At Last: A Federal Oil and Gas Lease Sale in the Pawnee National Grasslands

Developing federal lands in the Northern Denver Julesburg Basin (“DJ Basin”), Colorado, has been a challenge for many operators active in the area because of the presence of the Pawnee National Grasslands (“PNG”), an area that has been largely off-limits to oil and gas development. While development of fee minerals in the DJ Basin has been occurring at a rapid pace, leasing in the U.S. Forest Service-managed PNG has been on hold since 2010, when the federal government began preparation of a new oil and gas plan amendment. However, this may be about to change with the finalization of the Forest Service oil and gas plan and the BLM’s decision to include certain parcels in the PNG in the upcoming May 2015 oil and gas lease sale.

The BLM’s delay in leasing was triggered by a lawsuit initiated in 2010 by WildEarth Guardians that argued that the BLM failed to consider the impacts of oil and gas development on air quality in the Front Range non-attainment area, which includes the PNG. The Forest Service responded to the litigation with a decision that the 1997 Forest Plan and NEPA were out of date based largely on the increased oil and gas development in the Northern DJ Basin.

Three years later, in 2013, the Forest Service initiated work on the PNG, Colorado; Oil and Gas Leasing Analysis Environmental Impact Statement (“EIS”), completed the EIS and issued a Record of Decision in 2013. The Record of Decision permits oil and gas leasing to go forward, but places a “no surface occupancy” stipulation on all PNG parcels. As such, all of the parcels located in the PNG will have no surface occupancy lease stipulations in addition to the standard stipulations to protect air, water, wildlife habitat, historic and cultural resources, and reclamation requirements. With the advent of horizontal and directional drilling, access to most of the offered parcels appears possible from adjacent, lands.

On February 13, 2015, the BLM posted an oil and gas lease sale notice offering 42 parcels (containing a total of 25,215 PNG mineral acres) in the PNG to be leased on May 14, 2015. On March 16, 2015, Rocky Mountain Wild and WildEarth Guardians filed protests on the parcels. WildEarth Guardians’ protest focused on the May 2015 lease sale Environment Assessment (“Lease Sale EA”), arguing that the Lease Sale EA violates NEPA and that the BLM has not complied with its obligations under the Clean Air Act and Endangered Species Act. On April 20, 2015 Western Energy Alliance filed a Response to WildEarth Guardians’ protest arguing that the (1) BLM has complied with the requirements of NEPA in preparing the Lease Sale EA, (2) the Lease Sale EA comports with the conformity analysis requirements of the Clean Air Act, and (3) the Lease Sale EA complies with the Section 7 consultation requirements of the Endangered Species Act.

The BLM has not yet ruled on the protest, so it is not yet certain if some, all, or none of the parcels will in fact be offered at the sale. The BLM has until 60 days following the sale to decide the protests.

BLM May 14, 2015 Lease Sale Information: http://www.blm.gov/co/st/en/BLM_Programs/oilandgas/oil_and_gas_lease/2015/may_2015_lease_sale.html