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Ground shifts in West's energy turf wars

Firms' rights to seek fuel with little regard for landowners are eroding.

June 03, 2007|Nicholas Riccardi | Times Staff Writer

BAYFIELD, COLO. — The energy boom across the West has created tens of thousands of jobs and funded state scholarships, teacher raises -- even top-of-the-line sports centers in remote ranch towns.

The other day, Roger Hawkins was reminded how much all that wealth would cost him.

Strolling his 32-acre ranch in southwest Colorado, Hawkins came across yellow survey tape running past a web of deer tracks. It indicated plans for drilling on his property -- in the pine-studded hollow where he had hoped to build a new home.

Like many Westerners, Hawkins owns the surface of his ranch but not the rights to the minerals below. Traditionally, property owners in such "split estates" have had little choice but to get out of the way when energy companies start chopping trees, paving roads or sinking wells to get buried fuel.

But now they're fighting back.

Legislatures in Colorado, Montana, New Mexico and Wyoming recently passed bills to rein in oil, gas and coal extraction on private property. The measures do not halt the practice, by any means; the energy extracted heats homes and powers fuel plants, and Western states depend on energy revenue and the jobs that exploration brings. But the legislation gives some leverage to landowners.

"Everything is starting to shift in favor of the surface owner to protect them from the big, bad energy companies," said Hayley Shelton, who tracks such bills for the National Conference of State Legislatures. Mineral rights owners can still drill, she said, "but they have to walk a more narrow line."

Colorado's changes, endorsed by Republicans and Democrats, may have the furthest reach.

Last week, Gov. Bill Ritter signed a law reorganizing the state's oil and gas commission, which approves and monitors drilling. The law dilutes the influence of the energy industry and adds experts in public health and environmental effects.

Ritter, a Democrat, also signed a law requiring prospectors to work with property owners to plan drilling. The landowners can make requests about the location of the wells and the timing of the work. They may ask drillers to control noise or dust, to start drilling at a reasonable hour, or to limit truck trips over sensitive terrain.

The energy companies must abide by such requests as long as the alternatives are "technologically sound" and "economically practicable." It may require several court cases to pin down precisely what that means. The legislation's supporters call the vague language essential to ensure flexibility -- so an oil well in a patch of scrub isn't held to the same standards as a drilling rig in a densely populated area.

The key point: "You have to reasonably accommodate each other," said state Rep. Ellen Roberts, a Republican.

Historically, if an energy company wanted to drill on your land, "they could say, 'You don't like it? Tough,' " Roberts said. "This levels the playing field."

For years, the energy industry blocked any attempt to bolster the rights of landowners. Lobbyists pointed to the undeniable economic benefits of drilling, especially as gas and oil prices soared. Wyoming has one of the lowest unemployment rates in the nation, thanks to the energy industry. New Mexico has been able to greatly expand subsidized preschool with money from energy taxes.

Lobbyists argued that they needed to explore domestic resources to satisfy Americans' vast appetite for energy. "The industry has to at least have an ability to access [fuel] ... for society's use," said Greg Schnacke, executive vice president of the Colorado Oil and Gas Assn.

But tensions between energy companies and landowners have soared in recent years, creating substantial pressure for change.

With the population booming across the Mountain West, prospectors can no longer sink wells in the middle of nowhere. There aren't many empty expanses left.

"They're coming into backyards now," said Gwen Lachelt, an activist in Durango, Colo., who advocates for tighter control of the energy industry.

Recognizing that change was inevitable, industry officials in several states agreed to back the recent round of measures. In New Mexico, energy companies have agreed to give property owners a 30-day notice before drilling, compensate them for any damage, and restore the land to its original condition when the wells are tapped out, which can take decades.

"Prior to this law, we could have showed up at 6 a.m. right next to someone's house, been there for as long as it takes, and just leave," said Bob Gallagher, president of the New Mexico Oil and Gas Assn. "That's not right."

A similar bill was passed in Wyoming in 2005 and in Montana this spring.

This year, Wyoming lawmakers revised the state's unusual eminent domain law, which allows businesses to take private property for economic gain. The new law requires good-faith negotiations before any property is taken and makes it easier for landowners to challenge businesses in court.

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