Settlement snuffs development of 18 gas leases in Thompson Divide | PostIndependent.com

Settlement snuffs development of 18 gas leases in Thompson Divide

Scott Condon
The Aspen Times

White River National Forest Supervisor Scott Fitzwilliams speaks with protesters and others during a site visit to the Wolf Creek storage field area south of Four Mile Park in September 2015. SG Interests has formally applied to drill for natural gas in the area.

Eighteen gas leases in the heart of Thompson Divide southwest of Carbondale are formally out of play and won't be developed, the U.S. Bureau of Land Management announced Friday.

The BLM and a company called SG Interests reached a settlement agreement over the BLM's decision to cancel the leases in November 2016. The federal government agreed to pay $1.5 million to SG Interests as part of the settlement; SGI dropped its legal challenge of the lease cancellations.

"SG had 18 leases in the heart of the Thompson Divide. The development of those leases wasn't a closed book. Now it is," said Peter Hart, an attorney for Carbondale-based Wilderness Workshop, an environmental group that's part of a coalition battling to prevent oil and gas development in Thompson Divide.

The leases covered more than 21,000 acres or about 33 square miles in an area considered critical wildlife habitat and a roadless region. The leases were awarded in 2003.

“The development of those leases wasn’t a closed book. Now it is.”

— Peter Hart, Wilderness Workshop

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Hart hailed the settlement as a victory for Thompson Divide Coalition, a citizens' group dedicated to preventing gas lease development, and numerous allied individuals and entities.

The BLM canceled a total of 25 leases in Thompson Divide in 2016 after it determined there was a "flaw" in the conduct of the National Environmental Policy Act process for the leasing.

A company called Ursa Piceance LLC owned seven of the leases. Ursa accepted the decision and was reimbursed for bonus bids and rentals on the leases. The company sought $877,000. It couldn't immediately be confirmed by the BLM on Friday if $877,000 was the amount paid.

While Ursa accepted the BLM's cancellation, SG Interests challenged the decision in court. The company said the act constitutes "a taking of private property rights and/or a breach of the lease contracts." It filed a lawsuit in 2017 against Secretary of Interior Ryan Zinke as well as national and Colorado officials in the BLM, all in their official capacity.

There was speculation that the election of President Donald Trump and his policy to promote more domestic production of oil and gas could result in the federal government deciding not to defend against SG's lawsuit.

However, court documents were filed Thursday saying the parties had executed a settlement agreement. A motion was granted that gives the U.S. an extension for filing an answer to the lawsuit to create time for the payment to be made.

Thompson Divide stretches over 221,500 acres of federal land from the Sunlight Mountain Resort area to McClure Pass. Thompson Divide Coalition offered to pay SG Interests $577,838 for its leases in 2012. The oil company rejected the offer because it said it didn't recognize the investment made in the leases beyond bids and rentals.

Hart said he couldn't comment on the propriety of the government's payment of $1.5 million.

"Bit by bit this spectacular area is getting more protection," he said.

Pitkin County Attorney John Ely said Friday's announcement by the BLM removes an immediate threat of gas lease development, but other threats exist. Current decisions by the White River National Forest and the BLM prohibit further issuance of leases in the Thompson Divide area, but those policies could change over time, Ely noted.

Hart said gas development remains a possibility on active leases in other areas within or adjacent to Thompson Divide. SG Interests owns a sublease for development of the Wolf Creek area and it holds three leases in the Huntsman's Ridge area near the summit of McClure Pass.

"Hopefully SG is walking away entirely," Hart said.

scondon@aspentimes.com