Oil, gas lease sales to resume in Dakotas, Montana

AP News
Posted: Oct 22, 2010 2:06 PM
Oil, gas lease sales to resume in Dakotas, Montana

Federal oil and gas lease sales in the Dakotas and Montana will resume in December, more than six months after the Bureau of Land Management halted bids because of pressure from environmental groups.

An environmental law group said it will likely protest the upcoming lease sale and may sue in federal court.

Greg Albright, a BLM spokesman in Billings, Mont., said a review of the possible effects of drilling on about 135 federal parcels covering some 260 square miles in eastern Montana, western North Dakota and northwest South Dakota turned up no significant worries about greenhouse gas emissions. A quarterly lease sale that had been suspended in April will be held in December, though a date has not been set, he said.

However, lease sales for about two dozen parcels "mostly in Montana" will continue to be put off because of the possible effect on wildlife, Albright said.

The BLM conducted its so-called environmental assessment and will do so in the future on federal oil and gas leases due to a lawsuit filed by environmental groups over 61 parcels that were leased in 2008, he said. Those leases, for about 38,000 acres in Montana, are still being contested in federal court, he said.

Greg Costello, executive director of Eugene, Ore.-based Western Environmental Law Center, said the BLM's environmental review does not go far enough in addressing greenhouse gas emissions on federal land. The emissions come from oil field equipment and flaring natural gas as an unmarketable byproduct of oil production.

Costello said his group is especially critical of raw methane that leaks into the atmosphere before it can be sold as natural gas.

Not only does so-called fugitive methane contribute to greenhouse gas emissions more than carbon dioxide, allowing it to escape is wasteful, he said.

The BLM "has basically ducked the methane issue," Costello said. His environmental law group, which represents the Montana Environmental Information Center, Earthworks Oil & Gas Accountability Project, and WildEarth Guardians in the lawsuit over the 2008 leases, probably will sue in federal court over the leases coming up for bid in two months, he said.

Federal oil and gas lease sales in the Dakotas and Montana totaled a record $75.4 million during fiscal 2009, and parcels in western North Dakota's oil patch accounted for the overwhelming bulk of interest for the sixth-straight year.

North Dakota had $74.2 million in leases in fiscal 2009, according to the BLM.

Only two sales were held in fiscal 2010, which ended in September. The sales in November and January fetched more than $30 million, with North Dakota accounting for about $27 million of the total.

All the more than 56,000 acres offered in North Dakota and Montana received bids. No parcels in South Dakota were offered.

Revenues from the oil and gas leases are shared by the federal government and the state or county where the parcels are located.

Ron Ness, president of the North Dakota Petroleum Council, said he expects "significant interest" in parcels in the December lease sale. Ness said the suspended sales affected oil and gas activity in North Dakota, although he couldn't say how much.

"I don't know if it slowed production, but resources were allocated in other directions," he said.