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BLM halting lease sales may impact area

A recent halt in the sale of Bureau of Land Management oil and gas leases slated for Tuesday could cause some delays to area oil production, one state official said Saturday.

"It's going to be a pretty significant impact to Billings, Golden Valley and southern McKenzie County," said Lynn Helms, director of the state Department of Mineral Resources, Oil and Gas Division. "We have seen interest really start to warm up in Billings County, western Stark County and Golden Valley County. This is going to change a lot of those plans."

BLM announced Thursday its plans to delay Tuesday's oil and gas lease sale in lieu of "expected litigation," following a similar protest by the Counsel for Montana Environmental Information Center, Earthworks Oil & Gas Accountability Project and WildEarth Guardians in 2008.

The groups are protesting Tuesday's sale centered "on unresolved concerns regarding climate change and BLM's management of oil and gas leases in the region," according to a letter from the Western Environmental Law Center to BLM's Montana State Director Gene Terland.

Before the leases can be sold, BLM will conduct further environmental research under the National Environmental Policy Act.

"We'll try to quantify the potential greenhouse gases that federal oil and gas exploration and production could emit," said Montana BLM Public Affairs Officer Greg Albright.

The sale was to involve 129 parcels in North Dakota, South Dakota and Montana, including 14 parcels in McKenzie County totaling about 4,650 acres, 13 parcels in Billings County totaling about 11,200 acres, and 10 parcels in Golden Valley County totaling about 9,150 acres.

"The last thing we want to do is to hold a sale, have people give us their money and then get involved in litigation which will tie that lease up," Albright said. "This also hopefully gives the industry more certainty as to what's going to happen."

But, BLM oil and gas leases are nothing new to the area.

"Most of the BLM lands, about two-thirds of them, are concentrated in the southwest part of (North Dakota) in McKenzie, Billings, Golden Valley, Slope and Bowman counties," Helms said in an e-mail Saturday.

The worst delays and issues will be felt in western Billings County, southern McKenzie County and northern Golden Valley County, Helms said.

BLM has provided no timeline to the oil and gas commission as to when the leases may be put back on the auction block, Helms said, adding though the oil industry is disappointed in the sale's halt, it is no surprise.

"It's one thing if the federal government wants to postpone drilling where it's mostly federal lands and they're only delaying things for themselves, but where there's a lot of intermingled federal and fee lands, they are in fact postponing development and decreasing the recovery of oil," Helms said.

Some of the area's biggest oil players could feel the delays.

"Just recently, Whiting Petroleum has made some pretty good wells in Three Forks in Billings County," Helms said. "These companies have made their plans for what they thought they wanted to buy and drill," Helms said, adding activity on the parcels probably wouldn't begin this year but sometime next year.

Rick Ross, vice president of operations for Whiting Petroleum Corp. and chairman of the North Dakota Petroleum Council's Board of Directors, said while he cannot say whether the company was planning on buying any of the leases, the company is disappointed the leases were pulled.

"Certainly we're hopeful that the BLM will offer those leases in a pretty timely manner," Ross said. "I think all of the industry would be in that same position. The fact that they pulled the leases down and are going to do further study certainly slows the time for that to be developed."

Additional reviews of the questioned parcels could take four to six months, Albright said.

"I'd be very surprised if they met that goal," Helms said.

Statewide BLM oil and gas leases could be becoming a hot commodity.

Last year, BLM sold five oil and gas leases raking in $75 million in bonus bids, $74 million of which came from North Dakota parcels.

"It's no secret that tracts (parcels) in North Dakota command a much higher price," Albright said.