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Interior: Disputed Utah Leases May be Reinstated

A report issued by the Interior Department last Thursday calls for an expeditious review of the disputed 77 parcels in Utah, which were auctioned in December and then later withdrawn, to determine whether they should be reoffered to producers for oil and natural gas development. It recommends that reinstatement of certain leases may be appropriate following the review.

The report, which was compiled by a team led by Interior Deputy Secretary David Hayes, calls on the head of the Bureau of Land Management (BLM) to appoint a team of experienced agency officials that were not involved in the decision-making on the 77 parcels to decide whether to reinstate any of the parcels. "Companies who successfully bid on specific parcels should receive timely feedback on whether they will be able to develop those parcels," the report said.

After completing its review, the BLM team will determine whether the parcels: 1) should be reoffered to the original bidders under the same conditions as previously specified; 2) should be reoffered for oil and gas development, but under different terms; or 3) should be deferred from leasing.

The report, which was commissioned by Interior Secretary Ken Salazar, indicates that reinstatement of leases on 30 parcels in the Uinta and Green River basins may be warranted. It further said that oil and gas development may be appropriate on 26 parcels in or around Desolation Canyon, Nine Mile Canyon and the White River Canyon, which is located in the Uinta Basin. However, the fate of oil and gas development on 21 parcels near Arches National Park, Canyonlands National Park and in the northern part of Vernal adjacent to Dinosaur National Monument is uncertain.

"I am encouraged that the Hayes report acknowledged that at least 30 leases may be reinstated," said Sen. Robert Bennett (R-UT), who blocked Hayes' nomination in the Senate until Interior agreed to review the leases (see NGI, May 25). "I will continue to work with the department on the ongoing review to ensure that the conditions under which these leases are restored are reasonable and not simply an obstacle to a final solution."

The American Petroleum Institute, which represents major producers, sees the report as a double-edged sword. "While we are pleased that the Interior Department has agreed to review whether to reinstate these leases, we are concerned that the report could be used to justify inaction on development of the energy resources that are found on federal public lands in the Mountain West."

In February Salazar, citing the proximity of certain parcels to landscapes of national significance and the need to conduct additional environmental review, canceled producer leases to develop oil and natural gas on 77 parcels of public lands in Utah (see NGI, Feb. 9). His action overturned the results of a final oil and gas lease auction held last December (see NGI, Dec. 22, 2008).

Following the auction, a federal judge in Washington, DC, granted a temporary restraining order to seven environmental groups. He ruled that the Interior had not completed a sufficient environmental analysis of the auction areas, particularly on how air quality around Utah's Arches and Canyonlands national parks and Dinosaur National Monument might become degraded because of drilling (see NGI, Jan. 26).

This report, which reviews the suitability of the parcels for development, "helps us unwind the problems that landed these 77 parcels in court with a temporary injunction," Salazar said.

"A set of 14 [of the 77] parcels are located near current production areas that are largely already dedicated to oil and gas development, and which have existing infrastructure to facilitate such development. These factors suggest that reinstatement of the sale of these leases may be appropriate. The BLM team should seek to confirm, on a site-by-site basis, that the stipulations associated with each parcel are adequate," the report said.

Ten of the 14 parcels are located in the Central Uinta Basin: parcels 90, 91, 93, 94, 96, 97, 98, 112, 115 and 116. The remaining four parcels are in the Southern Uinta Basin: parcels 209, 210, 211 and 212.

"A second set of 16 parcels is located where the intensity of existing production is more limited. The parcels in this second group, however, are not near particularly sensitive landscapes and they do not appear to trigger strong concerns regarding recreation or other alternative uses. These factors suggest that reinstatement of the sales of these leases may be appropriate."

The parcels are located east of Green River (parcels 159, 187); southeast of Green River (parcels 162, 163, 164, 166, 167, 168, 169, 170, 171 and 175); and south of Green River (parcels 361, 368, 369 and 370).

The remaining 47 parcels, which fall into three categories, require "more detailed site-specific analysis," according to the report. The first category includes parcels that are near two sensitive landscapes that have special cultural and physical attributes: Nine Mile Canyon and Desolation Canyon.

"Some oil and gas development is beginning to occur in these areas...Additional oil and gas development potentially may be appropriate in both of these areas, but given the special nature of the resources in and around Nine Mile Canyon and Desolation Canyon, a careful, site-specific examination by a multi-disciplinary BLM team should be undertaken," the report said.

The Desolation Canyon parcels include 86, 87, 335, 337, 338, 339, 340, 341, 342, 343, 345, 348, 349, 350 and 355. The Nine Mile Canyon parcels are 83, 328, 330, 331 and 332.

The second category of the 47 parcels includes six parcels that are in or adjacent to White River Canyon, which is located in the highly productive Uinta Basin. "Some of the mesas above the canyon have been leased and developed. Additional gas development in the area potentially is appropriate, particularly if new wells can be drilled on already-existing drilling pads, but given the special nature of the White River Canyon area, a careful, site-specific examination by the...BLM team is appropriate."

The White River Canyon parcels are 106, 109, 110, 111, 136 and 137.

The third category includes 20 parcels that are in the Moab region, an area that has "limited existing" oil and gas development, potentially high recreation values and is within a 10-mile radius of Arches National Park or Canyonlands National Park. "While we do not believe that all leasing activity should be delayed pending the completion of the air quality analyses that are recommended...parcels that are close to national parks or monuments should receive heightened scrutiny because their development could more immediately impact air quality in the nearby parks," the report said.

Also in the third category is a parcel that is located in the northern portion of the Vernal area adjacent to Dinosaur National Monument. "Although that parcel is on land that already has been disturbed, there is very limited oil and gas development in the area and the immediacy of the parcel to the national monument recommends it for a more deliberative review by the BLM team."

The parcels, which will be subject to greater BLM scrutinty, are located west of Arches National Park (parcels 174, 176, 177, 180, 181, 182, 183, 184, 185, 186, 196 and 197); east of Arches National Park (parcel 242); east of Canyonlands National Park (parcels 201, 202, 203, 205, 206, 207 and 208); and west of Dinosaur National Monument (parcel 101).

The report recommends that BLM move forward with a comprehensive air quality strategy for the region, in consultation with the National Park Service, the Environmental Protection Agency and state officials.

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