Kelly Sloan, The Business Times
More than six years after oil and natural gas drilling leases first were issued, production soon could begin on at least parts of the Roan Plateau in Western Colorado.
A settlement between the U.S. Bureau of Land Management and a consortium of environmental groups was announced during a press conference at the Capitol in Denver attended by Interior Secretary Sally Jewell, BLM Director Mel Cornzie, Colorado Gov. John Hickenlooper, U.S. Sen. Michael Bennet and representatives of Bill Barrett Corp.
The settlement opens the way for limited drilling in an area of the Piceance Basin north of Rifle.
Environmental groups, led by EarthJustice, sued the BLM over the issuance of the leases, citing what they deemed were problems with the environmental impact statement accompanying the lease sale. In 2012, a district court agreed in part with the groups and sent the EIS back to the BLM. The agency decided to redo the document, which would have set back development even further, spurring efforts to reach a settlement.
In the announced deal, Bill Barrett Corp. will relinquish 17 of 19 leases on top of the Roan Plateau while retaining 4,800 acres on top valued at approximately $10 million. The settlement allows energy development to commence on leases along the base of the plateau and on the two remaining leases on top following the completion of the existing resource management plan by the BLM. Bill Barrett Corp. will be refunded about $47 million for the 17 leases it’s giving up.
Officials speaking at the press conference hailed the settlement as a model for compromising between environmental interests and economic development.
While she said she was “not fond of lawsuits, especially ones that bear my name,” Jewell also said she “appreciated the plaintiffs for raising awareness of the issue.”
“We need to realize that there are some places that are too special to drill, and some that are low conflict,” she said.
Sen. Bennet called the deal “the best of both worlds” and said he supported the “collaboration and compromise that we have a hard time finding in D.C.”
Gov. Hickenlooper described the compromise as “the Colorado way.”
While concerns remain among some in Western Slope communities the settlement places hundreds of acres off limits for potential development, representatives of Bill Barrett Corp. said they’re relieved development might soon move forward on some of the leases acquired in 2008.
Scot Woodall, president and chief executive officer of Bill Barrett Corp, said his company “looked for balance as well” and the settlement provided “certainty to go ahead and drill, the certainty of a timeline instead of further court action.”
While Woodall said the other 17 leases would have had value as well, there was a timing issue involved.
Duane Zavadil, vice president of regulatory and government affairs for Bill Barrett Corp., said, “The key issue for Bill Barrett Corp is business certainty, the ability to execute on lands we retain.”
Zavadil said the company expects several years of mineral development on the retained leases at the bottom and top of the Roan Plateau. “There is a real potential to see development on the most prosperous leases. These are among the best of the best of the Piceance.”
Even as the settlement is praised for allowing at least some development to occur, some remain concerned local governments remain on the hook for millions of dollars they’ve received from lease sales through the U.S. Department of the Interior. The Associated Governments of Northwest Colorado has called for local governments to be held harmless for any financial obligations related to the required refund.
Concerns also remain the funds will be recovered by holding back future federal mineral lease funds owed to local communities. Backers of the settlement say that the revenue generated from the retained Roan leases will more than offset any clawback to FML funds.