Polis drills SG Industries executive about leases in Thompson Divide

Proponents of the oil and gas industry attacked Bureau of Land Management policies and federal oversight Tuesday during a U.S. House of Representatives hearing, claiming that regulations are impeding further extraction efforts and harming the Western Slope’s economy.

But Carbondale rancher Bill Fales, a lone conservation voice in the House Committee on Natural Resources hearing, pushed for protection of the ecologically pristine and hotly contested Thompson Divide.

Fales, 63, said the Divide is an economic engine for the Roaring Fork Valley, creating hundreds of jobs and bolstering the economy to the tune of $30 million annually.

“Our family has been running this ranch for 93 years, and that’s why I’ve traveled here today: to work to ensure the future of this ranch and our community,” he said. “While oil and gas has long been developed on parts of the White River [National Forest], that development is largely occurring on the far western end.”

Fales noted that the Thompson Divide is just a small corner of the larger forest, and is the “proverbial golden egg that fuels our economy.”

“By contrast, in 2012, the U.S. Forest Service estimated the long-term return from natural gas production on this entire national forest was 21 jobs and $1.27 million in labor income,” he said. “I’m not against oil and gas production. I put out 400 tons of hay in the past six days, and I could not have done that without diesel fuel and hydraulic oil.”

But the land in the Thompson Divide is rugged and not fit for oil and gas extraction, Fales said. Calling it a “survival issue,” he said the Roaring Fork Valley made the conscious choice to shift to an agricultural-, recreational- and tourism-based economy after enduring boom-and-bust cycles of fossil-fuel extraction in past decades.

“That transition has been incredibly successful, and our economy is thriving,” Fales said. “Our most valuable economic asset is what’s on the ground, not what’s under it. Our communities are united in the view that drilling the Thompson Divide is not an appropriate use of our public land.”

Lamborn blasts BLM

The discussion, heavily populated by industry representatives, saw four Republican congressmen and one Democrat, U.S. Rep. Jared Polis, question witnesses during a hearing titled, “Opportunities and Challenges of Developing the Mancos Shale Resource.”

U.S. Rep. Doug Lamborn, committee chairman and a Colorado Springs Republican, slammed the BLM for not sending a representative to testify.

“I’d like to voice my frustration over the fact that the Bureau of Land Management refused to send a witness to today’s hearing as requested by the [Energy and Mineral Resources] subcommittee,” he said. “By refusing to testify before Congress, the BLM showcases its disregard for the families and communities that are most affected by its decisions.”

But Polis, the ranking minority member on the committee, said the BLM was not represented at the hearing because the Department of the Interior offered to send just one representative, who came from the U.S. Geological Survey.

“I think that if we had requested the BLM side of Interior, hopefully they would have been able to comply with that,” he said. “For us to have multiple people from the same agency is sometimes too much to ask.”

David Boyd, a BLM spokesman, said Tuesday that the agency had no comment on the hearing.

All told, five people were invited to testify: Fales; Robert Downey, vice president of production and business development for Gunnison Energy, LLC; Walter Guidroz, program coordinator for the Energy Resources Program of the U.S. Geological Survey; Robbie Guinn, vice president of land for SG Interests; and Rose Pugliese, a Mesa County commissioner.

The discussion stemmed from a request by the oil and gas industry for the BLM to republish a draft environmental impact statement (EIS) concerning 65 contested leases in the Thompson Divide, and to reopen the public-comment process. This comes at the heels of a new USGS assessment that estimates far greater reserves of natural gas in the Mancos shale formation, a massive area beneath sections of the Four Corners states and Wyoming.

The report estimated that 66 trillion cubic feet of natural gas may exist under the Mancos. This equates to roughly 40 times the previous estimate, which was conducted in 2003 and estimated 1.6 trillion cubic feet.

Which industry is more valuable?

At the heart of the hearing was the BLM’s preferred action on the leases in the Thompson Divide, which would see 25 owned by Houston-based energy companies SG Interests and Ursa Resources canceled outright and additional restrictions placed on others.

This has led to arguments over the stability of the extraction industry, which is prone to booms and busts depending on market prices, versus a tourism-based model like in the Roaring Fork Valley, which has thrived in recent years but lacks upward mobility for lower-tier employees.

One congressmen suggested that an oil-and-gas job has greater value than employment in the tourism or recreation industries.

