BLM wants to take back error, gas lease
The U.S. Bureau of Land Management says it plans to cancel an oil and gas lease in the Garfield Creek State Wildlife Area unless the company owning it agrees to land-disturbance restrictions that the BLM mistakenly failed to impose when the lease was issued.
The agency is seeking to resolve an oversight when the lease was issued for 1,520 acres at the wildlife area, south of New Castle. The lease’s majority owner is Dejour Energy (USA) Corp., which acquired it from the initial buyer.
In 1991, in an oil and gas amendment to the BLM’s resource management plan for the region, it required that oil and gas development beneath federal minerals in the wildlife area be subject to a no-surface-occupancy restriction, except where leases already had been issued. The BLM reaffirmed that requirement in a 1999 amendment, but when it issued the Dejour lease in 2001, it mistakenly applied the restriction to only one-third of the lease acreage.
The wildlife area covers more than 13,000 acres. Its owner, the Colorado Division of Wildlife, doesn’t want it disturbed by oil and gas development, but it can’t stop such activity because it doesn’t own the underlying mineral rights. Some drilling within the area already has begun in order to develop privately owned mineral rights.
The BLM owns 10,544 acres of mineral rights within the wildlife area. It has leased some 7,000 acres of those rights, but with restrictions that will require most of that oil and gas to be tapped by drilling directionally from outside the wildlife area or from well pads located above privately owned minerals within the area.
The BLM and DOW are in talks with Dejour to try to resolve the problem with Dejour’s lease.
“Obviously, they don’t want to lose it, and we don’t want to end up in court with them over it,” said Steve Bennett, manager of the BLM’s Colorado River Valley Field Office.
Jamie Connell, the BLM’s district manager for northwest Colorado, said the BLM has the authority to cancel a lease that doesn’t comply with the law. It would have to refund the owner what it was paid for the lease, but also potentially pay for damages, which could be a significant amount of money, she said.
Dejour president Harrison Blacker said it would not be appropriate to comment on the BLM position regarding the leases, but that Dejour continues to seek “a constructive resolution.”
“Dejour believes that these are valid leases. … We understand the issue that the BLM has raised. We’re going to continue to work on that,” he said.
The BLM would be willing to allow an exception to the no-surface-occupancy restriction if the DOW agrees to a surface-use agreement with Dejour. BLM spokesman Randy Hampton said the DOW is considering such an agreement for drilling on a part of the Dejour lease that’s already protected by the restriction but is along a county road.
The DOW is “holding fast” to opposing development on the two-thirds of the lease that is the focus of negotiations, although things could change as talks continue, Hampton said.
Blacker said while concerns about the possible effects of energy development in the wildlife area are valid, he has seen multiple oil and gas projects in his career in areas of wildlife sensitivity.
“To my knowledge, there’s always a way to mitigate impacts on the wildlife, except in cases where you have endangered or nearly extinct species,” he said.