BLM’s New Oil and Gas Rule Offers Positives for the North Fork Valley and Western Slope of Colorado

By Ben Katz 10 months ago
Image credit: Brett Henderson, High COuntry Conservation Advocates

At WSCC, we strive to provide our members with  accurate, well-researched information. We are intentional about not using alarmist messaging and present information to you along with our analysis so that you can make an informed decision on how you want to engage. With that being said, the BLM has embarked on several several important rulemaking processes that impact our local public lands.

Of recent note is the new Oil and Gas Rule, common-sense solutions to both codify and build on the crucial updates that Congress secured for the onshore leasing system in the Inflation Reduction Act. This rulemaking is necessary for clarifying how the changes in law will be implemented throughout the complex oil and gas leasing process.

Table of Contents
So what’s in the rule, anyway?
How exactly will this rule affect the North Fork Valley?
Why are Roadless Areas important, again?
So what does this all mean?
Our recommendations
How to take action – Comments are due September 22, 2023
The other related work we are doing
What we’re reading

So what’s in the rule, anyway?

The rule contains many specific provisions. This includes an update to the fees oil and gas producers are required to provide to the BLM before leasing, updating the bonding requirements so that an adequate amount of money is put aside to clean up oil and gas wells, and a push to move oil and gas leasing towards areas that are “more likely to produce”, or have a higher potential for oil and gas, while also considering “preference criteria” in these areas to protect other valuable resources.

More specifically, the proposed rule includes findings and regulatory changes to the following aspects of the federal onshore oil and gas program (this is not an exhaustive list, but a high-level overview of some changes proposed):

Fiscal Rates/Fees

  • Findings: The BLM notes that both the Government Accountability Office and the Office of the Inspector General have highlighted weaknesses in the onshore program’s fiscal framework and have recommended that the BLM take steps to ensure that the American public receives a fair return from oil and gas activities on public lands.  
  • BLM’s Proposed Regulatory Changes: The proposed rule increases the onshore royalty rate, annual rental rates, and minimum lease bid, as well as requires a new Expression of Interest (lease nomination) fee, reflective of the changes to these rates and fees that are mandated in the IRA. In addition, the Interior Department proposes that the minimum lease bid and base rental rates be adjusted annually for inflation after 10 years following the enactment of the IRA. 

Bonding/Reclamation

  • Findings: The BLM notes that, “…current minimum bond amounts are outdated, expose the Federal Government to significant financial risks in the event of bankruptcies, and delay ‘complete and timely’ reclamation and restoration of lease tracts.” Accordingly, it is recognized in the proposed rule that, while “the BLM has spent $2.7 million annually on orphaned wells, … without an increase in the [minimum] bond amounts, the BLM [should expect] to continue to incur similar annual costs to address orphaned wells.”
  • BLM’s Proposed Regulatory Changes: The proposed rule increases the minimum federal onshore oil and gas bond amounts to reflect inflation and the minimum coverage that would be required for operations on federal lands, based on the BLM’s estimate of current plugging and reclamation costs: not less than $150,000 for a lease bond and not less than $500,000 for a statewide bond. The proposed rule also eliminates the allowance for both nationwide and unit operator bonds, in addition to requiring existing bonds to be updated to meet the increased minimum bond amounts within no more than 3 years (depending on the bond type).

No/Low Potential Lands Leasing

  • Findings: The BLM notes that “historically, the BLM has not employed nationwide criteria to inform its selection of sale parcels,” and, as a result, “the BLM has invested a considerable amount of time and resources on evaluating parcels that the public does not purchase and that lessees do not develop.” Therefore, “directing federal oil and gas leasing towards areas that are more likely to produce…can [more] appropriately utilize the BLM’s time and resources” in administering federal onshore oil and gas lease sales. The rule does not mention “sacrifice zones” for any landscape.
  • BLM’s Proposed Regulatory Changes: The proposed rule ensures that, when determining whether to offer lands specified in an expression of interest at an upcoming lease sale, the BLM considers a set of “preference” criteria consistent with the agency’s mandate “….to manage public lands for multiple use and sustained yield and to take any action required to prevent unnecessary or undue degradation of the lands and their resources.” Included in the list of minimum preference criteria provided in the proposed rule is the potential for oil and gas development (giving preference for leasing to lands with high potential for development).
    • Preference criteria include the following:
      • Proximity to oil and gas development existing at the time of the BLM’s evaluation, giving preference to lands upon which a prudent oil and gas company would seek to expand existing operations;
      • The presence of important fish and wildlife habitats, including wetland habitats, or connectivity areas, giving preference to lands that would not impair the proper functioning of such habitats or corridors;
      • The presence of historical properties, sacred sites, and other high-value leasing lands, giving preference to lands that would not impair the cultural significance of such resources;
      • The presence of recreation and other important uses or resources, giving preference to lands that would not impair the value of such uses or resources; and
      • The potential for oil and gas development, giving preference to lands with high potential for development.

