Red Lodge Clearinghouse

Canada-based Lexam Explorations plans to drill two test wells and construct an access road on about 5,200 acres in the southern Colorado refuge, which lies near Great Sand Dunes National Park. In FWS's environmental assessment for the proposal, issued Jan. 11, the preferred alternative calls for a long list of protective measures to limit surface impacts during drilling. Those requirements include:

• Biological surveys to document current wildlife activity and sensitive resources in affected areas.

• Avoidance of impacts to sensitive habitat, wildlife, plants or other resources "to the extent possible" while constructing the access road and well pads.

• Environmental monitoring to ensure that all operations are done in a way that minimizes surface impacts.

• Building roads in a way that allows them to be easily removed and reclaimed after operations cease.

• Decontamination of all vehicles and equipment from outside the refuge to prevent the introduction of noxious weeds.

• Completion of a baseline water quality study of streams and aquifers near the planned well locations before drilling begins.

• At least three monitoring wells near each well pad to detect any spills.

The measures largely reflect an informal agreement between FWS and Lexam to reduce the environmental impacts of the project. The Colorado Oil and Gas Conservation Commission has also included stipulations in the drilling permits it has issued to Lexam.

The environmental assessment is the result of a lawsuit filed by environmental groups. A federal judge ruled in November that FWS could not allow Lexam to proceed with drilling until it completed an environmental analysis of the project (Land Letter, Dec. 6, 2007).

The assessment also includes two other alternatives. One would not impose any surface requirements on Lexam, and the other, the "no mineral exploration" alternative, calls for either the federal government's purchase of the mineral estate or Lexam's abandonment of its drilling plans.

Lexam owns all of the mineral rights beneath the refuge and 75 percent of the hydrocarbon rights; ConocoPhillips owns the other 25 percent. That means Lexam has a legal right to access any oil and gas that may lie beneath the refuge. The COGCC has approved permits for two 14,000-foot wells; a third application is pending.

Baca National Wildlife Refuge

The 92,500-acre refuge was created by Congress in 2000 and established in 2003 after a complex series of land transfers and purchases involving public lands and the private Baca Ranch. But the mineral rights remained in private ownership.

Typically, national wildlife refuges are given permitting authority for activities on the refuge in the law that creates them. But in the rush to protect the Baca Ranch as a refuge and protect its water, that provision was overlooked, FWS officials said.

Ian Ball, Lexam's vice president for corporate development, said the company has gone to great lengths to take the concerns of FWS and the public into account in planning the project. "I do understand the local community's concerns about the environment," he said. "That's why we've never balked at any recommendation from FWS or the public."

The company has incorporated many of the suggestions it received from the agency and local citizens, Ball said. For instance, the company has agreed to surround the well bores with a cement casing to a depth of 3,000 feet to protect the aquifer. "We've done everything that's been asked of us, at quite a large expense, in order to have a workable relationship," he said, adding that the company is open to further suggestions.

But environmental groups believe the new refuge is no place for oil and gas development, particularly given its water resources. "The reason the refuge was created was to protect water supplies and the underlying aquifer, which are far more economically valuable than oil or natural gas," said Christine Canaly, director of the San Luis Valley Ecosystem Council. "Now that's being placed at risk to benefit a Canadian company that has no experience drilling in an area as complex and poorly understood as the San Luis Basin."

Refuge managers are still working on the management plan for the refuge, and it is not yet open to the general public. Canaly and other critics say FWS should complete the management plan before any energy development occurs.

Michael Blenden, project leader for the San Luis Valley National Wildlife Refuge Complex, of which the Baca refuge is a part, said FWS has considered the possibility of purchasing the mineral rights from Lexam, but a buy out does not seem likely. "It hasn't been thoroughly discussed, because Lexam hasn't been jumping up and down saying they want to sell the mineral rights," he said. "And it's going to be expensive."

That said, public pressure could push FWS to try harder, Blenden added. "Discussions here haven't gone far, but if there's a human outcry to do that, we can certainly pursue it to the end," he said.

Ball indicated that Lexam would not rule out an offer if FWS came up with one but that the company is committed to exploring the refuge's oil and gas potential. "We like the potential of the property, so until we have something to review, we think it's our best alternative to proceed with the exploration," he said.

There are no oil and gas fields nearby, and the potential for the refuge is hard to characterize, but seismic tests indicate there's a 5 to 15 percent chance of finding recoverable oil or natural gas, he said.

While some opponents to the drilling plan have urged FWS to acquire the land through eminent domain, the agency cannot condemn the land because it does not have the money to compensate the company, Blenden said. Furthermore, the legislation that created the refuge stipulates that any private property on the refuge -- including mineral rights -- can only be acquired from a willing seller.

"We can't just steal the mineral rights," Blenden said. "Condemnation is not an option."

The public has 45 days to comment on the environmental assessment. FWS will hold an open house in Crestone, Colo., on Feb. 12 to discuss the document.

April Reese writes from Santa Fe, N.M.

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