SG Interests looking for drill sites within Thompson Divide
July 19, 2012
CARBONDALE – An oil and gas company that leases thousands of acres of public land in Thompson Divide west of Carbondale has informed the Bureau of Land Management that it is preparing to apply for permits to drill wells.
Houston-based SG Interests told the BLM last week that it is performing surveys and undertaking other work to determine where it wants to locate drill pads, according to David Boyd, a spokesman for the public agency.
“It’s an initial-discussion, heads-up kind of thing,” Boyd said.
Oil and gas companies can perform preparation work such as surveys on their leases without permits from the BLM. Once a company determines where it wants to drill, it files a “notice of staking” with the BLM, Boyd said. The proposed location for a well pad is staked out, and BLM officials visit the field to confirm that the proposed pad is on a valid lease. The step triggers the official “application for permit to drill” process.
“SG has said they’re interested in seven to nine well pads,” Boyd said.
A well pad can have one or more wells. No information is available yet on the how many wells the company wants to drill.
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Encana, another oil and gas developer with leases in Thompson Divide, allegedly is preparing to file notice of staking for one or two well pads, according to two sources. Boyd said the BLM hasn’t been informed yet of any activity by Encana.
“This is a significant move. People should be aware of it,” said Peter Hart, an attorney with Wilderness Workshop, a nonprofit conservation group with its headquarters in Carbondale.
A confederation of ranchers, hippies, sportsmen and conservationists formed the Thompson Divide Coalition three years ago to prevent gas development in that area. The coalition is working with national, state and local officials, as well as the gas producers, to try to preserve the land.
SG Interests’ actions came as a surprise, according to Zane Kessler, who was hired Monday as the coalition’s executive director.
“This is concerning at best,” he said.
Officials with SG Interests and Encana didn’t return telephone calls Thursday seeking comment.
If SG Interests and Encana apply for permits to drill, the federal review will focus on surface disturbance conditions such as whether road construction is allowed. The decision wouldn’t be whether the gas producers can drill wells, according to Boyd.
“They have the leases,” he said. “They have the rights to those resources.”
This is the first time in the past several decades that a gas company has informed the BLM about its intention to pick out well pads in that area, Boyd confirmed. The move could trigger the showdown that many felt was inevitable in the pristine Thompson Divide once it was learned nearly a decade ago that thousands of acres of public lands had been leased by gas producers.
The Thompson Divide area covers about 221,500 acres generally west of the Crystal River, north of McClure Pass and south of the Sunlight Mountain Resort ski area near Glenwood Springs. It includes 88,100 acres in western Pitkin County. About 82 percent of the area is public land.
Gas companies hold 81 leases that cover 105,000 acres of public lands.
Thompson Divide is on the eastern edge of the gas-rich Piceance Basin. The focus of the natural-gas boom in Garfield County in the 2000s and the ongoing activity is west of Thompson Divide, to the south of Silt and Rifle.
Kessler called the divide the “last buffer” between the Roaring Fork Valley and the center of a multimillion-dollar gas-production area. The Thompson Divide Coalition believes in responsible development of natural resources, he said, but maintains that Thompson Divide serves a greater good in the long run if preserved for its watersheds, cattle grazing, hunting and outdoor recreation.
Once a formal application for a permit to drill is submitted and the locations are verified as valid leases by the BLM, the review would be handed to the U.S. Forest Service, Hart said. The agency would perform an environmental study to determine the surface-use conditions.
“The Forest Service (process) will be the biggest opportunity for public comments,” Hart said.
Kessler said the coalition will continue to try to preserve the land. In February, it offered $2.5 million to compensate six gas developers for direct investments of public record on their gas leases. The Thompson Divide Coalition’s strategy is to remove gas leases from play and prevent new leases from being offered.
When asked if SG Interests’ move toward applying for drill permits should be regarded as the company’s answer to the financial offer, Kessler replied, “We hope not.”
“We look forward to engaging the industry players in good-faith negotiations,” he said.
SG Interest’s actions are the latest in a complicated chain of moves and countermoves between gas developers and conservationists over drilling in Thompson Divide.
SG Interests proposed to the BLM to create the 32,000-acre Lake Ridge Unit, which would engulf 18 of its leases in Thompson Divide. Twenty leases the company holds are set to expire between May 31 and Aug. 31, 2013, according to research by Thompson Divide Coalition. Forming a unit would combine the leases and allow SG Interests to hold on to them for a longer amount of time as long as one well was drilled.
The Thompson Divide Coalition and its allies effectively got the public engaged to oppose the creation of the unit. Colorado’s senators also urged the agency to take its time and put a lot of thought into its decision. The BLM hasn’t ruled on the proposal, leading to speculation that SG Interests is getting nervous about the status of its leases.
Hart said he hasn’t been able to get information about the exact locations of the leases yet. The BLM won’t release information because no formal application for a drilling permit has been submitted. However, Hart said he has learned all the leases SG Interests wants to drill on now are within what would be the Lake Ridge Unit.
If drilling takes place, access would be via Four Mile Canyon outside Glenwood Springs and possibly Thompson Creek outside Carbondale, according to Hart.
Drilling in the area would be expensive because the terrain is so challenging.
“They’re going to have to blaze their own roads if they want to build them,” Hart said.
In addition, more than half of the acres in the Thompson Divide area are in the Forest Service’s inventoried roadless system. The agency could prohibit roads and require gas developers to fly in equipment.
Meanwhile, natural-gas prices hover around a 10-year low. There’s no question that the Thompson Divide area holds natural gas. It’s a question of whether it can be drilled economically.
In a 2004 study, the Wilderness Society determined from U.S. Geological Survey data that the Thompson Creek area had 33 billion cubic feet of economically recoverable natural gas. That figure is now lower because gas prices have plummeted since 2004, making recovery of some of the gas less feasible.
“SG is at least posturing,” Hart said.
He declined comment when asked if he thought SG Interests would seriously pursue drilling permits.