Importantly, the proposed rule does not change the BLM’s multiple-use and sustained yield

mission. Responsible energy development will continue on public lands, and does not affect any valid existing rights or currently authorized leases, and existing operations would get a phase-in period to meet new bonding requirements. These points are important. Remember a few short months ago, the BLM began a rulemaking process to add conservation to the list of “uses” of public land, aptly named the Public Lands Rule. Additionally, there are many thousands of acres of oil and gas leases in the North Fork that this rule would not affect. So how does this stack up with our current oil and gas situation here in the North Fork Valley?

How exactly will this rule affect the North Fork Valley?

The last change to the BLM’s oil and gas leasing program mentioned above is likely the one most likely to catch your eye. Directing oil and gas leasing towards areas that are more likely to produce means that those areas unlikely to produce would be mostly left alone, right? Where are those areas of medium and high oil and gas potential? Do we have any in the North Fork?

First, let’s take a look at a map of the North Fork Valley, with an overlay of high-potential oil and gas lands.

Looking at the map above, the dark red indicates “high development potential” and the pink/purple indicates “medium/moderate development potential”. This data is sourced from the Bureau of Land Management. Paonia can be found near the center of the map. In the base map, the yellowish/orange indicates land managed by the Bureau of Land Management, while the light and dark green are lands managed by the US Forest Service. The dashed line indicates a county boundary.

At first glance, it looks like a great big bullseye on the upper North Fork watershed. And it’s true, we have some high potential lands for oil and gas development in our watershed. We have known and have been fighting off oil and gas development in our watershed for a long time, right? 

Going a little deeper, let’s take a look at where oil and gas leases currently exist in the North Fork watershed.

Added to the map are the red boxes, which account for the oil and gas leases in the North Fork Valley. The rest of this map has stayed the same, with Paonia in the near center. As you can see, over 100,000 acres of oil and gas leases are currently active in the North Fork watershed! Holy cow! 

These leases are all from the late 1970’s or early 2000’s. A subset of these leases, mostly in the southern area near the town of Somerset, are held by Vessels Coal Gas and managed to mitigate waste methane from the coal mines. The other leases are mainly held by two companies, SG Interests and Gunnison Energy. 

Now, let’s add the designated Roadless Areas to the map.

Adding the Roadless Area boundaries (which in the map are symbolized by the yellow and blue areas) certainly makes the map much busier, but necessary to view what is exactly going on. Below is a map with the active oil and gas leases removed to paint a clearer picture.

Going a bit deeper into Roadless Areas, in 2012 the US Forest Service finalized the Colorado Roadless Rule, which provided some protections for over 4 million acres across the state. General Roadless Areas are symbolized in yellow, while Upper Tier Roadless Areas are symbolized in blue on the above map.

Why are Roadless Areas important, again?

With exceptions, areas designated as Roadless are just that, without roads. Generally, Roadless Areas provide protection by prohibiting tree cutting, road construction and reconstruction, and the use of linear construction zones (think transmission or telephone lines) within roadless areas, with exceptions to the prohibitions. These exceptions are extensive and can be summarized in this document. In reference to oil and gas, however, there are some important points to highlight. Temporary roads can be built for existing oil and gas leases (those leases that existed in 2012, when the Colorado Roadless Rule was finalized). This includes all of the current oil and gas leases in the North Fork Valley watershed. Pipeline construction would also be allowed in Roadless Areas, including a pipeline that would connect an oil and gas lease to existing infrastructure within the roadless area. Upper Tier Roadless Areas (blue in the above map) have fewer exceptions, but still some. 

It’s important to note some public lands advocacy history here. Beginning in 2001 and extending through 2012 when the Colorado Roadless Rule was finalized, WSCC had significant involvement in the designation of local Roadless Areas. We owe a lot of the protections granted to those local Roadless landscapes due to the advocacy work that our community has previously done!

While we could go on for a while discussing Roadless Areas, the exceptions, and the intense discussions, disagreements, and collaboration when the Colorado Roadless Rule was being created and approved as a rule, the main takeaways for us are that these areas offer some protections for new oil and gas leases in these areas. This leaves a smaller but significant area susceptible to new oil and gas leasing in the high-development potential areas in the North Fork Valley, as indicated in the below map. Generally, this is in the Hubbard Park area up Stevens Gulch Road from Paonia.

