Is Roan gas deal a model for Thompson Divide?
August 26, 2014
A possible settlement between conservation groups and energy interests regarding gas leases on the Roan Plateau could provide a template for negotiating a similar treaty involving leases within the Thompson Divide region.
However, the two situations have key differences that make an apples-to-apples comparison difficult, according to the executive director of the Carbondale-based Thompson Divide Coalition and one industry representative who is familiar with the respective disputes.
“It does appear as though conservation and industry stakeholders — some pretty strange bedfellows — are working together to find a mutually acceptable outcome. We’re encouraged to see that,” said Zane Kessler, who is directing the coalition’s efforts to protect the Thompson Divide area south of Glenwood Springs from energy development.
Unlike the gas-rich Roan Plateau northwest of the Rifle, though, “the mineral potential in the Thompson Divide is seriously questionable,” Kessler said, pointing to recent studies that conclude gas development in the divide would not be economically feasible.
Also, without knowing the specific terms of the proposed Roan settlement between a coalition of environmental groups and Denver-based Bill Barrett Corp., it’s hard to say if it could offer a model should talks resume between the coalition and Thompson Divide leaseholders, he said.
“On the surface, we do see some potential similarities,” Kessler said in reaction to recent statements by Garfield County Commissioner Tom Jankovsky, who said he hopes the Roan settlement, if finalized, could provide a model for sorting out the Thompson Divide dispute.
Under the proposed Roan settlement, Barrett would be reimbursed for giving up federal leases in the more pristine areas atop the Roan Plateau. In exchange, Barrett and other leaseholders would be allowed to develop less-controversial leases, both on top and at the base of the Roan.
Industry and conservation groups, as well as numerous state and local elected officials, have touted the prospect of a settlement in the near-decade-long dispute over drilling on the Roan as a “win-win” that would serve to protect environmentally sensitive areas while allowing gas drilling to proceed on other leases.
Jankovsky, reacting to a letter last week from Gov. John Hickenlooper’s budget planning office saying the governor supports efforts to ensure local governments won’t have to pay back mineral lease dollars if the Roan deal goes through, made the Thompson Divide comparison.
Especially since a total of 65 active gas leases in a larger area of the White River National Forest, including 25 within the Thompson Divide, are now under federal review, Jankovsky said he hopes a similar compromise could be reached.
Dave Ludlam, executive director of the West Slope Colorado Oil and Gas Association, whose members include energy companies with federal leases in both the Roan and Thompson Divide areas, said he “100 percent concurs” with Jankovsky that a negotiated settlement is necessary.
“The Thompson Divide could and should end up under some type of similar settlements,” Ludlam said.
However, without good-faith negotiations, he said he doesn’t see that happening any time soon.
“One of the key differences is that, in the case of the Roan, you have two negotiating partners who are acting in good faith,” Ludlam said. “You also have statesmen involved who want to create win-win scenarios, and our companies are always willing to create those kinds of scenarios.”
In the case of the Thompson Divide, “I haven’t seen that same kind of good faith happen,” Ludlam said in reference to the coalition’s offers to buy out leases held by at least two companies, SG Interests and Ursa, while lobbying for those leases to be canceled.
“I just think that, right now, there are some key and stark differences that would prohibit any kind of agreement there,” he said.
Kessler responded to Ludlam’s assessment, saying West Slope COGA has never been party to any negotiations involving the Thompson Divide.
“By pitting Western Slope communities against each other, and by opposing a middle-ground legislative solution that would allow a buy-out to occur, (WSCOGA) appears to have done more harm than good in this process,” Kessler countered.
The coalition says it needs federal legislation in order to resume negotiations. A bill being sponsored by U.S. Sen. Michael Bennet, D-Colorado, to provide a way for energy companies to sell or voluntarily give up leases while closing off unleased sections of the Thompson Divide to future leasing, creates that pathway, Kessler has maintained.
Another key difference between the Roan and the Thompson Divide is that leases in the Thompson Divide were sold for much less, the statutory minimum of $2 per acre, while the Roan leases sold for “as much as $11,000 an acre.”
Talks between the coalition and the companies involved in the Thompson Divide have stalled because the companies want “far more” than what they paid for the leases, Kessler said.
Another distinction between the two situations is that the Roan settlement talks and the Bureau of Land Management’s decision to review leases there grew out of a federal lawsuit filed by conservation groups. So far, the disputed Thompson Divide leases have only been the subject to administrative appeals rather than court action.