Afield with a vegan gas man
by Paul Larmer
"I probably don't look like a typical oil and gas guy," says Eric Sanford. Wearing clogs -- his "driving shoes" -- and a wide cloth belt that looks right out of the 1980s, he sure doesn't.
Sanford, 39, who jokingly describes himself as the "vegan son of Nebraska farmers," grew up in a town of 600 in the Sand Hills. He earned money for college, and later law school, from the seat of a tractor, installing irrigation systems with his father. After only four years in the oil and gas industry, he is now the operations and land manager for SG Interest's Bull Mountain Unit, located 20 miles northeast of Paonia on Colorado's Western Slope. It's an "exploratory" natural gas play with a dozen operating wells; the company hopes to add 146 more over the next five years.
In April, Sanford led High Country News publisher Paul Larmer and editorial fellow Neil LaRubbio on a tour of the Bull Mountain Unit, 20,000 acres of mostly private lands overlying the mostly federally owned minerals leased by SG Interests. The tour -- and the chance to have a candid chat with a “land man” -- gave HCN a first-hand look at how gas development fits into a rural landscape.
The Bull Mountain Unit is dotted with small ranches and surrounded by sagebrush and oak uplands. Roads have been widened and graveled to access drilling pads. Sanford points out 60-foot swaths of disturbed land that undulate over the hills -- the pathways for a network of underground pipelines that carry the gas to market -- and comments on the condition of each one: "The cattle got in there and it looks like we will have to do some reseeding. … You can see the sagebrush coming on in there! … Here's the hill where the sheep came through; it's depressing to see 100 sheep going up a hill and everything in front of them is green and everything behind is brown."
At Well #14, on a couple of acres scraped to bare dirt, Sanford squats to examine the wellhead’s pressure gauge, forming a circle with his hands. "The idea that you can drill a hole that small to 10,000 feet and it produces gas for 40 years still amazes me. It's as much art as it is science."
What follows are excerpts from our conversation.
HCN: How did you get into the oil and gas business?
Eric Sanford: My first job out of law school was as a prosecutor for Colorado's 6th Judicial District, covering La Plata and Archuleta counties. I worked on drug cases, domestic abuse cases. Then I went into private practice for seven years on the other side of the system as a criminal defense lawyer. I got burned out and disillusioned, and started helping a lawyer friend doing title research for the oil and gas industry. I liked it, and in 2008, I was hired by SG Interests, a small-to-mid-sized company based in Houston. We're not Conoco or Exxon, but we're not a mom-and-pop operation, either.
HCN: Tell us about your job.
Sanford: Part of my job is to sit down with landowners and tell them: "The real estate agent and the title company didn't tell you, but you just spent $5 million on your dream ranch, and you don't own the minerals. We leased them and will be developing them." This happens every day in Colorado and around the West and causes more tension than any other issue surrounding oil and gas development.
HCN: Why don't the real estate companies disclose who owns mineral rights to potential buyers?
Sanford: Finding the mineral ownership is often difficult. I've spent three months on searches. In the San Juan Basin -- Rio Arriba County -- the search can include looking at land grants from the King of Spain. The mineral rights may have been severed long ago -- perhaps they were passed on down through the generations to family members, but grandpa sold them during the Great Depression because he was short on cash. Even if the mineral owner only owns 25 percent of the minerals, the surface owner cannot prevent subsurface access because, in Colorado law, the mineral estate is dominant over the surface estate. The reason for dominance is that you could never exercise your mineral rights if you did not have the right to access those minerals.
HCN: So this makes you a popular man when you knock on landowners' doors?
Sanford: I'm often seen as the bad guy, but the decision actually got made 40 years ago, when the mineral rights were sold. From an emotional perspective it's tough, though, especially if your great granddaddy homesteaded the land 100 years ago. I negotiate agreements with landowners that include not only payment terms -- in cases where the private landowner retains mineral rights -- but specifics such as: Where should the roads go? What kind of fence do you want? What kind of cattle guard? What type of seeds for the reclamation work? We walk the land together and talk about how they want to have it treated. They know the land better than I ever will. If I misrepresent something to one landowner -- like I promised to install a certain gate but bought a cheap one instead -- they'll all know about it because they all talk to each other more than they talk to me. So I'm better off playing it straight.
