GRAND JUNCTION – Leasing for natural gas in Colorado is a largely private affair, though it is less so in the northwest corner of the state, according to the Bureau of Land Management.
Ninety percent of drill-permit applications in Colorado in 2012, the most recent year available, were on other than federal lands, BLM spokesman David Boyd said. The remaining 10 percent were on federal lands.
That breaks down to 3,405 non-federal wells and 370 on federal lands, said Boyd, who also said he compared federal records against those of the Colorado and Gas Conservation Commission to reach the figures, which he presented to the Grand Junction Area Chamber of Commerce.
Interest in drilling on federal land was proportionately higher in the bureau’s northwest district, which encompasses the Piceance Basin and some surrounding lands.
Officials approved 1,100 permits to drill on non-federal lands in the bureau’s northwest district in 2012 while the BLM approved 323, making the ratio 77 percent nonfederal drill approvals to 25 percent on federal lands.
That’s a higher proportion of federal approvals than in previous years, Boyd said.
BLM’s Northwest District was the busiest of all the state’s districts from 2005 to October 2013, however, Boyd noted. It has processed 4,162 applications for permits to drill, or 93 percent of all those in the state on federal land. The Front Range District has processed 4 percent or 197, and the Southwest District, 3 percent, or 143.
Industry and environmental organizations differed on the reason for the disparity.
Drill rigs, according to the Center for Western Priorities, are “following the oil to nonfederal lands.”
They’re also being driven away by unreliable federal regulations, said David Ludlam, executive director of the West Slope Colorado Oil and Gas Association.
“The sanctity of contracts with the federal government has eroded,” Ludlam said, pointing to delays in approvals to drill on leased areas such as the Roan Plateau.
Fram Exploration ASA, which is planning to drill 108 wells on 12 pads in the Whitewater area, has been working for “half a decade” to get the point that it can begin drilling its 10-year lease, Ludlam said. Two other companies with leases, Ursa Operating Co. LLC and SG Interests, have seen 10-year leases expire before they were allowed to drill, he said.
Both companies are seeking extensions of their leases.
Local BLM officials, Ludlam said, are working hard, but are frequently overruled by higher-ups in Washington, D.C., frustrating leaseholders with delays.
The market, however, is more interested in oil than in the dry natural gas predominant in the Piceance Basin, the Center for Western Priorities said.
“Companies are strategically shifting away from natural gas development – particularly in low-value dry gas zones like those found in western Wyoming, western Colorado and eastern Utah – toward those areas with established shale oil resources or mixed shale oil and gas resources,” with little regard to whether the ownership is public or private, the group said.