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BLM Clearing Backlog of Oil and Gas Leases in Wyoming

The U.S. Bureau of Land Management (BLM) says it has cleared most of a more than two-year-old backlog for issuing oil and gas leases in Wyoming and hopes to have the remainder completed within days.

Despite the progress, Western Energy Alliance, a Denver-based nonprofit corporation that represents more than 400 oil and natural gas companies, says it will continue with its lawsuit against the agency.

BLM spokesperson Julie Weaver told NGI on Friday that since July 2010, the agency has issued 1,152 oil and gas leases in Wyoming. They were purchased through 15 sales at auction between June 2008 and February 2011 and are collectively worth close to $100 million.

Weaver said the agency hopes to issue 170 additional oil and gas leases -- derived from three sales and valued at $37 million -- by Friday (April 8).

"Right now we are working on the sales from February 2010, and then we will do May and August [2010]," Weaver said. "Hopefully we will be done by next Friday. At that time we will no longer have a backlog of these parcels."

Weaver acknowledged that despite the progress, the issuance of 222 parcels would be deferred pending four resource management plan revisions at the Buffalo, Cody, Lander and Worland field offices, and a proposed sage grouse amendment (see Daily GPI, April 14, 2010).

"Those revisions are going on, and some of these 222 parcels are included in those revisions," Weaver said. "Until draft environmental impact statements come out, we can't make a final decision on whether we can issue these leases, add additional stipulations, or if we need to reject them outright. Each revision is different."

Weaver added that one of the proposed revisions should be done by spring, but the sage grouse amendment is not anticipated to be completed until late 2012.

That delay is the crux of an ongoing legal battle with Western Energy, which filed a lawsuit against BLM in October to compel the release of 118 leases in Utah and Wyoming worth an estimated $4.5 million. The case, Western Energy Alliance et al. v. Ken Salazar et al. (No. 2:10-cv-00226-NDF), was filed in U.S. District Court in Wyoming (see Daily GPI, October 20, 2010).

Kathleen Sgamma, spokesperson for Western Energy, told NGI on Friday that the alliance's lawsuit would continue because none of its 39 leases in neighboring Utah have been released by BLM, and nine of its leases in Wyoming are included in the list of 222 being deferred.

"We continue to believe that the application of new policies to leases sold under policies in existence at the time of sale is an unlawful action," Sgamma said. "We will continue to pursue those issues in our lawsuit."

Western Energy, formerly the Independent Petroleum Association of Mountain States, is seeking a declaratory judgment over whether the government may indefinitely delay issuing leases from BLM auctions while it holds money from the highest bidders. Although the federal Mineral Leasing Act requires BLM to award leases with 60 days of a sale, the earliest auction named in the lawsuit occurred in November 2005.

"It's good news to see that's finally moving," Bruce Hinchey, president of the Petroleum Association of Wyoming, told NGI on Friday. "Some of those leases are more than two years old. The companies that won the auctions paid their money up front and the government has been sitting on it. But this [announcement] is also good news for the state of Wyoming because half of the money comes back to the state."

Hinchey declined to speculate as to why the BLM decided against issuing the leases as required under the Mineral Leasing Act, other than to say it was probably done to analyze various environmental concerns.

"We see protests all the time on federal lands, whether it be over leases, wells drilled, environmental impact statements or regional management plans," Hinchey said. "But there have been many more protests since the Obama administration has taken office. Obama has really empowered the environmental groups, and because of that you see the additional protests we've seen recently."

Baseline Minerals Inc., Double Deuce Land & Minerals Inc., Nerd Gas Co. LLC, Wold Oil Properties Inc., Laramie Energy II LLC and Samson Resources Co. have joined Western Energy as plaintiffs.

Hinchey said he was optimistic over BLM's plans to clear the rest of the backlog within the next two weeks.

"I think that would be great," Hinchey said. "It would be nice to see things move and get back to a more normal situation where companies can explore and develop and try to meet some of the nation's energy demands."

Weaver said the May 2010 sale fetched $34 million, making it the largest ever for the BLM office in Cheyenne, WY. Many parcels are still available at auction. She said BLM has offered 1,635 parcels in Wyoming at auction so far and has sold 1,534 of them.

The BLM manages 264 million acres of public land and 700 million acres of federal mineral estate. Of those totals, about 18 million acres of land and 40 million acres of mineral estate are located in Wyoming, while Utah contains 23 million acres of land and 32 million acres of mineral estate.

"The BLM's policies have huge impacts on what this industry and other industries in the state can do," Hinchey said. "With the policies that we have seen in the past, we would hope that some of those change."

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