For several years, the Bureau of Land Management imposed a de facto moratorium on oil and gas leasing in prime sage grouse habitat, deferring the sale of more than 5 million acres industry had nominated to drill in seven Western states. The idea was to wait until BLM had regulations in place that could allow drilling to proceed without destroying the bird’s sage-steppe habitat.
Now that sage grouse have been deemed safe from extinction, BLM is considering which of those lands to put on the auction block.
They include 2.2 million acres in Nevada, 1.6 million acres in Wyoming, 600,000 acres in Montana, and more than 300,000 acres each in Colorado and Utah, according to BLM data obtained by Greenwire. Smaller acreage had also been deferred in the Dakotas.
The data cover lease sales from calendar years 2009 to 2014.
The total acreage — more than twice the size of Yellowstone National Park — is a "huge amount" of land, said Kathleen Sgamma, vice president of government and public affairs at the Western Energy Alliance, a regional oil and gas trade group based in Denver whose members depend heavily on public lands.
The 5.2 million acres is more than three times what BLM has leased annually for oil and gas over the past five years.
The lease parcels were deferred while BLM and the U.S. Forest Service updated land-use plans strengthening sage grouse protection across 67 million acres in 10 states. The plans — hailed by most green groups as a watershed conservation achievement — were a key factor in the Fish and Wildlife Service’s decision last month not to list the charismatic bird as threatened or endangered.
But what to do with all those deferred leases?
It’s a question BLM plans to answer before Christmas, and one that’s being closely watched by industry and conservation groups.
Many of the lands BLM decides to lease would be subject to tough new restrictions to protect grouse that were developed over the past four years.
BLM’s land-use plans put 28 million acres of priority sage grouse habitat — an area the size of Ohio — off limits to surface impacts.
They also imposed disturbance caps ranging from 3 to 5 percent across 35 million acres, which limit the density of well pads and roads and other human disturbances. Drilling in many cases would also need to stay at least 3 miles from sage grouse breeding grounds, known as leks.
Potential lease parcels will be carefully screened for disturbances to grouse, said BLM spokesman Mitch Snow. The birds tend to avoid human activities, tall structures like oil derricks and noise.
"We’re talking boots on the ground," he said.
BLM will be moving forward with leasing in a way that "maximizes potential and minimizes impacts," said Sarah Greenberger, a top counselor to Interior Secretary Sally Jewell. She noted that 90 percent of high and medium potential oil and gas resources within the grouse’s range are outside of federally managed priority habitat.
Jewell last month said the BLM land-use plans give industry certainty on where they can and cannot drill.
But it’s not clear whether industry will still want to drill on the deferred leases.
For one, crude prices are hovering at around $45 a barrel — a major tumble from when the sage grouse plans were being developed — and there remains a glut of natural gas. The new restrictions may also pose a formidable hurdle.
"The likelihood of those [leases] getting developed is going to be pretty slim," said Bruce Hinchey, president of the Petroleum Association of Wyoming.
Instead of putting all the deferred leases back up for auction, BLM should notify companies of the new restrictions and see which areas they want to re-nominate, Sgamma said.
"The overlapping restrictions will significantly affect the economic evaluation of the leases, and companies will need to recalculate their value," Sgamma said. "Companies will now need to assess whether they’re still interested."
But those lease parcels that do get re-nominated should go to the front of the line for sale, she added.
Given the lagging demand, BLM should take time to ensure it makes the right decisions on which lands to lease, said Nada Culver, senior counsel at the Wilderness Society in Denver. It should "honor its commitment to prioritize leasing outside [sage grouse] habitat," she said.
"The economic climate may not be as favorable, and management considerations may affect the investment interests of companies," she said. "I’d note, though, that given the history we’ve seen of stockpiling leases without developing them and the relatively low costs of maintaining leases, BLM should not necessarily expend significant resources just because of expressed interest."
Erik Molvar, a biologist with WildEarth Guardians, said leasing deferrals over the past several years have offered grouse a respite from disturbance, allowing their rangewide population to grow over the past couple of years.
The "honeymoon" period is over, he said.
"I would expect many of these oil and gas leases to be nominated once again and to be reoffered under new terms and conditions," he said. "I expect well-capitalized companies will take the opportunity to snatch up leases on the cheap" and hold onto them until commodity prices recover.
As BLM deferred new leasing, it also deferred approval of most oil and gas wells within Wyoming’s prime sage grouse habitat, according to a report Molvar authored recently (Greenwire, Aug. 24). The industry has over 27,000 wells in the project pipeline in the Cowboy State that could greatly fragment the bird’s best breeding grounds and drive it closer to extinction, the report found.