Dominion Inks 83,000-Acre Deal With Ute Indian Tribe

Richmond, VA-based Dominion Exploration & Production Inc. reported that it has entered into a landmark agreement with Northern Ute Partners LLC to jointly explore for and develop oil and natural gas on 83,000 acres of previously restricted lands within the boundaries of the Uintah and Ouray Reservation of the Ute Indian Tribe in Utah.

The contiguous acres, known as the Naval Oil Shale Reserve No. 2 (NOSR-2), were reserved by the federal government in 1916 as a strategic hydrocarbon reserve. The area was off-limits for exploration until earlier this year, when the lands were transferred to the Northern Ute Tribe in January 2001 through legislation signed by then President Clinton in 2000.

Dominion said that the Northern Ute Tribe has historically played a passive role in the development of energy resources on its reservation, but the tribe has recently seized the opportunity to take a more active role through the formation of a consortium that will participate with Dominion in the acquisition of seismic data and the drilling of test wells over the next two years. The consortium will also take part in the development to follow successful discoveries.

Northern Ute Partners LLC, composed of the Northern Ute Tribe, Red Willow Production Co.(the gas and oil operating co. of the Southern Ute Indian Tribe), Contango Oil & Gas Co. and a major financial institution, hold 50% of the rights to NOSR-2, while Dominion will act as the operator of the project with the remaining 50% interest.

Dominion already has extensive experience in the region through the former CNG Producing Co., which was acquired in May 1999 and renamed Dominion Exploration & Production (see Daily GPI, May 13). The company has a long record of gas and oil exploration in the Uinta Basin.

"Dominion has an established track record of success in our exploration and development operations in the Uinta Basin," said Jerry Schuyler, senior vice president of Dominion Exploration & Production, Inc.'s Onshore Business Unit. "We are continuing to expand our extensive infrastructure in the area to drill more wells and to move more gas out of the basin. We are pleased to have the opportunity to work directly with the Northern Ute Tribe to explore for new reserves in this area."

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