A land conservation group reached an agreement Friday with Plains Exploration & Production Co. (PXP) to purchase the company’s oil and natural gas leases on 58,000 acres in the Hoback Basin of the Wyoming Range.

The Trust for Public Land (TPL) agreed to pay $8.75 million for Houston-based PXP’s leases, which effectively ends the exploration and production (E&P) company’s plans to drill 136 gas wells near the Hoback River headwaters. TPL has raised about $4.5 million toward the purchase and expects to have the full amount ready when the transaction is set to close in December.

Wyoming’s Range Legacy Act prohibits oil and gas development on 1.2 million acres of the Wyoming Range paralleling the state’s western boundary with Idaho. Nearly 85% of the acreage involved in the PXP leases lies within the area protected by the law.

Wyoming Gov. Matt Mead called the deal “an outstanding outcome and a true ‘win-win’ resolution that respects both the wishes of local residents and the legal rights of leaseholders.”

The U.S. Forest Service (USFS) last year said it planned to conduct an additional environmental study on PXP’s controversial plan to drill gas wells in a portion of the Bridger-Teton National Forest in the Wyoming Range (see Daily GPI, Nov. 28, 2011). Mead had expressed some concerns about the PXP plan, which at the time was in the draft environmental impact statement phase at the USFS (see Daily GPI, March 16, 2011).

PXP’s Steve Rusch, vice president for environment, health and safety, said the company had “repeatedly stated our willingness to consider a buyout of our lease position if a valid offer was tendered.” Friday’s “announcement fulfills that pledge.”

The long term outlook for natural gas prices “remains mixed,” Rusch noted, and in recent years PXP has been “shifting away from low-margin natural gas toward higher-priced oil.” However, PXP would have accomplished the proposed gas project in an environmentally sensitive manner if it had proceeded, he said. Ultimately, “TPL’s interest in the leases represented an opportunity that was advantageous for all parties involved.”

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