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Energy company looking to strike oil on Bears Ears’ doorstep

First Published      Last Updated Nov 11 2016 09:02 am


Energy development » EOG Resources proposes to drill exploratory wells on Bluff Bench within a proposed national monument.

Energy developers are seeking to drill three exploratory wells inside the proposed Bears Ears National Monument in search of hydrocarbon riches on both state and federal lands a few miles northeast of Bluff.

Conservationists and local leaders fear drilling could imperil the town's water and scenic vistas and industrialize an area some say should be preserved for its geological and archaeological treasures.

"We as a community have a great deal of concerns," said Bluff shop owner Steve Simpson, who traveled to Washington, D.C., with local conservationist Josh Ewing to meet with Obama administration officials last week. "The obvious concerns are water first. It's in our recharge area. The technology used today is such that it is safe, but the technology is driven by humans and humans can err. We simply cannot afford a mistake because we don't have an alternative water source."

Much of the land north and east of Bluff, the tiny historic town on the San Juan River, has been leased for energy development, but most of the drilling here occurred years ago and resulted in dry holes, although there have been a few producing wells.

But EOG Resources, a Houston-based company active in the Uinta Basin's oil patch, is willing to gamble on wildcat wells on the Bluff Bench. In May, the Utah Division of Oil, Gas and Mining approved EOG's proposal to drill on state trust lands.

The company is contractually obligated to begin drilling by the end of 2017, or face a $500,000 penalty to the School and Institutional Trust Lands Administration, or SITLA.

Now the Bureau of Land Management is considering the company's application to drill two wells a few miles to the north of that well. The agency has initiated an environmental review and will accept public comment through Friday to help determine the scope of the analysis.

"It's the scenic gateway to Bears Ears, which Bluff has served a long time. Why would you want to turn that into an oil field?" said Ewing, who is executive director of Friends of Cedar Mesa and a vocal national monument backer.

While EOG's track record is good in their Utah operations, that does not appear to be the case in Wyoming. In 2015, EOG's operations resulted in 43 spills reported to Wyoming Oil and Gas Conservation Commission, according to an analysis by the Center for Western Priorities. In contrast, EOG reported only three spills in Utah over the past decade to the Department of Environmental Quality.

Phone messages left with EOG offices in Utah and Houston were not returned.

President Barack Obama is expected to decide soon whether to designate a Utah monument proposed by a coalition of five Indian tribes, which consider the lands surrounding Bears Ears Buttes and Cedar Mesa sacred. The eastern boundary of the 1.9-million-acre proposal includes a large block of land owned by SITLA, which manages its holdings to benefit schools monetarily, without consideration of the lands' scenic or natural values.

SITLA's 15,000-acre Bluff Block was amassed in the 1970s though exchanges for BLM holdings. It is shaped like the letter L, with the town of Bluff at the lower left, or southwest corner; U.S. Highway 191 running up the vertical leg and State Route 163 running out the horizontal leg.

EOG acquired 22 leases covering 13,223 acres last year from Morning Gun Exploration. The deal came with a contract requiring the company to drill an initial test well that penetrates a mile deep into the Paradox Formation by Jan. 1.

This contract illustrates the hard bargain SITLA can drive with its oil and gas lessees. For example, it required EOG to hand over $50,000 in exchange for pushing back the drilling deadlines a year. A second test well that was to be drilled by the end of 2017 must now be drilled by Jan. 1, 2019.

The company is required to spend at least $500,000 on the first well. If anything less is spent, the company must remit the difference to SITLA. It must also pay a $25-per-acre bonus to re-up these leases when their five-year terms expire. Any production is subject to an 18 percent royalty — nearly 50 percent more than what the BLM requires.

Some Bluff leaders are incensed that SITLA is angling to establish an oil field on the bench above town at the very time it could become part of a national monument.

"SITLA is planning to leverage a conservation designation, likely a national monument, to turn Bluff's backyard into an industrialized zone totally incompatible with a town built on tourism. To make matters worse, this plan for a large oil field ... has been developed with absolutely no consultation with our community," wrote restaurateur Rick Reeb, chairman of the Bluff Service Area board of trustees, in an Oct. 17 letter to U.S. Interior Secretary Sally Jewell.




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