Deny Thompson Divide unitization request
Glenwood Springs, CO Colorado
As a former Garfield County commissioner and a commissioner on the Colorado Oil and Gas Conservation Commission (COGCC), I am thankful to U.S. Sens. Bennet and Udall for supporting thousands of people in western Colorado who want the BLM to deny or postpone SG Interests’ proposed Lake Ridge unit in the Thompson Divide.
The senators’ requested time for “robust and meaningful discussions among all concerned stakeholders” is extremely appropriate. Additionally, I would like to thank Secretary Vilsack and Secretary Salazar, along with the BLM leadership for thoughtful consideration of this request.
Unitizing 32,000 acres in the Thompson Divide represents a commitment to long-term development in an area many people do not believe should see oil and gas development. The Thompson Divide is a biologically rich landscape and much of the lands lie within inventoried roadless areas on the White River National Forest.
These lands contain old-growth spruce and aspen forests and extensive wildlife, along with rivers and streams that supply domestic and agricultural water within the region. The historic economic resources that would be impacted by long-term development include ranching, outfitting, recreation and tourism.
If approved, the Lake Ridge unit will extend leases beyond the 10-year terms for which they were issued. Leaseholders such as SG Interests have a right to develop their leases during the 10-year primary term; beyond that, the BLM has broad discretion to approve or deny industry requests, including unitization proposals.
As I understand it, SG Interests has not brought the existing leases in the Lake Ridge proposal into production. From an economic perspective, it is hard to believe they intend to bring them all into production now with gas prices around $4/mcf. The current price of gas is lower than the average price we’ve seen during the entire period SG has held these leases.
They’ve held these leases when gas hit $18/mcf in 2003, $14/mcf multiple times in 2006, and $13/mcf in 2008. Now and for the foreseeable future, the price of gas will remain low, with a glut affecting national markets.
It seems SG’s intent may be to preserve its minimal investment in these leases (it paid $2 per acre for most of these leases) rather than pursuing diligent development. (Source: http://www.ferc.gov/market-oversight/mkt-gas/overview/ngas-ovr-hh-pr.pdf)
There are pros and cons to unitization. As the Colorado Oil and Gas Association has pointed out, unitization emerged as a way to ensure responsible, orderly and systematic development. In certain circumstances it is advantageous to create units that contain site specific plans for development.
However, because energy development is different than it was 110 years ago when unitization was introduced, it may not always be the “best practice” COGA represents. For example, Garfield County landowners have found themselves pulled into federal units by the BLM because of the location of their land, without the ability to deny access or negotiate how energy development will occur on their property.
In this case, because of SG Interests’ lack of activity and because extensive dialogue between stakeholders is ongoing about the possibility of retiring leases in the Thompson Divide region (without causing injury to the leaseholders), the question must be asked if SG is only looking for a way to extend the terms of federal leases.
It is no wonder that ranchers, outfitters, landowners, business owners, residents and local elected officials are seeking denial or postponement by BLM on the Lake Ridge proposal.
Many local governments, including the Garfield County Commission (through a resolution adopted in 2010), support the efforts of the Thompson Divide Coalition, whose mission is to secure permanent protection from oil and gas development of federal lands in the Thompson Divide area, including the Thompson Creek and Four Mile Creek watersheds, as well as portions of the Muddy basin, Coal Basin and headwaters of East Divide Creek.
If you fly over Garfield County, you see few lands that are untouched by oil and gas development. One area that will take your breath away is the Thompson Divide.
Together, let’s recognize that some places are more valuable for existing uses than developed for natural gas. Let’s save these pristine lands for future generations.
Thank you again to our national leaders who are standing for a comprehensive, inclusive and transparent process.
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