Feds sign off on 3,600 new gas wells in Utah; energy industry insider blasts 'broken system'

Published: Tuesday, May 8 2012 10:27 p.m. MDT

A drilling rig stands in the Greater Natural Buttes natural gas field operated by Anadarko Petroleum Corp. in Uintah County. Interior Secretary Ken Salazar announced Tuesday, May 8, 2012, that he had signed off on a plan by Anadarko to drill more than 3,600 natural gas wells in Uintah County over the next decade.

Geoff Liesik, Deseret News

SALT LAKE CITY — Interior Secretary Ken Salazar trumpeted the benefits of compromise between the energy industry, environmental groups and government agencies Tuesday before signing off on nearly 3,700 new natural gas wells in Utah.

"The world today should stand back and just say, 'Wow! How did they do this?'" Salazar said.

Salazar signed the Greater Natural Buttes record of decision after a deal was worked out by various parties to avoid lawsuits and allow Anadarko Petroleum Corp. to drill for natural gas on 163,000 acres in the Uintah Basin.

Bill Ryan, who called the decision "delinquent and late in coming," says he knows exactly how the agreement was reached.

"It was blackmail by the extreme environmental movement," he said. "It was politics."

A veteran of more than four decades in the energy industry and the owner of Rocky Mountain Consulting in Vernal, Ryan accused Anadarko of "rolling over" for environmental groups and the Obama administration.

"This was all being handled as a resolution to litigation," Ryan said. "It's another indicator that the system is broken."

Anadarko negotiated the agreement with Indian tribes, federal, state and local agencies, the Wilderness Society and SUWA, the Southern Utah Wilderness Alliance. It's an agreement that will mean about 4,000 new jobs and billions of dollars in taxes and royalties for the state.

That's good news for business owners in the Uintah Basin like Cam Pope, whose family owns the 7-11 Ranch Restaurant on Main Street in Vernal.

"I'm impressed we got (the agreement)," Pope said. "It must be an election year."

Pope still vividly remembers the last major energy boom a few years back. He had a hard time keeping workers because oil-field wages were more than he could compete with. And there weren't enough rooms for tourists because energy companies were paying to house their workers in the area's motels.

"There's more hotels now, and more coming," Pope said, adding that city and county officials are doing a better job of preparing to the next boom.

"Hopefully, it won't be as bad as the last time," he said.

The Anadarko project is expected to play a major role in that boom.

According to the Utah Department of Workforce Services, a drilling rig that operates 24-hours a day creates about 40 direct jobs. Those jobs then create additional positions in the service, retail and commerical sectors, the state agency said.

To get its project approved, Anadarko agreed it would limit the number of wells in wilderness-quality lands of the White River area. Conservation easements will also be in place surrounding certain segments of the river. SUWA said the White River agreement will help ensure the area will be protected from the sights and sounds of oil and gas development.

"We are especially grateful for the constructive relationship we've built with SUWA," Anadarko project manager Brad Holly said Tuesday.

Salazar praised the project as one that could bring economic prosperity to Utah "while safeguarding air quality and assuring the protection of critical wildlife habitat and outdoor recreation values,” Salazar said.

The project encompasses approximately 162,911 acres in an existing gas-producing area, with new surface disturbance estimated to be 8,147 acres — about 5 percent of the total project area.

Anadarko must still secure permits to drill from the Bureau of Land Management for each of the proposed wells before drilling can begin.

"You could not start to build a (well) location based on today's decision," Ryan said.

While Ryan was critical of Tuesday's announcement, Rep. Rob Bishop offered praise for it. Then the Republican from Utah blasted the Obama administration for other oil and gas policies, such as new hydraulic "fracking" rules and cancellation of controversial energy leases several years ago.

But Salazar pointed out energy production on public land has increased 13 percent under Obama and natural gas production is at an all-time high.

SUWA said the Anadarko agreement showed how to do it.

"It's possible for these win-win solutions where the state's wildest public lands are protected while the state of Utah continues to have a robust energy sector," Steve Bloch with SUWA said.

But Ryan said there is no "win-win" in this outcome for the American public if this is how the country's domestic energy policy is going to be set.

"(Anadarko) basically gave up a huge amount of resources that will never be developed now if the environmentalists have their way," he said.

Still, Ryan said he understands why energy companies would make such deals.

"It comes down to a cost-benefit analysis," he said. "I'm enough of a business person to understand it, but unfortunately it happens all too often."

Another natural gas drilling proposal in the Desolation Canyon area by Gasco is already coming under fire by environmentalists who contend pristine wilderness areas will be ruined by drilling activity. 

Located in Uintah and Duchesne counties, Gasco's project area takes in 206,826 acres in an existing gas producing area, according to the BLM, and allows up to 1,298 new gas wells that would be drilled from 575 well pads over 15 years. The total new surface disturbance area would be an estimated 3,604 acres, or about 2 percent of the total project area, according to the BLM.

The project is headed for approval in the next few weeks.

Contributing:  Amy Joi O'Donoghue

E-mail: gliesik@desnews.com, hollenhorst@desnews.com
Twitter: GeoffLiesik

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