Energy group sues over oil-gas lease backlog

AP News
Posted: Oct 18, 2010 7:57 PM
Energy group sues over oil-gas lease backlog

The petroleum industry sued the federal government Monday to try to force action on a backlog of hundreds of unissued federal oil and gas leases in the Rocky Mountain region.

The Denver-based Western Energy Alliance and six companies based in Colorado, Wyoming and Oklahoma filed suit in U.S. District Court in Cheyenne.

The lawsuit focuses on 118 leases in Wyoming and Utah that the U.S. Bureau of Land Management has not issued despite selling them to the companies at public auctions as long ago as November 2005. The lawsuit said the Mineral Leasing Act required the BLM to issue the leases within 60 days.

The lawsuit seeks an order to issue the backlogged leases and to require the BLM to issue all future leases within 60 days of sale.

Region-wide, hundreds of leases sold in the past few years _ 1,057 in Wyoming alone _ still await decisions on whether they ultimately will be issued or not. Companies have paid more than $100 million for unissued leases across the region, money the government has not offered to refund while also not granting the go-ahead to drill on public lands, the lawsuit said.

"Instead, the lease payments are held by the defendants in an unproductive capacity for months and years with no certainty as to when either the leases will be issued or the lease payments refunded," the lawsuit stated.

Interior Department spokeswoman Kendra Barkoff declined to comment.

BLM officials have said that environmental protests and uncertainty over endangered species have required them to step up scrutiny of leases, which takes time.

The BLM has begun deciding on some of the backlogged leases: Since July, it has issued 283 leases sold in Wyoming in 2008. The BLM has deferred leasing on another 75 parcels sold in 2008, enabling refunds for the buyers of those leases.

The vast remaining backlog is hurting the region's economy, said Kathleen Sgamma, government affairs director for the Western Energy Alliance.

"When you're looking at $100 million being held by the Department of Interior in a nonproductive capacity, thousands of jobs and hundreds of millions of dollars in economic activity are being suspended in the West," Sgamma said. "In a time of economic slowdown, Interior's policies are preventing that much investment in the West."

An environmental group that has protested hundreds of unissued leases in Wyoming, including some listed in the lawsuit, said the BLM is doing its job by looking closely at the leases it offers for sale.

"The oil and gas industry has controlled the leasing process from start to finish for so many years, they have come to see it as their right to determine what lands get leased for oil and gas and when," said Erik Molvar, with the Biodiversity Conservation Alliance.

The companies suing are Baseline Minerals Inc., of Denver; Double Duece Land & Minerals Inc., of Aurora, Colo.; Nerd Gas Company LLC, of Casper; Wold Oil Properties Inc., of Casper; Laramie Energy II LLC, of Denver; and Samson Resources Co., of Tulsa, Okla.

The companies have paid a total of $4.5 million for the 118 unissued leases in Wyoming and Utah, according to the lawsuit.

The case has been assigned to Judge Nancy Freudenthal, wife of Gov. Dave Freudenthal, who nominated her for the bench last year. The Democratic governor's office has been prodding the BLM to act on the backlogged oil and gas leases.