“Having access to a good job is a pretty big deal,” said U.S. Rep. Dan Benishek of Michigan. “I think that tourism jobs are OK, but an oil-production job, that’s a family-raising job.”

Zane Kessler, executive director of Carbondale’s Thompson Divide Coalition, said Tuesday that Benishek’s remarks were off-base and insulted Roaring Fork Valley residents.

“Comments that tourism jobs cannot sustain families are completely inaccurate and downright offensive,” he wrote in an email. “Ranching and tourism jobs in our community feed families in the same way that oil and gas jobs feed families in the center of the Piceance Basin. In fact, our recreation and tourism-based economies are strong and growing.

“Unfortunately, the same cannot be said of natural gas-dependent economies elsewhere.”

Fales noted that in Glenwood Springs alone, tourism provides a $240 million economic boost.

But Mesa County’s Pugliese said, in essence, that oil and gas jobs are more important, claiming that the cancellations of the Thompson Divide leases could negatively affect Grand Junction’s economy. She added that over-regulation by the federal government has led to hardship in her region.

“In Mesa County, we’ve tried to diversify our economy. Boom-and-bust cycles are difficult on all of us, and yet tourism jobs just cannot sustain people,” Pugliese said. “They can have two or three jobs, they’re trying to support their families, and our Medicaid rates are increasing. That’s a problem. Those energy-industry jobs are good jobs, … and they were here in Mesa County and now they are not.”

She said that while there isn’t much drilling directly in Mesa County, much of the work force resides there and suppliers have set up operations near Grand Junction. Pugliese noted that she received an email Monday saying that her county’s sales taxes are down 3.5 percent for the year.

“The commissioners of western Colorado have asked me to speak on their behalf as well,” she said. “When you think about economic effects of over-regulation, potentially canceling leases or modifying leases, the ability or inability to do business in Mesa County and our surrounding western Colorado counties, you have to think about the domino effect as we call it.”

She said that 10,000 jobs have been lost by economic downturn in her county. Pugliese added that “900 of the 1,200 strong jobs” in Delta County’s coal mines have also been lost due to actions by the Department of the Interior.

She opined that by exporting some of the West Slope’s abundance of natural gas to Asian markets, economic stability will be brought back to the region.

While Mesa County’s support of the oil and gas leases in Thompson Divide is not debated, Pitkin County has long favored cancellation, and Garfield County Commissioner John Martin has signed a letter of support for the BLM’s preferred action.  

Additionally, a glut of natural gas reserves, coupled with low market prices, has led to a slowdown of production in western Colorado in recent years, making some companies pull out and focus on other regions of the country.

Polis noted that recreation and tourism jobs are more sustainable, and aren’t subject to the whims of the oil market.

He submitted letters of support for Colorado Sen. Michael Bennet’s bill seeking permanent withdrawal of leases in the Thompson Divide, and noted that 91 percent of public land in the state is already open to oil and gas leasing.

Polis asked Fales, who grazes his cattle in the Thompson Divide, how drilling in the area would harm the local recreation economy.

The rancher replied that the Divide is the heart of local elk-calving ground, and extraction would greatly affect Glenwood Springs’ tourism base as well as the region’s ranching.

“In the Divide Creek permit a few years ago, when the oil and gas exploration really picked up, those ranchers suffered a 20 percent calf loss,” Fales said. “It was unexplained, it was coincidental, but they weren’t very happy when they got their paycheck at the end of the year.”

He added that his cattle end up at Whole Foods, and just the perception alone that he was grazing the animals near oil and gas development would devastate his livelihood.

“I have to go through a lengthy certification process to keep that market,” Fales said. “If the consumers perceive that that land isn’t pristine, they’d quit buying it.”

SG Interests VP calls lease process ‘sobering’

Guinn told the committee that developing leases on public lands is getting “exceedingly difficult” with changes in land-management decisions that he sees as being without legal precedent. He said the BLM’s preferred alternative has had a “chilling effect” on extraction progress.

“Our experience in purchasing and trying to develop 18 federal leases in western Colorado has been sobering,” he said. “Today, SG faces the cancellation of 18 federal leases, not for anything we have done or not done, but because BLM made a paperwork mistake when it sold the leases in 2003.”

According to a BLM executive summary, in 2007, the Interior Board of Land Appeals “ruled that before including U.S. Forest Service parcels in an oil and gas lease sale, the BLM must either formally adopt a National Environmental Policy Act (NEPA) analysis completed by the Forest Service or conduct a NEPA analysis of its own.”

