Lexam and Drilling in Baca Wildlife Refuge (2006 – 2008)

The Crestone Eagle, August 2006:

Baca Wildlife Refuge faces oil exploration—Lexam plans to drill 2 deep test/production wells

by Lisa Cyriacks

Ron Garcia, Baca National Wildlife Refuge Manager, is organizing an informational meeting at the Baca Grande POA (Property Owners Association) building on August 9 at 6:30pm. Lexam Explorations, Inc. has notified the Baca Wildlife Refuge of their intention to exercise their mineral rights and explore for oil on the Baca Grant portion of the Refuge. Ron has already identified several concerns as a refuge manager and would like to gather input from the community about their concerns. This information would be utilized in negotiations with Lexam about the scope and impact of the proposed work.

Lexam is currently proposing to drill two test wells 12,000 to 14,000 feet at sites 7,800 feet and 10,500 feet from the extreme western boundary of the Grants (Baca Grande subdivision). Each site would result in about 2 acres of disturbed land. Also, they are planning a thorough seismic exploration to determine if there are other target sites that may be oil producing. The grid for that activity has not yet been disclosed.

Lexam is currently in the process of applying for the required permits from the Colorado Oil & Gas Commission and Saguache County. Lexam is also currently seeking $3 million in funding on the Toronto Venture Exchange to pay for the costs of developing their rights on the Baca Grant. Lexam has been engaged in oil and gas exploration for more than ten years, and while the company has no direct experience as an operator of oil and gas wells, Lexam’s management team does have significant experience running a large-scale, profitable operation. The independent summary technical review on the Toronto Exchange lists Red Lake Mine, one of Canada’s largest gold mines (in terms of annual ounces of gold produced) as one of their successful projects.

Should the test wells pan out, they will become production wells including all the supporting infrastructure that goes along with processing and storage. Because of the depth of the wells, the oil rigs would be very large due to the fact that the additional weight to drill very deep requires bigger derricks. As part of the site, there would be trailers for the workforce, including geologists, chemistry labs, and safety experts; diesel generators for power; and various pits for holding waste and contaminants. An interesting item to note is that, should the wells go into production, the Bureau of Land Management would authorize drilling on any portions of the refuge outside the boundary of the Baca Grant to allow the government to take advantage of comparable profits.

The Refuge is exploring all options, including legal, that are available to them in order to mitigate the impact of this exploration and test drilling. Surface access and use on the Refuge is provided by Lexam’s ownership of the mineral rights, and is further provided for by a Surface Use Agreement signed by American Water Development Inc (AWDI) in 1992 that is binding on surface owners who are successors to AWDI.

Gary Boyce extended this agreement with Lexam Explorations Inc. in 2002. This agreement is scheduled to expire in 2011, unless Lexam Explorations has achieved production. Solicitors for the Department of the Interior are reviewing and preparing an interpretation of that agreement and the scope of the Refuge’s authority in relationship to the agreement.

The agreement gives the mineral rights owner the right to enter the property for the purpose of exploration, development and mining of minerals found on the property. It also grants the mineral rights owner the exclusive right to determine the extent of activities on the property, and to construct roadways for access.

Ron is also compiling a list of negotiable items to bring to the table. He has already made the request twice to relocate the wells further west due to concerns about ecologically sensitive riparian areas and the wet meadows. Each time Lexam’s staff has carried the request back to the scientists and, the first time, complied with his request. He is hoping to be able to request that Lexam use a closed loop system that gives more protection to the land, water and especially birds. A closed system utilizes a tank rather than an open pit to contain waste and contaminants, and would result in less disturbance to the soil and easier cleanup of the site.

Ron is committed to minimizing the impact of this exploration and keeping the process as environmentally friendly as possible, given the limitations presented under pre-existing agreements. He is requesting the community’s assistance as he enters into negotiations with Lexam’s representatives. If you are unable to attend the meeting, but have concerns or information to share, you can reach Ron at the Baca Wildlife Refuge office at 719-256-5527 or by email: ron_j_garcia@fws.gov.

The Crestone Eagle, September 2006:

Lexam & Colo. Oil & Gas Com. reps to attend meeting on drilling in Baca Wildlife Refuge September 12

by Lisa Cyriacks

Ron Garcia, Manager of the Baca Wildlife Refuge, and Jim Spehar, Sonoran Institute, are convening a second meeting on oil and gas development. This meeting is scheduled for Tuesday, September 12, at the Baca Grande POA Hall, 6:30-8:30pm.

