AP Exclusive: Wyo. Range gas lease buyout planned

CHEYENNE, Wyo. -- A land conservation group has reached a long-sought agreement with a petroleum company to prevent a controversial gas drilling project inside a national forest by buying out a vast area of federal oil and gas leases in northwest Wyoming.

The Trust for Public Land announced in Jackson on Friday that it plans to pay $8.75 million for nearly 58,000 acres of leases from Houston-based Plains Exploration and Production Co. The deal would end PXP's plans to drill 136 gas wells near the Hoback River headwaters inside Bridger-Teton National Forest.

"We have a deal to save the Hoback!" Deborah Love, the conservation group's Northern Rockies director, said to loud applause.

Never before has drilling occurred in the headwaters of a federally designated Wild and Scenic River such as the Hoback, she said.

"It's not that Wyoming residents oppose drilling. Folks recognize Wyoming is benefiting from the extraction economy. They just don't want large-scale industrial development in places that are frankly too special to drill," Love said.

The agreement made financial sense while allowing PXP to refocus elsewhere, a company official said.

"PXP has repeatedly stated our willingness to consider a buyout of our lease position if a valid offer was tendered. Today's announcement fulfills that pledge," PXP vice president Steve Rusch said in a statement.

The announcement opens a fundraising effort by the trust. The trust has secured $4.5 million for the deal but needs to raise the other $4.25 million by Dec. 31.

"We still have the last chapter to go. This is where all of you come in and you can help write a happy ending to that story," Love told the audience at Snow King Resort.

Opponents of the Eagle Prospect/Noble Basin project said it would pollute the air, harm wildlife and taint pristine streams in a landscape of rolling meadows and forest.

The drilling project was located near a southern approach to Jackson Hole used by many visitors to Grand Teton and Yellowstone national parks.

Eighty-five percent of the buyout acreage is within an area protected by the 2010 Wyoming Range Legacy Act. The act prohibits future oil and gas development on 1.2 million acres in the mountain range that parallels Wyoming's boundary with Idaho. The law doesn't apply to the PXP leases.

The company acquired the drilling leases a few miles south of Bondurant in 2005. As existing leases, they were grandfathered in under the act, although the act provides for remaining leases to be donated or bought out.

Upon acquiring the leases, the Trust for Public Land intends to turn them over to the federal government to permanently retire them.

"This story represents a respect for the valid lease rights and a respect and recognition of the value of conservation," Gov. Matt Mead said at the news conference. "What this is, is a local idea, a local passion, that created a Wyoming cure."

Mead's predecessor, Gov. Dave Freudenthal, was there, as was Susan Thomas, widow of Sen. Craig Thomas, who authored the Wyoming Range Legacy Act before his death in 2007.

"There is no doubt that Craig believed in energy development and exploration," Thomas said. "He also believed in special places that help give the balance that Wyoming people wanted."

Citizens for the Wyoming Range, which opposed the gas project, endorsed the deal.

"We always felt like a lease buyout was the cleanest, and a win-win, solution. It's a Wyoming solution to a Wyoming problem," group spokesman Dan Smitherman told The Associated Press.

Low natural gas prices played a role in the agreement. Rusch said PXP has been shifting away from low-margin natural gas toward higher priced oil in recent years.

The company could have completed the project in an "environmentally sensitive manner," but the trust's interest was advantageous to everybody involved, he said.

The deal should encourage owners of a handful of much smaller leases within the Wyoming Range Legacy Act territory to sell or donate, Love told AP by phone.

"I think the belief is that if you can buy out PXP, you're essentially taking away the economic incentive for these other, smaller leases to kind of tag on," she said. "Because the infrastructure costs are pretty big."

The trust has played a key role in other major land conservation deals, including protections for more than 600,000 acres in the Northern Rockies, according to Love.


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