In May, the Bureau of Land Management put the latest round of oil and gas leases up for sale, igniting another round of controversy over energy development in the West, and sending citizens scampering to slow an industrial expansion.
Among those concerned were Ed and Peggy Baxter, who discovered that two parcels up for grabs were just five miles from their home in Cedaredge, Colo. In 2003, Delta County commissioners had briefly blocked coalbed methane development in the area, but had backed off in the face of a lawsuit from the industry (HCN, 6/9/03: County commission stands down on gas wells). Although a coalition of local residents continued to fight, some drilling was already in progress.
That got the Baxters, a retired banker and retired mortgage lender, wondering if they could win a lease for themselves and prevent more expansion by Gunnison Energy Corp., a company that has grabbed up leases on thousands of acres in Delta and Gunnison counties. "We decided at breakfast to bid up to a couple hundred dollars," says Ed Baxter.
On the morning of the lease sale, the Baxters arrived at the BLM office in Denver to find beefed-up security in response to a protest planned by environmentalists. They were greeted by guard dogs, yellow crime scene tape, and wary security guards. "We were escorted up the elevator, and the hallways were taped off with (BLM) employees standing in front (of them)," says Ed.
After registering with the BLM, the Baxters bid up to $125 an acre before being outbid by Gunnison Energy, their only competition.
The Baxters’ attempt to lease for conservation was amateur, they say: "We would have (just) framed whatever we got from the BLM and put it on the wall," Ed says. But the tactic may get another test in August and September, as another round of leases hits the block across the West.
A risky strategy
The Baxters weren’t the only people to consider bidding against energy companies in the name of conservation. Pitkin County, Colo., Commissioner Dorothea Farris debated bidding, too, after the BLM offered leases in Jerome Park, an area that the county is purchasing for elk and wild turkey habitat, and cross-country skiing.
The idea of conservation leasing isn’t new. Last year in Arizona, the nonprofit environmental group Forest Guardians won the right to bid for state grazing leases and then retire them (HCN, 9/1/03: State no longer just for the cows). But bidding on federal oil and gas leases is a different ballgame, and its application may be limited.
According to the BLM, any citizen, group of citizens, or municipality can bid on a lease. In fact, for years, speculators have bought leases in hope of selling them for profit to oil and gas companies. Lease owners do not necessarily have to drill; oil and gas companies frequently sit on their leases, waiting higher prices, and some leases simply expire after their 10-year life span, still undeveloped. Duane Spencer, with the Colorado BLM, says the decision to develop a lease or not is "left up to the prudent operator."
Although conservation leasing is legal, "as a conservation strategy, it’s risky," says John Leshy, who was the top lawyer in the Interior Department under the Clinton administration. "You only get the mineral rights, so it doesn’t protect against things like off-road vehicles. It’s time-limited (to 10 years) with no possibility of extension, and you have to outbid the competition and pay annual rent."
If citizens used that tactic on a wide scale, Leshy says, the oil and gas industry could also try to shut out environmental groups from auctions. "Ranchers have leaned on states to prevent conservationists from bidding on (grazing) leases," he says, and the Interior Department has the ability to change the definition of a "qualified bidder" for an oil and gas lease.
Also, while bidding for grazing leases is relatively inexpensive, oil and gas leases can break the bank. When Forest Guardians won its grazing lease in Arizona, the rancher’s bid to keep the lease was $40 per acre. The highest bid in Colorado’s oil and gas lease sale in May was $1,400 per acre.
In a February lease sale in Utah, "one of the areas we cared about went for $900 an acre and it was a 600-acre parcel," says Steven Bloch of the Southern Utah Wilderness Alliance. Protecting the entire area would have taken at least a half a million dollars.
Conservation leasing could be useful on select tracts of land that have potential for permanent protection down the road, says Bruce Baizel, attorney for the Oil and Gas Accountability Project. If nothing else, a lease could delay development until voters elect a new president who is not as heavily influenced by industry, he says: "If you win on a bid, you buy 10 years of time."
Still, some groups object to the very idea of conservation leasing, particularly on land that they believe deserves protection as wilderness. Says Matt Sura of the Western Colorado Congress, "Those parcels shouldn’t have been up (for leasing) in the first place."