HCN: Do the landowners read the fine print in the contracts?
Sanford: I'll sit down and go through a lease agreement with the landowners, but I tell them to go hire a lawyer --not a real estate lawyer, but someone with real experience in oil and gas.
HCN: You face plenty of opposition from local conservationists. Are their efforts to stop oil and gas misguided?
Sanford: There are industry people who won't admit that they've ever had an environmental impact or that fracking fluids have ever polluted anything. There are environmentalists who don't think we need to develop resources even though they drive around in SUVs and have large homes. I see hypocrisy on both sides. The opposition to our industry has its own industry, mostly nonprofit. They have jobs and collect a paycheck, too. They present it as David versus Goliath. They show pictures of the (densely developed) Jonah Field (in Wyoming) and Rifle, (Colo.), and say, "We're going to look like this if we let industry in." But that's just not going to happen with the new technology and best management practices we follow now. That's a scare tactic. This area will only see one well pad for every 324 acres at the most.
HCN: What will this landscape look like when you quadruple the activity?
Sanford: I won't lie; this is an industrial operation. The land won't be what you’re seeing today. But in 50 years (when the gas play is over and the land is reclaimed), I see this place looking very much like it does now.
HCN: Are you surprised about the growing antipathy across the country toward gas development?
Sanford: The reaction to gas has changed a lot in the past five years. For a while, it was seen by environmentalists as the bridge to a renewable future. That was good, as long as it was a short bridge. But now with the new technology -- fracking and horizontal drilling -- uncovering a much bigger resource, the bridge seems long, maybe many decades long. This creates a different kind of opponent, more like the one opposing coal and oil.
HCN: Does the public get enough benefit from mineral development on public lands?
Sanford: Absolutely. The minerals dug out today go into the federal treasury in the form of royalties. Coal companies provide $37 million in taxes for the Western Slope. Oil and gas could potentially dwarf this amount.
HCN: But your boss (Russell Gordy) is a billionaire and one of the biggest landowners in the country -- this isn't just about public benefit.
Sanford: The only reason we are in business is to make a profit. But we also believe it can be done responsibly. I was at a county commissioners’ meeting in Gunnison and a young teenager with a white rose on his shirt lay on the floor at the front of the room. Whenever I spoke, he'd mutter, "Greed!" I told the crowd, "This young man is right. We're in this business to make money." Does oil and gas make too much money? This is a very risky business. You can spend $5 million on a dry hole.
HCN: Can you point to a place where the oil and gas industry and small communities successfully cohabitate?
Sanford: I look to (Colorado's) LaPlata County, which has lived with oil and gas industry since the 1950s. The population has quadrupled there, alongside plenty of oil and gas development. Some people complain, but others point to the new schools and library that were built with industry money. Everyone has learned to get along.
HCN: SG Interests was recently under investigation by the Department of Justice for potentially colluding with another gas company – Gunnison Energy – to artificially lower the price it paid for federal leases in this area. The company has agreed to pay the federal government hundreds of thousands of dollars. Can you tell us about the case?
Sanford: This issue has not been accurately reported. It was not collusion or a fine, as the press has reported, but a settlement. After seven years, we thought it was best to put this behind us. But you'd need to talk to our Vice president.
HCN: What do you think of Tim DeChristopher, the jailed Utah activist who intentionally bid up federal oil and leases near Canyonlands National Park without intending to pay for them?
Sanford: I guess he wanted to be a martyr, and he got it. I wrote a letter to the Telluride paper after it ran a story comparing him to Gandhi and Martin Luther King. Those folks didn't hide who they were, like he did at that auction. What if I were to go to a federal auction and screw up a solar power or geothermal bid? Would that be OK?
HCN: Do you have any regrets about going to work for the industry?
Sanford: Friends have asked me how I could sell my soul. But I really enjoy this work and this landscape. I've been spit on by opponents, but I don't view what we're doing in a negative light.© High Country News