abandoned well site flowline explosion in Weld County that killed two men in a home located less than 200 feet from the well in Firestone, CO, but industry sources downplayed that incident having any impact.

"Firestone was an improbable, unlikely anomaly that had no bearing on the lease sale," said David Ludlam, executive director of the West Slope Colorado Oil & Gas Association (West Slope COGA). "The operating environments of Rio Blanco and Moffat Counties couldn't be more different [than Weld] as these leases are in the least populated, rural and remote areas of our state."

In Thursday's sale the average bid price was $19.66/acre with the high bid hitting $102/acre and the high bonus bid being $161,568. Lakewood, CO-based Baseline Minerals Inc. was the high bidder for both per-acre ($102) and total bonus ($161,568).

Separately, on Friday, BLM's Colorado officials asked for public comments on an oil/gas E&P development proposal west of Rifle in the same northwestern corner of the state as the lease sale. The proposal is part of the Balzac Gulch Master Development Plan in which Terra Rocky Mountain LLC proposes to drill up to 66 new oil/gas well directionally from three existing pads during the next two years.

Terra estimates that it could pull up to 120 Bcf of gas from the wellsites over the next 40 years. The BLM Colorado River Valley Field Office is developing an environmental assessment for the proposal.

BLM field office manager Gloria Tibbetts said that the federal agency tends to take a "broad, multi-year look" at potential E&P development through the master development planning process. "Oil/gas development on public lands and minerals in the field office supports a working landscape that creates jobs and helps Western Slope communities grow," Tibbetts said.

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