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The Bureau of Land Management has officially rescinded approval for the proposed 5,750-well expansion of the Uinta Basin’s Monument Butte oil and gas field, further casting doubt on the future of the project after the director of the State of Utah Greg Sheehan has ordered further environmental review.
Monument Butte’s expansion had already been stalled for years thanks to relentless challenges from WildEarth Guardians, and the field’s lead developer, Ovintiv USA, recently announced it was selling an 85,000-acre stake in the field where it has inactive at least 200 wells.
This week, the Utah State Office of the BLM released its latest decision, this time to conduct additional environmental analysis, examining the greenhouse gas emissions associated with the energy the project would produce.
“This is a major win for public lands and our climate,” said Jeremy Nichols, WildEarth’s climate and energy program director. “This proposal has opened the door to a costly increase in drilling and fracking at a time when we need to keep oil and gas in the ground. We are delighted that the Biden administration has agreed to reconsider this decision. »
The group argues that open-field development on the 120,000-acre field could release up to 60 million metric tons of carbon dioxide and other greenhouse gases per year, resulting in a climate impact equivalent to that of 17 coal-fired power plants.
Even without the Monument Butte expansion, oil production in the Uinta Basin has reached record highs, driven by resurgence in energy prices and a new rail connection to Gulf Coast refineries, according to Oil, Gas and Mining Division. This summer, 12 drill rigs were operating in the basin – up from zero during the pandemic – drilling new wells that promise to boost production even further.
And if Utah’s proposed Uinta Basin Railroad is built, production could triple. In this light, the cancellation of the approval of the Monument Butte project is hardly a speed bump in the production of hydrocarbons from the basin.
The Utah Governor’s Office of Energy Development, now headed by Duchesne County Commissioner Gregory Todd, said it didn’t know enough about the recent decision to comment on Tuesday.
The company formerly known as Newfield Exploration drilled much of this field south of Myton, straddling the Duchesne-Uintah county line, in the 2000s. But today many wells sit idle , although 1,000 remain in production, according to Matt Kovich, director of Uinta Basin production for Ovintiv, Newfield’s successor.
At a gathering of industry leaders in Duchesne in July, he said Ovintiv was the Greater Monument Butte of a “capable buyer with a laser target to develop this unit,” while drawing his attention on Ovintiv’s remaining 130,000 acres of leases elsewhere in the basin.
With headquarters in Denver and Woodland, Texas, Ovintiv is the company resulting from Newfield’s 2018 merger with Encana. It was a leading oil and gas producer in the Uinta Basin, with major operations in North Dakota, Texas, Oklahoma and Canada, where it specialized in drilling horizontal.
“For us, it was about focusing on our core competencies,” Kovich said of the sale. “We are a multi-basin horizontal drilling company. We learned a ton in [Texas’s] Permian Basin. Now the focus is on using all of this institutional knowledge and learning about multi-stack development and implementation here in the Uinta Basin.
The 120,000-acre Monument Butte project area is largely controlled by the BLM, while 11% is on sections of state trust land scattered across the land. By 2009, Monument Butte had been fully developed as an oilfield, prompting Newfield to seek approval to increase well densities beyond the usual 40-acre spacing.
The Obama administration reviewed the proposal and in 2016 decided to allow 5,750 new wells to be drilled over a 16-year period. Also approved were 226 miles of new roads and pipelines, as well as improvements to 318 miles of existing roads, 20 compressor stations, a gas treatment plant, 13 facilities to manage oil-contaminated produced water and 13 gas-oil separation plants.
The decision was “programmatic,” meaning it did not authorize any ground-disrupting activity, the BLM claimed. Actual construction would need to be approved through a site-specific permit down the road.
This was the reason given by the BLM in 2017 to reject WildEarth Guardian’s original request for reconsideration. With no real field work allowed, the environmental group did not have “standing” to challenge the decision, the agency ruled.
Siding with WildEarth, the Interior Board of Land Appeals, or IBLA, rejected the decision.
“This reasoning does not apply to the ROD project [record of decision]which is a decision advancing the development rights of third parties and restricting BLM’s discretion to deny drill permit or right-of-way applications filed pursuant to the approved project,” Administrative Judge K. Jack Haugrud wrote in a statement. January 2022 decision.
The decision sent the matter back to the BLM for further study – 13 years after the project was first proposed. But the original developer has moved on and it’s unclear if the incoming operator at Monument Butte is even interested in drilling.
If oil and gas prices remain high, the answer is likely to be yes.