Six Tavaputs gas leases net $49 million
Six of the natural gas leases on the Tavaputs Plateau that had been stalled for more than two years netted the federal government nearly $49 million at an auction last Tuesday.
The leases were bought by two major energy producers: Bill Barrett Corp. of Denver and XTO Energy, Inc., of Fort Worth.
The leases were among the 77 withdrawn from the market by the Interior Department in early 2009.
When the department opened them for bidding, the demand for the property showed in prices paid. XTO paid about $38.8 million for its opportunity to drill, while Bill Barrett paid close to $10 million.
According to Interior Department figures, Bill Barrett's bid of $9.8 million for 811 acres was the highest per-acre amount, about $12,100.
XTO had the largest single bid for a parcel, $18.6 million for 1,751 acres.
This up-front money is what companies pay "for the privilege of drilling what might be a dry hole," commented Bill Barrett spokesman Jim Felton in remarks to the Carbon County Chamber of Commerce Thursday.
However, he stated, "The geologic risk was the least risk we faced over the past six years."
From the perspective of energy producers, the policy risk was higher. Recounting the long process of getting approval for full-field development, Felton quipped, "There's an old Chinese curse, 'May you live in interesting times.' Well, I'm ready for some boredom."
Since getting the go-ahead last year for full-field development, the company has roughly doubled its production capacity.
The company has also invested millions in dust suppression in Nine Mile Canyon to protect the rock art, and has agreed to enhance four acres of wildlife habitat for every acre disturbed, and contributed to archaelogical research, Felton stated.