Monday, December 15, 2008

State lands oil and gas leases

The Bozeman Daily Chronicle on Sunday, Dec 14, printed this article on some proposed legislation from me on state lands oil and gas leases. The income from leases and production on state lands funds Montana public schools, so I'm keen to make the process fair and profitable. It's not quite as fair or profitable as it could be. Here's the story.

Local rep wants state lease procedure tweaked

A local legislator is eyeing changes to how the state goes about leasing its mineral rights after many of her constituents in the Bridger Canyon raised concern when leases there went to auction Tuesday.

Rep. JP Pomnichowski, D-Bozeman, represents House District 63, which stretches up the canyon. She said Friday that she will pursue three pieces of legislation she hopes will make state oil and gas leasing more transparent and reasonable.

First, Pomnichowski said she wants legislation requiring the state Department of Natural Resources and Conservation, which oversees oil and gas leasing, to print public notices in newspapers distributed in the affected area. Currently, the DNRC can publish notices in any state newspaper, she said.

The Democrat also wants the agency to notify adjacent landowners and surface owners about upcoming lease auctions, she said.

Second, Pomnichowski wants more discretion to be used by the DNRC when leasing in environmentally sensitive areas.

When given statehood, Montana was given two sections of every township to raise money for public schools, and oil and gas leasing are a major source of revenue for the state. But Pomnichowski said the way the state was given land led to some parcels where drilling shouldn’t occur.

“That was a generic overlay of the state,” she said. “I completely agree with the idea that we have a resource that can help pay for state schools. But to say everything is open to mining n it’s not viable to set up a well in the middle of Montana Avenue.”

Montana Avenue runs by the state capitol in Helena.

Third, Pomnichowski will seek legislation to set up a cash-in-lieu program that would allow people who don’t want to see certain oil and gas tracts developed pay money to state schools in lieu of revenue that would have been generated by energy developers.

Currently, anyone can lease a tract from the state, but the parcel may go back up for auction if the tracts are not developed.

None of the legislation is fully drafted, Pomnichowski said. The Montana Legislature convenes on Jan. 5.

Pomnichowski said the auction of the Bridger Canyon leases was a “big motivator” for her to introduce the legislation.

“But this problem is not unique to Bozeman,” she said. “Livingston and Sweet Grass folks are also concerned.”

Following Tuesday’s auction, Bridger Canyon landowners are planning to appeal to the State Land Board, which oversees administration of the state-owned land, to put the leases on hold for further study on the impact of drilling in the Bridger Canyon.

In an e-mail to concerned parties, Kent Madin, a Bridger Canyon resident and opponent of these recent leases, said he and others “are not asking the Land Board to permanently remove these sections from future consideration for oil and gas development.

“What we are asking is that the Land Board do the prudent things, forego the less than $3,000 in immediate revenue and effectively shelve these parcels so that adequate time is available for additional study of the impacts,” Madin wrote.