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Thompson Divide leases cancelled but issues still remain

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SG files application

By John Colson

Sopris Sun Staff Writer

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Area environmentalists and land conservation advocates were buoyed last week when federal and state officials announced that 25 Thompson Divide natural gas leases had been formally cancelled and taken off the table.

The Thompson Divide comprises more than 225,000 acres of land at the edge of the gas-rich Piceance Basin, which underlies much of western Garfield County, from Sunlight Mountain to McClure Pass, and has been the target of considerable oil and gas development interests for decades.

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For the past eight years or so, a loose coalition of environmentalists, ranchers, business people and local governments known as the Thompson Divide Coalition, which won support from the City of Glenwood Springs, the Town of Carbondale and Pitkin County, among others, has lead the fight against efforts to drill for natural gas in the Divide, a fight that culminated in the BLM’s cancellation decision.

But energy industry officials, who view the lease-cancellation as a “taking” of their private property rights, have expressed an interest in going to court to overturn the U.S. Bureau of Land Management’s decision.

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Because of the way the leases were cancelled, there is no possibility of an administrative appeal to the BLM, according to agency spokesman David Boyd.

Still, one company, SG Interests of Texas, has filed a formal “application for permit to drill” or APD, on a different section of Thompson Divide, known as the Wolf Creek Storage Unit, which is operated by Black Hills Energy out of South Dakota.

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SG, which owns 18 of the cancelled leases, also owns lease rights in the 9,200-acre Wolf Creek unit. The Wolf Creek area, Boyd confirmed, contains wells drilled and pumped out in the 1960s by a different energy company, which then capped the dry wells and ultimately converted them into storage use for gas that had been taken out, piped elsewhere and processed, and then brought back to the valley.

“It’s that gas that gets used in the Roaring Fork Valley,” Boyd said to describe the need for the storage wells, which he stressed is not the gas that was taken out in the 1960s.

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Boyd said his office, located in Silt, received the APD from SG Interests on Nov. 17, the same day that the BLM announced it had cancelled the 25 leases — SG’s 18 wells and seven owned by Ursa Resources, which bought out the former Antero Resources drilling company several years ago.

The two companies are being reimbursed about $1 million by federal authorities, primarily for the amount originally paid for the leases back in the 1990s. But, in the case of SG Interests, the company reportedly feels the reimbursement to be inadequate to cover development costs over and above the purchase costs.

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1995-2012

The 25 leases, according to statements from the BLM, covered a time period from 1995 through 2012, and were subject to a lawsuit by area opponents of gas drilling showing that the leases in question had not been put through the required environmental analysis.

After a retroactive Environmental Impact Statement (EIS) review, the agency concluded that the 25 leases had been issued incorrectly and should be cancelled. But the BLM declined to extend that cancellation to another 40 leases to the west of the Divide, which were issued over the same time period and either have producing wells on them or are tied to other producing wells through a process known as “unitization,” according to federal and industry officials.

“Today’s decision is a testament to the ability of individuals, businesses, governments and organizations in Colorado to work together to find solutions that make good sense for the local community, economy and environment,” said Interior Secretary Sally Jewell on Nov. 17 at a ceremony about the announcement in Denver.

Boyd said the BLM had 10 days from the receipt of the APD to review the documents to determine if the application is complete. After that, he said, the U.S. Forest Service (specifically the offices of the White River National Forest) will conduct an Environmental Assessment (or EA, which is similar to and EIS but less rigorous) to determine if the leases should be issued.

The main responsibility to conduct the EA falls to the forest service, Boyd said, because the APD calls for construction of a well pad to house the equipment needed to drill the single well that is proposed, and such a pad is considered a “surface disturbance,” which is the purview of the USFS. The BLM is responsible for oversight of the sub-surface aspects of the leasing process, although the Colorado Oil & Gas Conservation Commission (COGCC) is the agency that issues the actual permits to drill and oversees the drilling process itself.

Boyd explained that SG believes it can drill new wells in the same general area without boring into the older wells, thereby tapping into reserves that already had been drilled and used.

“They’re looking at a deeper formation (known as the Mancos Shale), and it’s something that technically can be done,” he said.

The site of the new well, he said, is “in the storage area” but “not right next to one of the storage wells.”

Working together

He said the federal agencies (BLM and USFS working together) will examine the layout to be sure the new wells are not boring into the storage wells.

Also included in the environmental assessment, he said, will be the proposed access route to the well site. The governments of Garfield County and The City of Glenwood Springs have both opposed the idea of drilling traffic using the Four Mile Road for access, in part because that route would dump industrial traffic onto the streets of Glenwood Springs, which already experience heavy commuter traffic.

Boyd said he had not heard whether SG Interests, or Ursa, have filed legal action yet to overturn the BLM’s lease-cancellation decision.

SG official Robbie Guinn reportedly told a Western Slope newspaper that the company is planning to use data it gets from the Wolf Creek unit, regarding how much gas might be available for development at that site, to bolster its claim that the BLM’s decision is a “takings” of the company’s private property rights.

Another wild card in the ongoing dispute over the Thompson Divide leases is whether the opponents of drilling, too, will go to court over their perception that the BLM’s cancellation of the 25 leases did not go far enough.

The Wilderness Workshop, based in Carbondale, and the Earth Justice environmental legal firm’s office in Denver have indicated they feel the BLM improperly left some areas out of its cancellation protocol — specifically, portions of areas known as Mamm Creek,  Battlement Mesa and the Grand Mesa.

According to these critics of the BLM decision, the agency had earlier indicated it would protect up to 27 leases (out of 40 existing leases) in those areas, essentially in agreement with an early U.S. Forest Service management plan that called for added protections from drilling and other activities for those leases.

By leaving these out of the lease-cancellation decision, or at least imposing additional restrictions on drilling for the 27 leases in question, the agency is improperly abandoning its earlier pledge to protect wildlife, water and other resources in the region, in the eyes of critics.

Wilderness Workshop attorney Peter Hart said last week that the organization had not yet decided whether to pursue its objections through the courts.

Published in The Sopris Sun on November 24, 2016.

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