Coalition, Industry Clash Over Thompson Divide Report

Feb 13, 2014

 

Credit Thompson Divide Coalition

There isn’t enough natural gas in the Thompson Divide to make it worth drilling… that’s the conclusion of a report by consultants hired by the Thompson Divide Coalition. The Carbondale group has been trying to buy oil and gas leases from drilling companies. An industry group, however, says there aren’t enough facts to say if Thompson leases would be a bust, and it accuses the Coalition of being disingenuous about its intentions. 

 

The report is by Denver based MHA Petroleum Consultants. Zane Kessler is Executive Director of the Thompson Divide Coalition. He says not many firms wanted to review natural gas possibilities in the Divide on behalf of an environmental group.

“It was difficult to find somebody, but MHA was willing to take a look at it, and they told us at the very beginning: we have to do an objective analysis, and you may not be happy with the findings of this research.”

After ten months of crunching the data...analysts found there wasn’t much natural gas to be found in certain leases owned by operators SG Interests and Ursa.

 

Credit West Slope Colorado Oil & Gas Association

“Any attempts to find and exploit natural gas resources in the Thompson Divide, will likely fail in a commercial sense, and would also leave lasting visual scars on a pristine landscape.”

That was after considering capital costs, mitigation for wetlands, and other factors. Kessler says the report backs up what his group has believed all along.

“There’s a reason these leases sold for two dollars an acre, while leases in the heart of the Piceance Basin, closer to Rifle or on the Roan Plateau, sold in some cases for up to twenty thousand dollars an acre.”

Kessler couldn’t say what the price tag was for the report. It was largely funded by grant money through Aspen Skiing Company and the Environment Foundation. The Thompson Divide Coalition’s main goal is to protect that land by purchasing drilling leases. And Kessler says the results are key to what the organization does next.

“We’ve been at the negotiating table with industry for over a year now. Those negotiations have proven to be difficult because we couldn’t just take the industry’s word for it, on their valuation. We’re working to approach these negotiations in as business like a fashion as possible. We needed to know what the assets we’re negotiating over were worth on the open market.”

David Ludlam says, “This is merely self serving gimmickry that’s meant to devalue the property rights of our member companies.” He's

Executive Director of the West Slope Colorado Oil and Gas Association. He says the consulting firm that did the report is trustworthy… but disagrees with how the Coalition is reading the results.

“We take issue into the fact that the report acknowledges that there’s not enough information to calculate what the potential of the Mancos and Niobrara shales  are in Western Colorado.”

And proof of that wild card is that the Colorado well producing the biggest volume of  natural gas is in the Mancos shale, near Rifle. Ludlam believes the Coalition’s publicizing the new report is a sign of the group doesn’t actually want to purchase drilling rights… and definitely not at market prices.

“If this report was supposed was supposed to identify a value to these leases that they could use in negotiations, why was it sent out as a press release to every media outlet in Western Colorado before the companies had a chance to even look at it or talk to the Thompson Divide Coalition about it?”

If they’re truly interested in purchasing leases at a fair price, Ludlam believes the Thompson Divide Coalition would have brought the report to future meetings, and presented it, “Over the negotiating table, with the companies that actually own, and have placed their own value on these assets and that’s why they purchased them."

  Responding to the allegations, the Coalition’s Executive Director Zane Kessler says his group alerted leaseholders six months ago that they planned to get an outside review on the volume of natural gas in the Thompson Divide. The Coalition also provided a copy of the recent report to drilling companies a day before before releasing it to the public.