The U.S. Bureau of Land Management on Monday said it would extend gas leases held by two energy companies in the disputed Thompson Divide area south of Glenwood Springs for another two years, while the agency works to remedy an admittedly “deficient” environmental analysis that resulted in the leases being issued 11 years ago.
One of the companies involved, Houston-based SG Interests, applied last year to develop test wells on leases in its Lake Ridge Unit, following a BLM decision in April 2013 granting a one-year extension to the SG leases.
In part because of that move, and “in consideration of comments from interested parties that have asserted the leases were issued in violation of [the National Environmental Policy Act], the BLM has identified a need to remedy a defect at lease issuance,” Steve Bennett, Colorado River Valley Field Office manager for the BLM in Silt, wrote in a letter to SG Interests officials on Monday saying the leases would be extended until April 1, 2016.
The SG leases, along with a similar grouping of leases held by Ursa Piceance LLC that were also due to expire today, were extended in order to allow the BLM adequate time to revisit the environmental review, Bennett wrote in the letter.
That process will ultimately “determine whether the leases should be voided, reaffirmed or subject to additional mitigation measures for site-specific development proposals,” he wrote.
The decision, which was expected to be formally announced by the BLM today, went against the wishes of several local governments and conservation groups that had objected to SG and Ursa requests for the lease extensions.
“We’re not sure why BLM can’t give our administrative appeal the same prompt attention the agency gives to requests from industry, but we are gratified that BLM admits the SG and Ursa leases are illegal, and has launched a process that can cancel them,” said Pitkin County Assistant Attorney Chris Seldin. “Now it’s up to the public to make its voice heard.”
Pitkin County commissioners were joined by the Carbondale Board of Trustees and the Glenwood Springs City Council in opposing the lease extension requests. The Carbondale-based Thompson Divide Coalition and Wilderness Workshop had also opposed the requests.
Thompson Divide Coalition Executive Director Zane Kessler welcomed the decision to launch a retroactive NEPA analysis, calling it “a process that can and should result in the cancellation of illegal leases in the Thompson Divide.”
Two energy industry groups said in a joint statement issued Monday afternoon that the BLM made the right decision.
“Western Energy Alliance and the West Slope Colorado Oil and Gas Association applaud the BLM for approving extensions to leases held by SG Interests and Ursa Piceance LLC in the Thompson Divide area of western Colorado,” their statement read.
“The companies would like to develop natural gas from these leases, but BLM has prevented development for various bureaucratic reasons such as extended unitization determinations, lengthy and redundant [NEPA] analysis, and failure to approve units and permits to drill.
“Today, BLM correctly recognized its role in delaying development on the leases and wisely granted an extension,” the joint statement read.
In filing a joint administrative appeal to the lease extension requests, Pitkin County’s Seldin cited two recent independent geologic and economic feasibility reports that questioned the economic viability of drilling for natural gas in the Thompson Divide region, calling the efforts to develop gas leases in the area “speculative.”
One of those studies, by John D. Wright, chief engineer for Wright Consulting of Golden, concluded that the infrastructure costs to access gas reserves within the 221,500 acres of mostly U.S. Forest Service land that make up the Thompson Divide would be too great to justify drilling at this time.