BLM auctions drilling rights in Utah

BLM auctions drilling rights in Utah

Thursday, August 17th 2006

Oil-and-gas players bid up to $475 an acre for drilling rights on public land Tuesday, but some were still angry over a judge’s decision two weeks ago that they say robbed them of parcels they’d already won in areas of Utah considered worthy of wilderness protection.

At a fast clip, the Bureau of Land Management auctioned 226,471 acres of federal land, much of it in central Utah where a wildcat gusher has intensified interest, for $8 million — half of which goes to the state.

The auction, however, did not include nearly 20,000 acres of land the bureau held back in response to a court ruling that found it had acted illegally in leasing similar wilderness-quality lands three years ago.

U.S. District Judge Dale Kimball reversed the lease of 16 parcels in an Aug. 2 decision, angering exploration companies like Denver-based Tidewater Oil and Gas Co., which stands to lose drilling rights on a half-dozen of those parcels. Tidewater’s leases are in the wild Book Cliffs region of eastern Utah.

“We don’t want our money back. We want our leases,” said Tidewater manager James S. Jones, who was bidding Tuesday for more drilling rights to add to the company’s portfolio of about 470,000 acres in Utah.

“A judge decides he’s going to take it back,” Jones said in dismay, going on at length about his company’s suffering. “That’s what you call being robbed.”

The Bureau of Land Management has not decided what to do about the leases it already awarded. It has 90 days to appeal and said it was studying Kimball’s decision.

The judge criticized officials for taking a “lease now, think later” approach to lands the agency had identified as worthy of wilderness in an inventory of BLM lands in Utah conducted from 1996 to 1999.

“They’re waiting for the dust to settle in several levels of bureaucracy,” said Stephen Bloch, staff lawyer for the Southern Utah Wilderness Alliance, which was among conservation groups that brought the lawsuit.

Bloch said of Jones’s complaint, “It’s not taking anything away. It’s saying the agency never should have sold the parcels to begin with.”

BLM auctioneer Blaine Parker said there was no shortage of public lands still available for drilling in Utah.

“There’s a lot of parcels being offered now, and they’re bringing a lot more money,” said Parker, who for 19 years has been calling bids on energy leases in the West. “We used to sell a lot of parcels for the minimum of $2 an acre, but no longer.”

The BLM sold other parcels Tuesday over the protest of conservation groups, which didn’t deter Jeff Clarke, chief executive for McKinney, Texas-based Marion Energy Inc., from paying Tuesday’s high bid of $475 an acre for 280 acres about 10 miles north of Price, Utah.

Clarke said the Bush administration has been good to oil companies, pushing the BLM to make more public land available for leasing.

The public, he said, doesn’t appreciate the risk companies assume when they spend money to lease and explore public lands.

“You can never be sure what’s a mile below the surface. It’s a high-risk business. That’s what people don’t understand when they bitch about high gas prices,” Clarke said.

Marion Energy placed successful bids on two parcels over the protest of the Denver-based Center for Native Ecosystems.

The center filed a 24-page objection to protect habitat for the white-tailed prairie dog and keep other lands undeveloped until the BLM can finish a resource management plan for the Price region.

On the Net:
Bureau of Land Management:

Share this post