 

The BLM’s draft environmental impact statement determined that the NEPA analysis for 65 existing leases “is no longer adequate due to changes in laws, regulations, policies and conditions.”

Guinn said the BLM did nothing for five years, and then through a new NEPA process decided on the preferred alternative.

“BLM’s lease cancellation decision calls into question the foundation for the development of federal oil and gas, the sanctity of a federal contract, and the rule of law,” he said. “Those private-sector investments won’t be made if there is no longer confidence in a government lease contract.”

Fales said the illegally issued leases were initially sold for $2 an acre, and no stakeholders, including himself, were notified of the sale.

He supported the BLM’s preferred alternative as being balanced and taking into account the needs of the entire community, and not just the oil and gas industry.

“This middle-ground approach respects the need for multiple uses on the forest and has received widespread support,” he said. “The BLM has canceled improperly issued leases in the past. Our nation is faced with an abundant supply of natural gas. We’re not facing a shortage, and we do not need to develop every area.”

But Guinn said he wanted the BLM to “press the pause button” on the lease cancellations so it can take into account the new USGS Mancos shale assessment, and provide a new public comment process for a revised draft EIS.

The industry and Mesa County had boycotted public events this spring during the previous process, electing to submit only written comments. During a 51-day public comment period that ended in early January, over 50,000 responses were received by the BLM, the vast majority of which called for the cancellation of the contested leases.

Guinn also wants state officials, conservation groups and citizens to take another look at a proposed lease swap that would allow drilling on over 30,000 acres of public land in the Grand Mesa, Uncompahgre, and Gunnison national forests in exchange for protecting equal acreage in the Thompson Divide.  

This spring, U.S. Rep. Scott Tipton of Colorado pushed a lease-swap proposal that was largely written by SG.

Carbondale-based Wilderness Workshop applauded Fales’ testimony, as well as the efforts of Polis, on Tuesday, and said the BLM should be able to complete its EIS process.

“Points made by minority witness Bill Fales and ranking minority member Jared Polis were dead-on,” says a Wilderness Workshop press release. “Industry groups who have boycotted BLM’s reconsideration of those illegal leasing decisions shouldn’t be allowed to hijack the process in the 11th hour. The extraordinary increase in shale gas that USGS estimates underground in the Piceance Basin, coupled with the national glut of natural gas, provides a reason not to drill every acre.”

Extraction opportunity or fuel for climate change?

Lamborn called the USGS findings “stunning” and a “game-changing opportunity” for energy resource extraction in western Colorado. But he pitted the findings against federal land-management agencies’ regulations, questioning if these data would even be considered in assessing where leases should be accepted.

“An unpredictable federal regulatory environment and arbitrary federal actions would chase investment from states with federal lands to those without federal lands,” he said. “In many cases, it will chase investments to other countries. … We need federal policies that do not pull the rug out from under job creators.”

But Polis was quick to note that climate change is a “threat to our planet,” and is affecting communities globally in the form of wildfires, floods, invasive species and months of record-high temperatures. He added that these changes are caused by human activity, and “the only people who continue to question that seem to be some of the Republicans here in Washington.”

“We have a large uncontrolled fire in my district now near Nederland,” Polis said. “We already have six homes that have been destroyed. We have, as we speak, 13 straight [of the] hottest months on record, and we have temperature records that go back 135 years. So, this is not a coincidence.”

He said conservation of public lands is a moral imperative, and in the best interests of national security, but that President Obama is stymied by Congress at every step in his efforts to cut down on gas leaks, all while industry is pushing for greater extraction amid battling regulation.

Polis said there is a “ton of natural gas” in the United States, and he’s concerned that developing all the newly discovered resources will lead to further impacts to climate, air and water.

“[We’d be] setting ourselves out on a path to catastrophe, contributing to climate change, and of course destroying many of our scenic vistas and the tourism economy in western Colorado,” he said. “Natural gas suppliers seem to often fight against every safety and environmental protection that’s asked of them.”

 In light of the massive new estimates of resources in the Mancos, and widespread support from local entities, Polis asked Guinn if he could see protecting the relatively small Thompson Divide in perpetuity as part of a broader agreement.

“I would not support permanent withdrawal of the Thompson Divide from future oil and gas development,” Guinn said. “We don’t know what this country’s energy needs will be going forward. So removing an asset like that from the inventory, I believe would be bad policy.”

collin@aspendailynews.com