American Oil and Gas Reporter - May 2020 - 16

IndustryDigest
will open 171,000 Colorado acres to oil
and gas leasing. Notice of the plan's
availability was published in the April
10 Federal Register.
BLM notes that the RMP, which
updates and combines the 1985 San
Juan/San Miguel RMP and the 1989
Uncompahgre Basin RMP, applies to
more than 675,000 acres of BLMadministered surface lands and
971,220 acres of federal mineral
estate. The Uncompahgre planning
area includes lands in Delta,
Gunnison, Mesa, Montrose, Ouray and
San Miguel counties in southwestern
Colorado, the bureau notes. It doesn't
include the Gunnison Gorge or
Dominguez-Escalante national
conservation areas, which are
managed under separate RMPs.
According to the bureau,
coordination with Colorado through the
governor's consistency review was
completed in January 2020.
"We appreciate the productive
dialogue with BLM, and the recent
changes made to the Uncompahgre field
office RMP to allow state wildlife
managers the opportunity to provide
input into mitigating the impacts of oil
and gas development on sensitive habitat
for elk, mule deer and bighorn sheep, as
well as the inclusion of no surface
occupancy protections for just under
33,000 acres of critical water and
riparian resources, especially in the
North Fork Valley in Delta and Gunnison
counties near Paonia," says Colorado
Department of Natural Resources
Executive Director Dan Gibbs. "We also
appreciate the BLM's commitment to
undertake a future statewide planning
effort to address related concerns with
the density of development in sensitive
big game habitat on BLM lands, which
will bolster conditions for herds across
the state."
The bureau maintains that the RMP
balances protection, restoration,
enhancement and use of resources to
meet natural resource management
objectives and the needs of local
communities. It estimates that 950 jobs
and $2.5 billion in regional economic
production could be generated annually

Coming Next Issue
Industry groups' ongoing efforts
for the industry
16 THE AMERICAN OIL & GAS REPORTER

from these public lands, including
recreation, agriculture and energy
development.
Western Energy Alliance President
Kathleen Sgamma is quoted in the
Durango Herald as emphasizing that
the RMP is best understood in the
context of BLM's mission of
considering multiple uses for federal
land in a way that "balances oil and
natural gas development with
conservation of land, wildlife, cultural
and other natural resource values." In
contrast, she says, anti-development
groups seek to bar hydrocarbon
production altogether.
The ROD, RMP and associated
documents are available online at
https://go.usa.gov/xnpgD.
❒

Washington Opens SPR
For Crude Oil Storage
WASHINGTON-The U.S.
Department of Energy is offering
domestic producers storage capacity for
30 million barrels of oil at the nation's
Strategic Petroleum Reserve. DOE says
it also intends to make an additional 47
million barrels of storage capacity
available in the near future.
The unprecedented global reduction
in consumer demand caused by the
coronavirus has forced U.S. refiners to
decrease production of motor gasoline,
commercial airline jet fuel and other
refined products, the agency notes,
reducing refinery crude demand and
exacerbating a market oil glut, which
has increased need for crude oil storage.
"A lack of storage is forcing
premature shut-in of oil wells and
economically hurting the U.S. energy
industry and its workforce," DOE
observes. "The SPR is well-positioned
to relieve some of this economic stress
by making storage capacity available to
U.S. oil producers immediately," it says.
Filling the SPR with crude oil
produced by U.S. companies that are
facing catastrophic losses and increased
financial hardship is a logical action by
the federal government, assesses
Secretary of Energy Dan Brouillette.
"The department continues to work
with Congress to fund ways to make
funding available for DOE to buy
American oil," Brouillette says.
"However, we must move with a sense
of urgency to support an industry that
underpins the U.S. economy and

supports our national security. Making
some of the SPR's storage capacity
available to industry, without
purchasing the oil, provides this
immediate benefit to the industry and its
hard-working employees."
The first crude oil deliveries were
scheduled for late April or early May,
depending on producer logistics, reports
Assistant Secretary for Fossil Energy
Steven Winberg.
The Texas Alliance of Energy
Producers points out the global crude
oil market is increasingly oversupplied
with production at or near record levels
in the face of crashing demand.
"That means that oil needs a place to
go until markets can begin to realign,"
the association says. "The additional
storage space provided by DOE through
the SPR program is a strong move that
alleviates some of these storage issues
now, and pushes back the 'day of
reckoning' in U.S. crude storage,
allowing more time for other supply and
demand solutions to take hold." ❒

Ohio Class Action Suit
Against Producers Fails
Thanks To Lease Clarity
CLEVELAND-Unambiguous lease
language was "the beginning and the
end" of a royalties lawsuit several
plaintiffs brought against oil and gas
companies operating in Ohio, writes
Federal Judge Benita Y. Pearson in a
case before the U.S. District Court for
the Northern District of Ohio. In the
class action lawsuit, landowners sued
affiliates of Chesapeake Energy Corp.
and Total S.A. for a minimum of $30
million in alleged underpaid royalties
associated with eastern Ohio production.
According to press accounts, the
landowners alleged the companies should
pay royalties on gross proceeds from the
sale of oil and natural gas without
deducting nontax post-production
expenses. The companies countered that
landowners weren't entitled to royalties
on refined or processed products, and
noted that the netback leases provided for
transportation and refining cost
deductions when they sold oil and gas
from one subsidiary to another subsidiary
before they sold it to a third party.
"Plaintiffs' 'gross proceeds'
argument, as articulated, does not
follow the lease terms at all," Pearson's
ruling states. "Their interpretation
https://go.usa.gov/xnpgD
American Oil and Gas Reporter - May 2020

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