Oil, gas lease sale staged under protest in central Nevada

By Martin Griffith, Associated Press

Saturday, July 19, 2014 | 2:55 p.m.

A U.S. Bureau of Land Management sale of oil and gas leases on public land in central Nevada has been conducted under protest.

Earlier this year, Lander County commissioners, the Center for Biological Diversity, the Yomba Shoshone Tribe and the Gandolfo Ranch filed protests over Thursday's sale in Reno. The sale also drew more than 30 protesters outside the office where it was staged, and it prompted last month's filing of a lawsuit seeking to block it by a rural Nevada group called Reese River Basin Citizens Against Fracking.

Opponents have expressed concern about the impact of hydraulic fracturing, or fracking, on the nation's most arid state and potential ground and surface water contamination associated with oil and gas exploration and development.

Oil and gas developers employ hydraulic fracturing to boost production. The technique pumps water, fine sand and chemicals into wells to fracture open oil- and gas-bearing rock deposits.

Bureau officials said fracking is a proven technology to safely develop Nevada's oil and gas. They are still reviewing the protests by the four parties and have 60 days to act, the officials added.

"According to our regulations, the sale can continue even with parcels under protest," Bureau of Land Management spokesman Chris Rose told The Associated Press. "The protests will be settled and appropriate action taken before any leases are issued."

Rob Mrowka, a senior scientist with the Center for Biological Diversity, said it was disappointing the agency did not resolve the protests before the sale.

"Aside from the fact we're opposed to fracking of any sort, there are also species concerns," he said. "(The sale) is going to have a big negative impact on sage grouse, on fish and on some rare plants."

Texas-based American General Energy Exploration Corp. dominated the sale, coming away with 26 parcels covering nearly 38,000 acres around Big Smokey Valley between Austin and Tonopah. Only one other parcel sold.

In all, the Bureau of Land Management offered 102 parcels totaling 174,000 acres in Lander, Nye and Esmeralda counties.

The bureau received an estimated 5,100 comments about the sale, the vast majority of them generated by the American Wild Horse Preservation Campaign. Horse defenders also expressed concern about fracking's impact on water sources.

Fracking has been contentious amid concern that fracking gone wrong could taint groundwater with hydrocarbons or fracking fluids containing toxic substances. Fracking typically requires from 2 million to 5.6 million gallons of water for each well and can lower water tables, reducing water available to communities and wildlife, according to opponents.

The bureau earlier removed 64 parcels totaling 111,000 acres from the sale because of their location in sage-grouse habitat and areas where large-scale mining is occurring, Rose said.

Thursday's sale of 10-year leases generated $137,472, with annual rental fees of $1.50 per acre for the first five years and $2 an acre after that until production begins, the bureau said. Once a lease results in production, a royalty of 12.5 percent is charged. Nearly half the bid and rental receipts go to the state of Nevada.