West's oil and gas not "locked up"

West's oil and gas not "locked up"

Post by Bob Smit » Tue, 21 Jan 2003 07:50:28

http://www.denverpost.com/Stories/0,1413,36%257E33%257E1116511,00.html

  Study: West's oil, gas not locked up  
'Unexpected' findings undermine Bush's case  
By Bill McAllister
Denver Post Washington Bureau

Friday, January 17, 2003 - WASHINGTON - Most of the oil and gas reserves beneath key federal lands in the West can be explored under standard government leases, a federal task force reported Thursday.
An estimated 57 percent of the oil and 63 percent of the natural gas under federal lands in five major geological basins are not subject to any special, more rigorous restrictions, the report said.

Only 15 percent of the oil and 12 percent of the gas was under lands where drilling was "totally unavailable," including lands protected as wilderness or national parks, according to the report.

The finding, which Assistant Interior Secretary Rebecca Watson described as "unexpected," appeared to undercut concerns the Bush administration and oil industry officials have voiced that tough lease restrictions and environmental laws are hampering exploration on federal lands.

According to the new study, which was prepared in large part by officials at the U.S. Geological Survey offices in Denver, there are 138 trillion cubic feet of natural gas reserves on the Western federal lands, making the region the nation's second-largest natural-gas resource after the Outer Continental Shelf.

This 138 trillion cubic feet of natural gas is sufficient to heat all 55 million homes that use natural gas for 39 years, the report said.

The report estimates that the lands also contain 3.9 billion barrels of oil. The U.S. uses about 7.3 billion barrels of oil annually, about half of it imported.

Of the five basins surveyed by government scientists from seven agencies, only one - the Montana Thrust Belt in western Montana - proved to have severe restrictions on most of its oil and gas reserves. About 90 percent of the oil and gas there was listed as off-limits to drilling, although the report noted it had the smallest oil and gas potential of any of the five areas.

The rest of the Rockies - including the Paradox-San Juan Basin, which straddles Utah, New Mexico and southwestern Colorado - appeared to be open to oil and gas producers. Almost 80 percent of the gas and 52 percent of the oil in that basin, which has large reserves, was said to be available through standard leases with modest restrictions.

Some industry officials and environmentalists were surprised by the report.

"Frankly, we were pretty amazed by the whole thing," said Noah Matson, director of public lands for Defenders of Wildlife. "It questions the administration's zeal to open up more lands for drilling."

Peter Morton, a Denver-based economist for the Wilderness Society, said the report suggested a declining need for exploration in the Rockies.

"This suggests that plenty of oil and gas is available, that there is no need to change environmental standards," he said.

Industry groups suspect that regulatory barriers are being underestimated.

"Is it really accessible?" asked the Independent Petroleum Association of America, a group composed of thousands of small, independent producers.

If it is accessible, Diemer True, chairman of the IPAA and a partner in a Wyoming oil company, vowed to press for more leasing in the region.

"Now we know that these resources in the inter-mountain West should be available for leasing," he said in a statement. "We need to make sure it happens."

Watson, who is in charge of Interior's land and minerals management programs, sought to downplay the report's significance in the fight over access to federal lands. She described it as "a new tool" that the Bureau of Land Management and U.S. Forest Service can use in planning.

She told reporters that she knew of no White House effort to rewrite the restrictions that the report studied. Indeed, Watson also appeared to be sympathetic to Westerners concerned about drilling.

While a rancher once would have liked to have had an oil rig on his lands, Watson noted, many of those ranchlands had become subdivisions in the "New West." The new homeowners are not eager to have oil exploration in their backyards, she said.

Watson and industry spokesman said there may be problems getting resources out of the ground that the survey didn't address.

"Some of frustrations operators feel is not so much the leasing itself, but the delays in getting necessary approvals such as environmental statements," said Ken Wonstolen, senior vice president of the Colorado Oil & Gas Association in Denver.

The reserves estimates in the study were somewhat lower from those released last month by the USGS, officials noted.

That's because they include an estimate of energy reserves by the Energy Information Administration.

Even so, government and industry officials said they expect the Rockies will continue to emerge as one of the country's most important new energy sources.

"The Rockies are on the upslope," said Wonstolen, noting that the wellhead value of Colorado's oil and gas production last year was between $2 billion to $3 billion. In addition, he noted that Denver is the headquarters for many of the companies who operate in the five basins.

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