So what does this all mean?

In short, we think the proposed rule is good for the North Fork Valley, and more broadly for western Colorado. Although there is a sizeable portion of high oil and gas potential lands in the North Fork Valley watershed, a significant chunk has already been leased and would not be affected by this new rule. If the rule is approved, there would only be a comparatively small chunk of lands that might see new leases in the North Fork that don’t already have some protective land designations. More importantly, the bulk of lands within the North Fork Valley close to our local communities would be off the table for new leasing, including much of the lands previously included in the 2012 lease sales

WSCC continues to fend off oil and gas projects and lease sales, and advocates for the strongest protections for our local landscapes whenever possible. While we think the BLM’s Oil and Gas Rule is an important step for the agency, it still creates uncertainties and leaves landscapes at risk in the North Fork Valley. WSCC works as hard as we can to ensure that the entirety of our watershed is defined by resilient ecological systems, where water management, agricultural practices, and recreation opportunities allow people and the environment to flourish.

  • The proposed reforms offer a more balanced approach to managing our shared resources better.
  • Applying the rule’s “leasing criteria” to future lease sales will help reduce conflicts with wildlife, cultural, and outdoor recreation resources.
  • The criteria will also reduce the practice of “speculative leasing,” where the oil and gas industry ties up land with little to no chance of development.
  • The other reforms included in the Oil and Gas Rule would mean good things for local communities as well. The proposed bonding reforms take long-overdue action to increase bonding rates to a more suitable level, ensuring that oil and gas companies pay to clean up their messes – not taxpayers.
  • The proposed fiscal reforms permanently increase the fees required to lease and drill on public lands, bringing those payments up to the same levels required by many states in the West and across the country.
  • The rule eliminates noncompetitive leasing, which previously gave away our public lands for as little as 1.50 per acre. Stopping this practice ensures the BLM is not wasting time administering questionable and speculative leases for pennies on the dollar.

Our recommendations

WSCC does not support oil and gas development in the North Fork Valley, and we fight as hard as we can to stop new leases and wells. Our local Western Slope communities and economies are transitioning away from the boom-and-bust cycle of oil and gas development toward a more diverse and resilient path centered on sustainable outdoor recreation, ranching and agriculture, heritage and culture, and the value of our public lands outside of the extractive industries.

While the proposed rule is not perfect and needs some strengthening to best protect local communities, we think it is a step in the right direction. WSCC supports this rule change.

How to take action – Comments are due September 22, 2023

A coalition of conservation organizations across the West have joined together to advocate for the proposed rule. Called the Coalition for Oil and Gas Reform, members include familiar organizations like Wilderness Workshop, Conservation Colorado, and Western Colorado Alliance whom WSCC works closely on many local and regional conservation issues. If you are short on time, we suggest you go to their website and sign their petition, which can be viewed at their website here.

If you have more time on your hands, individual substantive comments are always better. To submit your own comment to the BLM, you can use this link. To read the rule in detail, click here (click the blue “PDF” link in the upper right-hand corner to view the full document). WSCC has several template letters you can use to craft your comment, so if you have made it this far and would like to receive some added guidance, feel free to send me a note at [email protected].

The other related work we are doing

Related to oil and gas leasing and development in the North Fork is the work that WSCC is doing around the US Forest Service’s Grand Mesa, Uncompahgre, and Gunnison (GMUG) National Forest plan revision, as well as the BLM’s Uncompahgre Field Office (UFO) Resource Management Plan (RMP). 

The GMUG Plan does touch many things, but it wmostly steers clear of the topic of oil and gas. Other related items, like large landscape designations (think Wilderness or Wildlife Management Areas) are included that can have an impact (management actions like oil and gas well pad construction or road building are limited or restricted in Wilderness or Wildlife Management Areas). The plan does, however, include a moratorium on new oil and gas leases across the GMUG National Forest until the US Forest Service can complete an oil and gas leasing analysis for the Forest, which is likely at least 3-5 years away.

Additionally, the BLM is amending it’s Uncompahgre Resource Management Plan after WSCC’s successful litigation. The amendment will include updates to areas open to oil and gas leasing, among other items. WSCC created the North Fork Alternative in 2013, a community-supported alternative to oil and gas development which would close 90% of our watershed to oil and gas development. As that amendment process continues (we expect it to pick up again in January 2024), we will continue advocating for protections for the North Fork landscape.

What we’re reading

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  News, Public Lands
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