In the week after Interior Secretary Ken Salazar yanked scores of oil and gas leases near Vernal, Moab and Price, Utah has been buzzing with talk of how the move has damaged the state's rural economy.
But has it?
Uintah County Commissioner Mike McKee says so and blames "special interests" -- that is, the coalition of conservation and historic-preservation groups fighting the U.S. Bureau of Land Management in federal court.
McKee equates the loss to what would happen to Park City if the ski industry shut down. "To my understanding," he said, "a lot of the reason [for the pullback] is the leases were in wilderness-character areas. But many of these areas are not defined as being in the wilderness-character area."
While not blaming anyone, Carbon County Commissioner John Jones noted that some of the 77 parcels in question were to be part of Bill Barrett Corp.'s development of the West Tavaputs Plateau in Nine Mile Canyon.
Jones said Salazar's decision could mean 600 jobs lost. "I don't agree with what he's done," Jones said. "Our schools already have taken a bashing."
John Harja, executive director of the state Public Lands Policy Coordinating Office, put a $3.1 million price tag on Salazar's decision, basing his calculations on how much "bonus" pay winning bidders would have paid the BLM had the 77 leases gone through.
But hold on. Such claims appear shaky.
Here's how President Barack Obama put it:
"First of all, the problem that we've got right now in terms of the economics of drilling don't have to do with any policies that I've made over the last three weeks," Obama said Wednesday in Washington.
Rather, he said, "they have do to with the fact that the prices of commodities have plummeted, and so the notion that somehow folks would be out there drilling for all kinds of stuff at the moment and making these huge investments just probably isn't borne out by the facts."
Here are some facts:
» The BLM itself repeatedly has said that just because a lease parcel is sold doesn't mean the owner will get a lease, or a permit to drill or even drill.
» A University of Utah student won bids on 13 of those 77 leases with no intention of paying for them and ran up bids on other parcels -- so Harja's estimate of lost bonus payments may be inflated.
» A federal judge issued a temporary restraining order in January against the leases, finding the air-quality and cultural-resources analyses deficient in three BLM resource-management plans. Interior and conservationists are in a stand-down for the coming month. The BLM, meanwhile, has scheduled another lease sale for March 24.
» The 77 leases, along with others, remain under official protests that could take years to resolve, according to BLM officials.
Grand County Council Chairman Bob Greenberg said he didn't personally believe nullifying the leases would have much of an effect on rural economies. "You just have to turn down the volume when people squall," he said.
When Moab and county residents discovered that one of the lease parcels on the original list encompassed homes, the municipal golf course and Grand's only drinking-water aquifer, they turned on the BLM, Greenberg said.
The BLM offered reassurance. "They said, 'Calm down, calm down,' when I was concerned," he said.
Now, "the producers in position to cancel or postpone drilling are doing so," he said. "The chances these parcels actually would have been drilled on were very, very low."
Given the market, he may be right:
» Oil and gas drilling in Utah has nose-dived along with the economy. "Nose dive" is the word the Utah Division of Oil, Gas and Mining used when announcing this month that the number of drill rigs in the state has dropped by more than half since August.
» Last year set records for natural-gas production in Utah, and more oil was produced in 2008 than any year since 1993. But the boom appears over, for now, and industry leaders are saying producers need to downsize.
If the market returns, operators already have lots of leases and permits:
» As of fiscal 2007, more than 4.5 million acres of BLM-administered public lands were under lease; just over 1 million acres were producing oil and gas.
» The Utah Division of Oil, Gas and Mining since 2001 has approved 3,000 drill applications that haven't been developed.
But with gas selling for around $4.50 per million cubic feet, business is down.
Environment & Energy Publishing in a trade journal reports that this past week, Aubrey McClendon, the CEO of Chesapeake Energy Corp., the nation's top natural-gas producer, said deposits in Texas, Louisiana and Arkansas "super fields" have proven much larger than expected, expanding supply even as the weak economy drives down demand.
McClendon also pointed out that the recent discovery of a massive gas field extending across more than 15 million acres of shale formation in West Virginia, Ohio, Pennsylvania and New York ensures a long-term oversupply of gas.
The energy industry's slowdown definitely will cost Utah, whose former budget surpluses largely rested on oil and gas extraction. The state, rural counties and schools no doubt will feel the strain as royalties dwindle.
State and county officials could demand royalties already earned.
In January, Salazar visited Lakewood, Colo., where he ordered reforms at Interior's Minerals Management Service in the wake of Government Accountability Office findings that the agency has cheated taxpayers out of billions of dollars in uncollected royalties and allowed energy companies to game the system.
No one knows exactly how much Utah is owed. But that money already should have been in the bank, and makes the potential for the 77 leases look like small beer indeed.
Even so, when he shelved the lease sales, Salazar refused to put them permanently off-limits to drilling, saying: "I don't necessarily believe all 77 of these oil and gas leases won't go into development at some time."
Tribune reporter Thomas Burr contributed to this story.
Interior Secretary Ken Salazar withdrew 77 oil and gas leases on scenic public land near Arches and Canyonlands national parks, Dinosaur National Monument, Desolation Canyon and Nine Mile Canyon.
Salazar questioned the analysis by the U.S. Bureau of Land Management of potential harm from drilling to air quality and ancient cultural artifacts. He said he wants a more balanced approach that would take in environmental concerns along with oil- and gas-development needs.
Salazar did not rule out future development on those parcels, which cover about 103,000 acres near Vernal, Moab and Price.
A lawsuit challenging three BLM resource-management plans remains in federal court in Washington.


