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Game-changing Mancos Shale Reserves in Colorado Handicapped by Regulatory Uncertainty

WASHINGTON, D.C., July 12, 2016 -

 Today, the Subcommittee on Energy and Mineral Resources held an oversight hearing on the opportunities and challenges in developing the Mancos Shale of western Colorado, which constitutes the second largest gas reserve in the U.S. behind the Marcellus Shale.

A June 2016 report by the U.S. Geological Survey (USGS) found that the Mancos Shale contains more than 66 trillion cubic feet of natural gas, 74 million barrels of shale oil and 45 million barrels of natural gas liquids. These reserves are more than 40 times the original 2003 assessment.

For rural Colorado and other neighboring states, this could be a game-changing opportunity for decades to come, as long as federal policies allow for responsible development. An unpredictable federal regulatory environment and arbitrary federal actions will chase investment from states with federal land to those without federal land. And, in many cases, will chase investment to other countries,” Subcommittee Chairman Doug Lamborn (R-CO) said.

The report changes the baseline assumptions for all Bureau of Land Management (BLM) leasing decisions in the area, including impending regulatory and environmental assessments for energy development. Members questioned if the BLM is planning to incorporate the report’s findings into federal decision making for multiple-use areas overlying the play, but the BLM refused to send a witness. 

More specifically, the Committee and panel members asked the BLM to reopen comments on the “Draft Environmental Impact Statement for Previously Issued Oil and Gas Leases in White River National Forest Colorado” in light of the 2016 USGS assessment.

Robert Guinn, Vice President of SG Interests, discussed his frustration with the BLM’s “post hoc decision making” despite the proven ability to safely and responsibly develop shale resources.

The BLM and the U.S. Forest Service, rather than facilitating the development of the Mancos Shale, are making long-lasting land use planning decisions to prevent development of a significant portion of the Mancos Shale resources in the White River National Forest,” Guinn said.

Robert Downey, fourth generation Colorado native and Vice President of Production for Gunnison Energy LLC, talked about his experiences working with the BLM citing them as costly and time-consuming.

[W]e’ve sometimes found the BLM to be inconsistent and slow in handling applications we’ve filed […]. In our experience, it costs about 10 times as much to permit a well on federal land versus fee land, and it takes about 10 times as long to get a permit approved,” Downey stated.

Mesa County Commissioner Rose Pugliese talked about the firsthand impacts of the federal regulatory burden resulting in the loss of over 10,000 jobs in Mesa County, largely in the natural gas industry.

When you think about economic effects of over-regulation, potentially cancelling leases or modifying leases, the ability or inability to do business in Mesa Country or surrounding western Colorado counties, you have to think about the ‘domino effect’ […]. This is a huge cut into my budget for infrastructure and important public safety needs,Pugliese explained.

Click here to view full witness testimony.  

Contact: Committee Press Office 202-226-9019

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