It is hard to generate much sympathy for the oil and gas companies that are asking the United States to suspend their leases in the Thompson Divide above Carbondale. (A suspension is a form of lease extension.)
The leases in question were issued in 2003 (possibly in violation of then-existing environmental requirements) and the companies have been speculatively sitting on the leases without development ever since. I suspect they are requesting the suspensions for the following reasons:
• To see if natural gas prices rise enough to make the leases actually worth developing.
• To make their corporate books look better by exaggerating their developable gas reserves.
• To hope that the suspensions allow time for local governments and/or conservation organizations such as the Thompson Divide Coalition to raise money to buy the leases out. (But, such a buyout would only reward the inaction of the companies with an economic windfall for leases that will expire and be worthless in the next few months. Why waste scarce taxpayer and private conservation dollars to enrich company coffers in that way?)
When the United States issues oil and gas leases on federal land, the goal is to promote domestic energy production. In that spirit, lessees are supposed to proceed to diligent development of the leases in timely fashion, not speculatively sit on them for nine-plus years. In the Thompson Divide case, the leases were held without development in 2007, when natural gas prices hit an all time high. So why are the companies now coming in at the 11th hour, when gas prices are far lower, and asking the United States to extend the leases. In my opinion, they are just trying to pull a fast one on the public, and get something for essentially nothing.
There are already 10,000 existing gas wells in and around Rifle and the Garfield County portion of the Piceance Basin in northwest Colorado, with another 25,000-40,000 predicted to be developed in the next two decades. Isn’t that enough? Aren’t we doing our part?
The wise course in the Thompson Divide is to deny the lease suspensions, and let the leases expire. Then, if the companies really think the leases are worthwhile, they can submit new lease applications that will be processed in accordance with today’s environmental standards. I predict they could not meet such standards. The bottom line is that Uncle Sam should not extend the leases to reward the companies’ past inaction and aid and abet further speculation.
(Editor’s note: Andy Wiessner served for 10 years as staff and counsel to U.S. House of Representatives subcommittees with jurisdiction over public land and mineral leasing issues.)