BLM changing politics of oil and gas leasing in Gunnison County

Releases names of nominators, suspends leases

The future of oil and gas development in Gunnison County and surrounding areas came into question repeatedly this month as the U.S. Bureau of Land Management (BLM) made two key industry-related decisions that could potentially change regional energy production.

First the BLM approved requests by energy groups SG Interests and Ursa Resources to suspend the expiration dates for several oil and gas leases in the Thompson Divide area that were slated to run out this summer. The majority of the leases were purchased for $2 per acre at public auction in 2003, and have since largely sat idle. Under BLM regulations, if progress toward development of an oil and gas lease is not made within ten years, the lease expires. It can then be either retired or re-auctioned.
In the current political and environmental climate, it is reasonable to believe that if the leases had been allowed to expire under the set timeline, the land would have been protected from future development, said Zane Kessler, executive director for advocacy group Save Thompson Divide.
Prior to the BLM’s decision, SG Interests and Ursa Resources had submitted development plans for their leases to the agency; however, it seemed unlikely the agency would have completed reviews of the plans prior to the leases’ expiration dates—some of which were as early as May. The groups’ request for suspension was made in part to give the BLM additional time to conduct the required National Environmental Policy Act (NEPA) environmental analysis on the development proposals and to allow for additional discussions with and between stakeholders, according to a statement from the BLM.
“These suspensions will provide the community and the leaseholders an opportunity to continue their dialogue on the future of the leases in the Thompson Divide area,” said BLM Colorado River Valley field manager Steve Bennett. “Ultimately, the leases could be voided, reaffirmed or modified as an outcome of the additional environmental analysis.”
Thompson Divide is an area of 221,500 acres located west of the Crystal River and north of McClure Pass. About 51,700 acres, or 23 percent of the total area in the divide, is within Gunnison County. According to Kessler, the area contains large tracks of roadless lands, and is home to 15 different watersheds that feed flows directly into the North Fork of the Gunnison River, the Clear Fork, the Crystal River, the Colorado River and the Roaring Fork River.
“Obviously, we’re disappointed that the BLM didn’t let the leases expire,” said Kessler in an email. “[But the] decision stops the industry in their tracks, sets a firm timeline on the suspension, and requires that existing leases undergo an environmental analysis—a move that could ultimately render all of the leases invalid.”
The suspension is good for one year. While in effect, it prevents all industrial development activity and allows increased analysis of the environmental impact of drilling.
The second major decision related to Gunnison County’s oil and gas development came with the release of the names of several energy groups responsible for the nominations for oil and gas development of public lands in the North Fork Valley. The nomination process is important because it sets off a string of events in which the BLM first reviews a land parcel to determine whether it is suitable for development, and then, if appropriate, places the parcel up for public auction.
Since 1995, it has been the BLM’s practice to keep the names of nominating companies private in an effort to reduce competition, according to environmental advocacy group Citizens for a Healthy Community. However, in February of this year, U.S. District Court Senior Judge Richard P. Matsch found that the BLM was violating the public’s right to know by refusing to release the names of companies behind land nominations.
In his ruling, Judge Matsch wrote, “[Keeping the names private] runs directly contrary to the purpose of the public sale process. Competition in bidding advances the purpose of getting a fair price for a lease of publicly owned minerals. Moreover, the identity of the submitter may be relevant to the plaintiff and others who may raise concerns about the stewardship records of that potential owner, a factor relevant to the environmental impact of the proposed sale.”
The court gave the BLM until April 15 to release the names of the entities responsible for nominating approximately 30,000 acres in the North Fork Valley for development, and last week it was announced that the majority of the parcels were nominated by industry speculator Baseline Minerals. Baseline functions as intermediary for other companies whose identities remain unknown. Contex Energy Company and Gunnison Energy Corporation were also named as nominators, though for a much smaller number of parcels.
According to Jim Ramey, director for Citizens for a Healthy Community, by knowing the names of the companies involved in the nomination process citizens will be better prepared to protect and care for their public lands.
“If drilling companies want to develop publicly owned minerals they should say so publicly, allowing concerned citizens and affected communities to evaluate their health, safety, and environmental record,” said Ramey in a public announcement. “By not appealing the court’s February ruling, BLM has signaled that it will change its policy to require full transparency in the agency’s oil and gas leasing program.”
There has not yet been an announcement by the BLM that there will be a widespread change to the nomination process; however, in the North Fork Valley the public can begin to uncover just exactly with whom they’re expected to climb into bed.