Seeking compromise, gas company withdraws McCullough drilling permits

Hoping to avoid a potentially complicated and drawn-out legal battle, a Denver-based gas company has withdrawn its permits for drilling a series of exploratory wells in the McCullough Peaks area.

In February, the Bureau of Land Management’s Cody Field Office had, for a second time, cleared the Bill Barrett Corporation to proceed with a plan to drill three initial wells and potentially four more on federal land east of Cody. The BLM’s approval of the company’s plans came with several new restrictions that were aimed at addressing the legal objections of a coalition of environmental groups — the Wyoming Outdoor Council, the Greater Yellowstone Coalition, the Biodiversity Conservation Alliance, Friends of a Legacy: McCullough Peaks Mustangs and Red Canyon Wild Mustang Tour operator Ken Martin of Cody.

However, the five groups filed a second appeal of the Rocktober drilling project with the Bureau on March 11, claiming the additional stipulations were not stringent enough to protect nearby lands that the BLM has identified as having wilderness characteristics.

The groups’ objections to the Rocktober Unit wells had been framed in national media as potentially the first test of Interior Secretary Ken Salazar’s so-called “wild lands” policy, which ordered the BLM to protect lands with wilderness characteristics. The environmental groups argued the controversial “wild lands” policy, issued in late December, had created a new context for the proposed McCullough Peaks gas project.

But rather than again go through the appeal process and navigate a hot-button national policy discussion, Bill Barrett Corp. will instead try to craft a plan that will satisfy everyone.

“We are withdrawing our approved permits to give us, the environmental community, and BLM the opportunity to explore compromise outside of the courtroom,” said company spokesman Jim Felton in an email to the Tribune last Wednesday.

Bruce Pendery, staff attorney for the Wyoming Outdoor Council, said Monday he didn’t know too much about the withdrawal, but said the groups were looking forward to discussions with Bill Barrett Corp.

“They have, I think, some track record of showing they can work with groups, environmental groups, and so we’re encouraged by that and we’ll see if we can work with them as well and we hope that we can,” Pendery said.

Cody Field Office Manager Mike Stewart referred a Tribune request for comment on Bill Barrett’s withdrawal to office spokeswoman Sarah Beckwith.

On Monday, Beckwith said all the local office knew was that permits were being withdrawn.

“At this point there’s no reaction, because we don’t know what they’re proposing,” she said, though she added that “of course” the agency wants the situation worked out.

Bill Barrett Corporation holds the lands’ mineral rights. In 2008, the company applied to drill three wells. Another four wells, a compressor station and a quarter-mile of gas pipeline could be constructed if production justified them. In June 2009, the Cody Field Office approved Bill Barrett’s applications, with a series of conditions. The five environmental and wildlife organizations appealed the decision to the state BLM office, saying the conditions weren’t strong enough to protect the area’s viewshed, wild horses and sage grouse, among other concerns.

In July 2010, the state BLM office agreed with their concerns about wild horses and viewshed and told the Cody office to re-examine those issues.

In February, the Cody BLM office issued a new decision, this time requiring earth-toned slats in chain link fences surrounding the wells’ propane tanks and to install gates instead of cattle guards.

But the five groups still had concerns.

In an interview earlier this month, Marshall Dominick, president of Friends of a Legacy (FOAL), said the BLM made some “very good changes” from its initial OK of the project.

“I think that the process is working,” he said; for example, the simple change of requiring gates instead of cattle guards was “much more horse friendly,” Dominick said.

He also commended the BLM for adding drilling stipulations relating to mountain plover habitat — an issue that wasn’t even raised on appeal.

However, “I think that some of things they didn’t consider carefully,” said Dominick.

Pendery said the primary issue was that nearly 14,500 acres of areas the BLM has identified as “lands with wilderness characteristics” would be impaired, according to the bureau’s assessment. Those are lands that under the “wild lands” order are to be protected.

Only 155 acres of surface land would be directly impacted by the proposed drilling project, but the BLM said light, smells, noise and traffic from the gas wells and their development would impact the other acreage.

“There’s no doubt the (“wild lands”) policy does make provisions allowing impairment to lands with wilderness characteristics, but we don’t feel those conditions were met here,” Pendery said in an interview earlier this month.

Salazar’s wild lands policy has drawn strong criticism from elected officials in Wyoming — including Gov. Matt Mead and the bulk of the Park County Commission — but praise from environmental interests.

The appealing coalition’s March 11 petition for review by the state office centered on the “significant new context” created by the wild lands order.

Some of the options the groups asked the BLM to reconsider included remote monitoring systems on the wells (to lessen traffic), consolidated storage systems (to reduce their visual impact), having the wells drilled directionally (to create fewer pads) and relocating the compressor station outside of the lands the agency has identified as having wilderness characteristics. Those options were considered in the original BLM review and rejected; mineral lessees are allowed to do what’s necessary to develop their rights.

“We think the new wild lands policy makes reconsideration of those options worthwhile,” Pendery said.

In a joint press release issued Friday evening, the Big Horn Basin’s county commissions and conservation districts expressed support for the Rocktober project — despite Bill Barrett Corp.’s decision to withdraw the permits. The elected officials from around the Basin continued to dispute the assertion that the acreage around the drilling project qualifies as having wilderness characteristics.

While being “beautiful pieces of public land that deserve great consideration,” the elected officials said current management has allowed multiple uses of the land for the last 100 years.

It’s part of a broader concern the commissioners and district supervisors raise with the “wild lands” policy — that the BLM will inappropriately restrict use of lands that don’t qualify as wilderness.

The commissions and districts said the lands surrounding the Rocktober project shouldn’t qualify as “lands with wilderness characteristics” because they have roads, pipelines, reservoirs, stock tanks, cattle guards and existing oil and gas wells.

On Monday, Park County Commissioner Tim French said he was concerned Bill Barrett’s permit withdrawal set a “very dangerous precedent.”

“That company can do whatever it wants, but I just don’t like the precedent that an environmental group says it’s wilderness and can shut down oil and gas,” said French.

He said part of the intent of the press release was to tell the public that “what they’re hearing from the environmental community is not the whole truth.”

“I just want everybody to know that their (the environmental groups’) goal is to shut down oil and gas development,” said French.

However, in earlier interviews, Pendery and Dominick said they know Bill Barrett has valid rights and that the wells will eventually be drilled.

“We’re not trying to shut down drilling in this area,” said Pendery.

The overarching goal of the appeal, Dominick said, was to make sure the project’s done “in the best possible way that we can.”

“I’m not trying to be obstructionist. That isn’t the goal of FOAL, and I don’t think it’s the goal of the other organizations,” Dominick said.

Rather than immersing the project in a national policy discussion about wild lands, Bill Barrett spokesman Felton said the company wanted to be creative and get involved in discussions that would meet its objectives and those of “other stakeholders” when possible.

For that reason, the company wants to open a dialogue with the opposition groups.

“It is something we would like to do, and a source of optimism for us in this regard is the fact that we’ve been successful in the past in Wyoming,” said Felton. He pointed to a project five years ago where Bill Barrett Corp. negotiated an agreement with the Biodiversity Conservation Alliance to go forward with a seismic survey near the Bobcat Draw wilderness study area northeast of Thermopolis. In that instance, the alliance agreed to drop its appeal of the seismic survey in return for Bill Barrett taking steps to protect area sage grouse and paying $25,000 for sage grouse conservation.

The company has negotiated other settlements as well, as noted by Pendery.

“An honest discussion of issues can generate mutual gains ... and that’s our goal here,” Felton said.