GarCo officials fear revenue loss if BLM cancels leases on Roan
The Bureau of Land Management says it will evaluate the possibility of no oil and gas leasing under a new planning process for the Roan Plateau, which is prompting some western Colorado governments to wonder how much such an action could cost them.
At issue are some 55,000 acres of oil and gas leases that were sold in 2008 for $114 million.
That money was split roughly half and half between the federal government and the state of Colorado. Part of the state’s share of revenues from lease sales is distributed at the county and municipal levels in areas of energy development, prompting some governments to wonder if they’ll be on the hook if the companies must be reimbursed for the leases.
“It would be a real issue to the state of Colorado and all the parties to pay that money back in today’s economy,” Garfield County Commissioner John Martin said.
The county and town of Parachute plan to send letters to the state Department of Local Affairs seeking some answers to their questions. Parachute Town Administrator Robert Knight said Associated Governments of Northwest Colorado is doing the same.
He said Parachute would like to see the leases honored. However, “If we are going to have to pay back our portion … I kind of need to know what that would be, what impact that is going to have,” he said.
David Ludlam, executive director of the West Slope Colorado Oil and Gas Association, said it’s “definitely an appropriate question to be asking.” And he questioned the reach of the new planning process, following a court ruling last year.
“The judge didn’t say re-do an entire environmental impact statement. … All she said was fix a couple of things,” Ludlam said.
Among other things, U.S. District Court Judge Marcia Krieger ruled that the BLM failed to adequately consider a planning alternative that would keep drilling off the plateau top by making use of directional drilling. BLM spokesman David Boyd said that based on that ruling, the agency wants to make sure it fully considers a full range of alternatives, including no leasing not just on top but throughout the planning area, as it begins the new planning process. How to handle the possible cancellation of the leases is “a question that would have to be worked out,” he said.
Knight said Parachute needs to know soon if it must pay back funds or plan for future lease distributions to be withheld in order to help recover the Roan money.