Tentative Roan Plateau drilling deal elicits support
Elected officials from U.S. Rep. Scott Tipton to Gov. John Hickenlooper are getting behind a tentative settlement involving contested oil and gas leasing on some 55,000 acres of the Roan Plateau west of Rifle.
Just what, if any, financial liability such a settlement could result in for the state of Colorado and local governments remains unclear, however.
The proposed deal would resolve an ongoing lawsuit over the leases. A ruling in that suit in 2012 resulted in the Bureau of Land Management undertaking a supplemental environmental impact statement on its management plan that led to the leases being offered.
The deal would involve companies giving up some leases but royalty, severance and other revenue from production on remaining, highest-prospect leases would “more than offset” the cost of refunding companies for relinquished leases, according to an April 1 letter from Tipton to the Department of Interior voicing his support for the proposal.
The settlement, as Tipton, R-Cortez, understands it and would support it, would protect Colorado and local governments from being held responsible for the cost of the refunds.
“To be clear, DOI would need to pay the refunded costs and not pass them to the state, counties or local governments,” Tipton spokesman Josh Green said this week. “As the details of the negotiations between stakeholders are finalized, Congressman Tipton will be looking for complete assurances that the state, counties and local governments will be held harmless for these funds. He will oppose anything less.”
But comments by state spokesmen suggest some level of state financial liability is possible.
Eric Brown, spokesman for Gov. John Hickenlooper, said by email, “We do support the settlement but need to make sure it works with the Interior Department’s processes, which the litigants are working with the agency on now. The State Treasurer and Secretary of State would also have to support the settlement given the financial implications to the state.”
Asked to elaborate, he deferred to Todd Hartman, spokesman for the state Department of Natural Resources.
Said Hartman, “We’ve had preliminary conversations with DOI about how the state would handle returning its share of initial Roan bonus payments over time, particularly in light of the fact that settlement could expedite development in less controversial areas of the Roan Plateau. Development of these less-sensitive leases would result in federal royalties, of which the state gets 49 percent.”
He declined further comment.
Said Green, “Based on what the stakeholders have reported, the understanding is that the federal government would be responsible for those funds, not state and local governments.”
The potential implications of any lease refund for Colorado and local governments are sizable. The 2008 Roan Plateau lease sale netted nearly $114 million, which set a record as the highest-grossing onshore Bureau of Land Management oil and gas lease sale in the Lower 48 states. Roughly half of that money that came back to Colorado was then shared with local governments.
Associated Governments of Northwest Colorado has opposed any Roan settlement that would cost local governments anything, even if it consists of withholding future energy-related tax or grant distributions to them.
“We come with clean hands. We had good faith when they distributed this money to the communities and said use this money to prepare for impacts,” said Scott McInnis, AGNC’s director and a former western Colorado congressman. “… The communities should not suffer now or in the future.”
Revocation of Roan leases is being considered after U.S. District Court Judge Marcia Krieger, in a ruling in a lawsuit brought by conservation groups, found flaws in the BLM’s Roan management plan and remanded the matter back to the agency for further action. Bill Barrett Corp., which owns the leases on the plateau top, the area conservationists particularly want protected from drilling, appealed, and the case remains in appeals court. Meanwhile, the BLM has begun its new environmental review and is considering alternatives including no oil and gas leasing, which would require refunding companies what they paid.
Tipton wrote in his letter that the proposed settlement has broad support from Colorado’s congressional delegation, the governor’s office, conservationists, industry and Western Slope stakeholders.
“This proposed agreement is truly a ‘win-win’ for industry stakeholders, the conservation community, Colorado and the Department of Interior…” he wrote.
U.S. Sen. Mark Udall, D-Colorado, confirmed his support for the proposal in a statement released by his office after being contacted for this story.
“This deal is emblematic of how Colorado does best when everyone comes together to work out balanced solutions — and how we can develop our plentiful energy resources while also safeguarding our land, water and air. I am committed to continuing to press the U.S. Department of the Interior to get behind this settlement,” he said.
Still unclear is what implications a prescriptive settlement would have for the environmental review the BLM has begun. Environmental impact statements consider a range of possible management alternatives rather than having a preordained outcome. Steven Hall, a Colorado BLM spokesman, declined comment on the possible settlement and what it might mean for the ongoing review.
In Tipton’s letter to the Interior Department, he wrote, “Every party has made a good faith effort to find reasonable solutions to every concern, and all that remains is for (Interior) to address and finalize this process. As such, I encourage BLM to expeditiously review the possibility of incorporating this agreement and its associated efforts into the supplemental land use analysis…”
Theoretically a lawsuit settlement could make the analysis, prompted by Krieger’s ruling, no longer necessary.
Tipton is still awaiting a response to his letter from Interior, Green said.
Mike Freeman, an attorney with Earthjustice who is representing conservation groups in the lawsuit, repeatedly has declined to say much about settlement negotiations. He said this week that parties “are negotiating and discussing options.”
“We think that there’s got to be a better solution that will protect the plateau,” Freeman said.
Duane Zavadil, a senior vice president for Bill Barrett Corp., couldn’t be reached for comment this week. In early April, he voiced hope that negotiations would lead to resolution, but said he didn’t want to jeopardize them by elaborating.
“We’re encouraged by the potential, though, I’ll say that much,” he said.
Conservationists say the plateau top should be protected from drilling because it has wilderness-quality backcountry and provides important habitat for deer and elk, fish and rare plants. They want any development of plateau-top drilling to occur via directional drilling from surrounding areas, but Bill Barrett Corp. has said that wouldn’t be technically or economically feasible.
Green, Tipton’s spokesman, said how drilling on the plateau top would be handled under a settlement “remains to be seen pending the final details of the ongoing negotiations.”