A royalty deal between the Bureau of Land Management and El Paso Exploration and Production Co. allows 25 more natural gas wells on the privately owned Vermejo Park Ranch, adjacent to a pristine forest area that is the focus of a battle over coal-bed methane.
The agreements will let the federal government recover royalty payments on gas under the ranch owned by media mogul Ted Turner. El Paso, not Turner, owns subsurface rights at the ranch, which already has numerous gas wells.
The gas comes from coal beds that extend under the eastern portion of the 100,000-acre Valle Vidal, part of the Carson National Forest.
El Paso Exploration is a wholly owned subsidiary of Houston-based El Paso Corp., which asked the the U.S. Forest Service in 2002 to open 40 percent of the Valle Vidal for coal-bed methane production. There currently are no oil and gas leases or producing wells there.
Environmentalists have said Valle Vidal's natural beauty and pristine land could be lost forever if drilling is allowed.
The BLM said it signed the agreements to gain royalty payments on wells along the boundary between the ranch and Valle Vidal.
The required spacing of wells in the gas field and the irregular, diagonal boundary between the ranch and forest land mean many border gas units, if developed, would drain from under the Valle Vidal, the BLM said.
Fears for watershed, elk
That worries opponents of drilling in Valle Vidal.
Jim O'Donnell, spokesman for the Coalition for the Valle Vidal, said Thursday the agreement was not illegal, but "I think it is an unethical action" given a public outcry in favor of protecting the area.
Sportsmen and environmentalists have been fighting against drilling on Valle Vidal, a key watershed for the Rio Grande cutthroat trout, the state fish, and home to New Mexico's largest elk herd.
O'Donnell said an agreement that lets wells "to be placed right at the gates of Valle Vidal sets the stage for this cancerous spreading of roads and pipelines and well sites."
The adjacent resource belongs to the public even if drilling is taking place on private land, he said.
"It's one more example of how the public is being completely shut out of the process of managing the public lands," O'Donnell said.
The BLM's state director, Linda Rundell, said El Paso has the right to develop its private land mineral rights.
"The agreements will ensure that the federal and state governments are fairly compensated for the natural gas that is drained from the federal portion of each spacing unit," she said.
The federal government gets a 12.5 percent royalty on production from such wells, half of which goes to the state, BLM spokesman Hans Stuart said. The agreement uses a formula for calculating royalties from wells close to such a boundary, he said.
Company's response
Bruce Connery, vice president of investor and public relations for El Paso, said Thursday 21 of the wells are expected to be completed by July. The company expects to have them operating by the end of the year, he said.
The rest would be drilled next year, Connery said.
The wells would be located south of El Paso's current Vermejo wells, toward forest land, said BLM geologist Jay Spielman.
"They are not zooming five or 10 miles away from their existing wells," he said. "It's a logical progression south of where their current drilling is."