Oil company, ranchers disagree on terms of development

By Heather Richards
Casper Star-Tribune
Via Wyoming News Exchange
 
CASPER — The ranchers stood out in the room full of lawyers in suits at Tuesday’s Wyoming Oil and Gas Conservation Commission hearings.
The Moore family — Frank, David, Keith and Josh — sat through hours of testimony, starting with an acrimonious battle between two gas companies over drilling in western Wyoming. The four Moores wandered the hallways during breaks, returning to hear discussion of a single well north of Lander that owed taxes.
Their time to speak finally arrived late in the afternoon.
At issue is whether landowners have a window of time when they protest industry activity on their property before operations begin; specifically at issue is protest of bonding — security held by the state to cover potential damages.
It’s an unusual disagreement for the commission and one that may not lean in the landowners’ favor. It comes down to interpreting statute. The company says it’s lived up to its responsibilities according to the law and is concerned that a change in interpretation would set a bad precedent for industry. The Moores say the law gives them 30 days for protest. The commission, represented by Eric Easton of the Wyoming Attorney General’s office, read it differently: once prerequisites are met for bonding, the company can proceed while landowner objections are handled.
The Moores’ property sits at the corner where Johnson, Campbell and Natrona counties meet. Navigation Powder River holds leases to oil and gas resources there and contracted another firm, Seitel Data Ltd., to perform seismic testing that Navigation could use to guide production decisions.
The work wasn’t so much the problem with the Moores, who began discussing access and timing with Seitel in May, they said. Those discussions continued via email, phone and in-person meetings for months. But the Moores wanted the work done at times of the year when it would not impact ranching.
Seitel couldn’t reach agreement with the Moores. In August, the company posted a $24,000 bond, an amount double the minimum bond demanded by statute.
The Moores filed a protest Aug. 30. They believe they had 30 days to protest. What they didn’t understand — and what was not communicated to them when they reached out to OGCC staff — was that the protest wouldn’t hold up Seitel’s work, said Frank Moore.
For the Moores, the heart of the issue isn’t the bond amount. Bonding was the only means by which they could protest.
“Our concern was the time of the year they were coming in,” Frank Moore said. “It was the very first thing we discussed, and we discussed it every time we talked.”
The company’s operations took place in August and September, when fire danger was high and both wildlife and grazing could be impacted, he argued.
In the lead-up to operations, the company and the Moores went back and forth over a surface agreement, according the hearing documents. The Moores wanted the operations to be held until December. They also wanted fencing and water wells as part of the deal.
The company made a final offer in early August to drill four water wells and buy fencing material and delay until December, with the caveat that the offer was short-lived, according to Seitel’s response to the bond objection. The Moore’s declined, Seitel said.
The company moved forward with bonding, which was approved by regulators. Seitel began its work after Aug. 20 and was completed by Sept. 9, according to hearing documents.
Industry’s concern, as Seitel laid out in its response to Moore’s objection, is that allowing additional months to settle such a disagreement would set a bad precedent for oil and gas.
Moore’s interpretation of the law “would turn the bond dispute process on its head — making it a tactic that could be used for negotiating leverage and delay,” Seitel’s lawyer, Darin Scheer, wrote in his response.
In the hearing, Scheer noted it’s in industry’s interest to practice good faith negotiations and post appropriate bond for potential damage. But the delay is not how he reads the statute.
“It begs the question, if you were to interpret the statute requiring a pause or a quiet period for a bond dispute, how long do you have to wait?” he asked. “And if you are an operator, how do you build that into your operational time frame?”
Gov. Matt Mead, who sits on the commission, suggested that the Attorney General’s office publish an opinion interpreting the statute.
Scheer noted that industry would likely want to weigh in if that was the case.
“It’s not a democracy on that,” the governor said.
For the Moores, the dispute is over. The operations are over. They came to the commission because they felt the rules hadn’t been applied appropriately.
“If the oil and gas commission’s policy is to issue the permit immediately upon getting [approval], rather than giving us 30 days to respond, that needs to be clarified,” Moore said. “It’s not clarified at all. Obviously, it’s not even clear to staff people here in this office.”
The governor noted that timing is significant to ranchers, that bad blood between the agricultural industry and the energy sector wasn’t good for anyone in Wyoming and that it would be best for clarity from an official opinion.
“I think your interpretation may be wrong,” he told Moore. “But at least you’ll know that.”
Any change to the statutory language would require legislative action, as the Wyoming Legislature sets statute.