Court puts gas in private hands

  A decision by the U.S. Supreme Court in June has answered a long-standing question over who owns vast deposits of methane gas found in coal beds in several states across the West. In a case brought by the Southern Ute Indian Tribe of southwest Colorado, the court sided 7-1 with Amoco Production Co.

The ruling means that coalbed methane gas underlying 200,000 acres in southwest Colorado does not belong to the tribe even though it owns the coal from which the methane is extracted. In this case, the gas is owned by Amoco, which owns the rights to mineral development. An earlier federal appeals court had considered methane gas an integral part of the coal deposit, placing ownership with the tribe.

The case has ramifications that extend beyond the reservation. The federal government holds identical coal development rights underlying some 16 million acres across the West. Like the tribe, the federal government had claimed it owned the methane gas recovered from its coal beds.

Tom Throne, a Sheridan, Wyo., lawyer, says the Supreme Court decision will put coalbed methane rights back in the hands of private landowners in Wyoming, where the Powder River Basin is experiencing a boom in coalbed methane gas development. Throne represented Campbell County in the Supreme Court case, which signed on with Amoco and other energy companies as a friend of the court.

The Southern Utes say not all is lost. A recent royalty agreement with Amoco gives the tribe 32 percent of future methane gas development revenues. The deal is worth millions, though the tribe wouldn't specify how many millions.

"I don't think we've completely lost," says tribal chairman Clement Frost. "We're satisfied with the agreement that we signed with the Amoco people."

*Dustin Solberg

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