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June 13, 2012
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Environmental groups oppose new Thompson Divide drilling requests

GLENWOOD SPRINGS - Several environmental organizations are protesting new applications for gas drilling permits in the Thompson Divide area.

The drilling permits, sought by WillSource Enterprise LLC of Denver, are for gas leases that are either expired or invalid, according to the groups.

The applications are separate from the controversial drilling proposals of S.G. Interests and the Lake Ridge Unit, in another part of Thompson Divide.

Reed Williams, president of WillSource, said the claim that the leases are not valid isn't true.

"The BLM doesn't think so," said Williams from his office in Denver, "so obviously we would be in disagreement with that."

Officials from the BLM, however, said on Tuesday that the protesting organizations have made "some very good points" and that the matter is being reviewed.

In a June 8 letter to the U.S. Bureau of Land Management (BLM), the Wilderness Workshop and four other organizations objected to the issuance of drilling permits for WillSource, which is seeking permits in what is known as the Willow Creek Unit.

Also objecting to the leases are The Wilderness Society, the Natural Resources Defense Council, Earthjustice and Western Resource Advocates.

The 8,600-acre Willow Creek Unit is a portion of the 220,000-acre region known as Thompson Divide. Willow Creek is on the western side of the divide that separates the Crystal River drainage from the Colorado River drainage, on upper West Divide Creek.

A loose network of opponents, lead by the Thompson Divide Coalition, believe the area's value for recreation, wildlife habitat, livestock grazing and clean water to area residents outweighs its value as a source of natural gas.

The Willow Creek Unit, according to the letter, deals with a leasing "unit" that dates back nearly a decade and encompasses more than 8,600 acres of federally owned land in Pitkin and Mesa counties.

The "unitization" of gas leases, which is handled by the BLM, is a practice of lumping lease areas together that can belong to one or more drilling companies.

Critics say the practice makes it easier for companies to extend leases that otherwise might expire due to inactivity, while the industry and the BLM maintain that it is a way to streamline and improve federal management of mineral reserves.

In the letter to the BLM, attorney Peter Hart of the Wilderness Workshop argued that a Willow Creek Unit established in 2003, based on leases issued in 1996, expired due to inactivity in 2009.

The only active well in the unit, known as the Little Beaver I-20 well, was drilled in 2005 by Delta Petroleum. And according to the BLM's Jerry Strahan, branch chief for fluid minerals, tests by Delta showed it to be a "producing well."

But, Strahan added, the company did not have the resources to build the required infrastructure for continued well operations.

WillSource, the letter states, took over from Delta in 2006, and drilled no wells in the area between then and 2009, although the BLM granted five one-year extensions on its permits to drill.

An sixth extension request in 2009, according to Hart's letter, prompted opposition from Wilderness Workshop and other groups, asking that the BLM deny the request "based on extraordinary values at risk and a clear failure by the operator to pursue diligent development."

The BLM denied the extension request in December of that year, but "failed to record the termination of the unit, or confirm that leases in the unit have expired," Hart wrote. "As a result, oil and gas operators continue to treat as valid several thousand acres of expired leases on public lands that are highly valued by the public for reasons unrelated to oil and gas development."

In addition, in October 2010, according to Hart, the BLM approved drilling for one of the leases, known as Haystack I-17, that already had expired. The well has not been drilled to date, Hart wrote.

WillSource applied for three additional drilling permits in late 2011, also on leases that are believed to have expired, and which have yet to be approved, according to the letter.

Williams said he has not been told by BLM officials when the permit applications for the three new well locations might be completed.

But he is confident the permits will be issued.

"We abided by the regulations, the rules and worked diligently ... to see that our leases and rights to the area have been maintained and protected," he said. He noted that his company has been working in the Thompson Divide area for 15 years or so, including installing pipelines to well locations.

"We've got a tremendous amount of investment in the area. We have to defend ourselves," he said.

The organizations ask the BLM to deny the three unapproved leases and withdraw the Haystack drilling permit.

"We've reviewed the letter," said Lonny Bagley, deputy state director for energy, lands and minerals, "and they made some very good points."

Strahan said his staff is working to determine "which parts of the leases are still in effect, and which are not."

jcolson@postindependent.com


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The Post Independent Updated Jun 13, 2012 07:23AM Published Jun 13, 2012 07:16AM Copyright 2012 The Post Independent. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.