PAUL FOY - The Associated Press | Posted: Tuesday, April 4, 2006 11:00 pm
SALT LAKE CITY-- Bidding by oil-and-gas players could intensify at a government auction next month when drilling leases will be offered on 440,000 acres of public land in Utah.
The auction set for May 16 will rank as the largest government lease sale ever held in Utah.
The stepped-up leasing reflects a soaring market demand for oil and gas, new technology that makes it easier to find and drill deeper for petroleum, and a rich oil find in central Utah that's driving speculative bidding.
The Southern Utah Wilderness Alliance accused the Bush administration of rushing to open more public lands for drilling to buoy domestic energy supplies. The Utah Petroleum Association counters that drilling can be done in a responsible manner.
"Clearly, market demand is going up," Adrienne Babbitt, a Bureau of Land Management spokeswoman in Salt Lake City, said Tuesday. "Last year, Utah consumed 155 billion cubic feet of gas, and we exported another 300 billion feet of gas."
Together, that was enough natural gas to heat 4 million homes over a year.
Demand for crude oil is equally strong. World oil prices rose Monday by 11 cents to $66.74 a barrel on the New York Mercantile Exchange. The rise was attributed to an uncertain outlook for supplies out of Iran and Nigeria.
The previous largest BLM auction in Utah was a quarterly lease sale in September 2004, when 357,000 acres were put out to bid.
The leasing frenzy in Utah broke out last May after news that a tiny Michigan company discovered what could be a huge oil field in central Utah. That pushed starting prices of $2 an acre to as much as $1,250 an acre in the region.
Wolverine Gas & Oil Corp. is pumping oil as fast as it can near Sigurd, 130 miles south of Salt Lake City, after tapping a single oil deposit believed to contain 100 million to 200 million barrels of oil.
Wolverine made its discovery in a so-called overthrust belt, a geologic formation that favors oil deposits and underlies the mountains that form the spine of Utah.
Other companies are joining the rush to tap wells in central Utah, betting that the complicated geology is hiding a lot more oil, Babbitt said.
"We're seeing people interested in places they haven't been interested in before," she said.
Part of the reason the BLM is putting more land out to bid is that it is releasing parcels previously held up over environmental and recreational concerns. The May auction will off 296 parcels scattered throughout Utah.
"Industry's driving it," said Stephen Bloch, a staff lawyer for the wilderness alliance. "A lot of parcels have been deferred over the previous years, and industry has clamored for them.
"Rather than do the responsible thing and tell industry they have to wait until new land-use plans are finished, BLM is rushing headlong to lease as much as it can as fast as it can at the behest of industry, which is turning the screws at the highest levels at the Department of Interior."
The nation is "in desperate need of energy," said Lee Peacock, president of the Utah Petroleum Association, in a statement he offers whenever environmental groups object.
"The companies are doing everything they can in the oil and gas industry to provide a very needed resource. That's a long, drawn-out process. The beginning step is obtaining leaseholds in areas that are known or speculated to have oil and gas potential. Without access to those lands we do ourselves a disservice by restricting the energy we need," Peacock said.
The BLM will offer leases along the eastern border of Capitol Reef National Park, in the nearby San Rafael Desert and along the Price River.
But the agency said it's still protecting potential drilling parcels near Hovenweep National Monument; the Parowan Gap, a natural V-shaped notch in central Utah that was used by the ancient Fremont people to mark the longest day of the year; and Labyrinth Canyon along the lower Green River, where rafting is a growing business.
The agency also said it's protecting Nine Mile Canyon in eastern Utah, where a series of ancient rock art panels have been called the world's longest art gallery.
This story appeared in The Daily Herald on page D3.