Bennet seeks Thompson Divide peace
A newly proposed measure by U.S. Sen. Michael Bennet would increase the amount of compensation that two companies receive for recently canceled leases in the Thompson Divide area southwest of Glenwood Springs.
The measure is aimed at permanently protecting the area and avoiding a legal battle over it. But an official with one of the companies, SG Interests, says he doubts it will get through Congress, and he also revealed that SG already has sued over the canceled leases.
Bennet, D-Colo., announced the introduction of the latest version of his Thompson Divide legislation Wednesday. His office said in a news release that it would “protect more than 172,000 acres in the Thompson Divide and adjacent areas from the possibility of future leasing, while providing compensation for Thompson Divide leaseholders.”
Bennet said in the release, “This middle ground approach protects the land — and the local economies tied to it — from future energy development, while also ensuring that former leaseholders receive fair compensation to reinvest in other areas of Colorado.”
The measure has received widespread support, including from the Thompson Divide Coalition, Carbondale Mayor Dan Richardson, Garfield County Commissioner Tom Jankovsky, representatives from Pitkin and Gunnison counties, Gunnison Energy, the Wilderness Society and the Wilderness Workshop.
“Garfield County supports this middle-ground compromise that makes the energy companies whole, was developed with input from all sides, and provides a balanced solution to the Thompson Divide leasing issue,” Jankovsky said in Bennet’s release.
But Robbie Guinn, a vice president for SG Interests, questions what the measure would accomplish, not to mention its prospects for passage.
“I don’t believe that this bill is going to get through Congress and be signed by the president,” he said.
He believes it runs counter to President Donald Trump’s talk of promoting oil and gas development.
Guinn said SG was notified of the legislation by Bennet the same day Bennet introduced it, and he’s still trying to understand what it does.
“It talks about avoiding litigation. Well, this litigation was filed a month ago. I really don’t understand the rationale with the bill and how this is supposed to work,” he said.
SG sued officials with the Department of Interior and Bureau of Land Management Feb. 10 over the BLM’s decision to cancel 18 leases SG owned on the Thompson Divide. The BLM also canceled seven Thompson Divide leases owned by Ursa Resources. Altogether the leases covered some 33,000 acres.
The cancellations followed a retroactive environmental review because of an earlier oversight by the BLM.
“The decision to cancel the (l)eases was not required, and it was made purely for political reasons against prior practice, scientific evidence, and legal obligations. It should therefore be held ‘unlawful and set aside’ as ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,’ ” the suit says.
Bennet’s office said in his release that his bill “presents an option to avoid costly and drawn-out litigation by withdrawing from the Thompson Divide area altogether, in exchange for credits that could be used to bid on new leases in areas determined appropriate through the National Environmental Policy Act.”
Credits also could go toward lease rental fees or royalty payments.
In the case of the canceled Ursa and SG Interests leases, the bill spells out that the companies would be compensated not just for what was paid to acquire the leases and for lease rental fees, but for costs related to pursuing drilling permits, preparing environmental analysis or otherwise seeking to develop the leases, except for legal-related costs.
The BLM had said it only would reimburse lease acquisition and rental costs, covering about $1 million in total.
Don Simpson, an Ursa official, said Thursday that Ursa already has been refunded by the BLM. It wouldn’t be eligible for lease credits under Bennet’s bill for what it’s already been paid. But it could be eligible for reimbursement for additional costs.
Simpson said the BLM had turned down its request for reimbursement for perhaps $300,000.
Simpson said Ursa isn’t contemplating litigation in the matter.
“It would be great if we could get more of our sunk costs out of it, but right now we’ve almost moved on,” Simpson said.
Guinn said SG has refused to accept just the bonus and rentals as payment.
“We would not even accept (as sufficient) our sunk costs in what we have spent out there.”
SG contends the leases in question hold huge resource development potential. It says in its suit that the BLM failed to properly acknowledge in its lease review analysis the potential for developing Mancos shale gas there.
SG points to the results of other shale drilling in the area and a U.S. Geological Survey estimate last year that the Mancos shale in the Piceance Basin could hold 66 trillion cubic feet of recoverable gas.
SG continues to hold lease rights to drill into the Mancos shale in some 9,000 acres of Thompson Divide in what’s known as the Wolf Creek area. That’s a matter of continuing concern to opponents of Thompson Divide drilling.
Under Bennet’s bill, for SG to accept the credits being offered for the 18 canceled leases it would have to give up the Wolf Creek leases and be compensated for them as well.
According to the bill’s terms, the areas covered by relinquished leases would be permanently withdrawn from further leasing.
Guinn said that while Bennet calls the measure a middle-ground compromise, “basically it’s just taking more leases from us.”
Bennet’s measure wouldn’t force SG to give up leases. The decision whether to participate under the terms of the bill would be up to the company; the bill specifies that it honors valid existing rights.
But Peter Hart, an attorney with the Wilderness Workshop, said developing the Wolf Creek leases would be a headache for SG because of the level of community opposition, and other issues such as difficult road access.
“That’s obviously going to be part of their calculus” should they be presented with the option to give up the leases under the bill’s terms, he said.
Gunnison Energy is supporting the measure after Bennet agreed to seek protections for less acreage than he had previously, excluding an area in the upper North Fork Valley that has seen previous drilling and Gunnison Energy is interested in further developing.