Representatives of the Colorado Oil and Gas Conservation Commission and Lexam Explorations will be present at the meeting to present information about the application that has been made to the state, the scope of the work intended, the rights of property owners, and information about avenues to mitigate the impact of the proposed exploration and drilling.

At the first meeting held in August, Ron Garcia and Jim Spehar, presented the information currently available to them and a proposed strategy for developing a coordinated plan to deal with concerns from the refuge, the Baca subdivision, and surrounding community. Information from the August meeting is already posted on the Saguache County website: www.saguachecounty.net, including a resources list of where to find additional information. An informed perspective is critical. Do not miss this opportunity to ask questions about the regulatory process involved in mineral exploration and development, and inform yourself about your rights.

Sometime in the past, the mineral rights were severed from the surface rights of the Baca Ranch (which includes the Baca Grande subdivision and the area above the subdivision). With the recent acquisition of the land, the federal government also acquired the water rights, but not the mineral rights. Lexam Explorations, Inc., Toronto, Canada, currently owns 100% interest in the hard mineral rights and a 75% interest in the oil and gas rights. The remaining 25% interest is owned by ConocoPhillips.

US Fish and Wildlife, the federal agency that manages the surface rights, has a legal mandate to accommodate the exploration and development of mineral interests; but also has a mandate to protect the resources on the refuge by laying out the concerns about surface impacts due to the drilling. At this time, Lexam Explorations has agreed to negotiate on how the drilling and exploration will be done. There are federal regulations that apply, and US Fish and Wildlife is complying with the procedures that apply. Ron Garcia, as refuge manager, stated his intention to seek the most effective and environmentally friendly way through this process.

Jim Spehar of the Sonoran Institute has background in dealing with these industries in other areas in Colorado. Oil and gas exploration is growing exponentially in the West and in Colorado. As part of their ongoing commitment to Saguache County, the Sonoran Institute has agreed to facilitate these discussions with Lexam, the Wildlife Refuge, and community representatives—creating a “negotiation team” utilizing best practices developed in other communities in the West. Jim also advocated creating a short-term approach and a long-term strategy for dealing with any future possibilities for drilling in the San Luis Valley.

Concerns that were raised by the audience at the August meeting, included general health and safety issues, potential negative impacts on air and water quality, impact to the wildlife and the sensitive environment protected by the Baca Wildlife Refuge—including wetlands, temporary vs. permanent impacts from drilling, sound levels creating by the drilling, the current political climate which may not afford citizens much protection, watershed protection, protecting our homes and quality of life.

Additional information can be found at: www.saguachecounty.net. Or you can contact Ron Garcia at the Baca National Wildlife Refuge 719-256-5527; ron_j_garcia@fws.gov or Jim Spehar at the Sonoran Institute Central Rockies Office 970-263-9635; jspehar@sonoran.org.

The Crestone Eagle, October 2006:

Community turns out to express concerns on Lexam’s plans to drill in Baca Wildlife Refuge

by Lisa Cyriacks

Over eighty Valley residents showed up at a September meeting where Lexam Explorations Inc. presented their plans for drilling two speculative 14,000 feet deep test wells, and collecting additional seismic data on the Baca National Wildlife Refuge. The Colorado Oil and Gas Commission also sent representatives to explain the permitting process and answer questions about regulation and enforcement of the drilling and exploration process.

The proposal is controversial. The legislation that was passed to create the Baca National Wildlife Refuge (and Great Sand Dunes National Park) was written to protect water resources in the San Luis Valley. The U.S. Fish and Wildlife Service recently took over management of the land dedicated to the Wildlife Refuge, and has not really had time to collect baseline data to determine what eco-systems need what level of protection, or even a complete assessment of what species are present on Refuge lands.The proposed sites for the drilling are located 1.5 and 2.0 miles west of the Baca Grande “Grants” boundary along the Willow Creek drainage.

The community’s concerns focused on the potential adverse impacts on the confined and unconfined aquifers during the drilling process, and long-term adverse impacts on overall water quality. Additional concerns about disturbance to a natural area, noise, traffic, unsightly rigs, potential adverse impacts on wildlife—particularly migratory waterfowl—and air pollution were also raised. Many questions were left unanswered at the end of the evening due to time constraints.

What is not at question is Lexam’s legal right to exercise their subsurface mineral rights and proceed with exploration. Ron Garcia, Refuge Manager, and Jim Spehar, Sonoran Institute, are interested in forming a community workgroup to identify community concerns and in facilitating discussion among all parties involved to provide opportunities to mitigate impacts.

Jim Spehar reminded the crowd Tuesday night that Lexam had no legal obligation to hear or factor in community concerns. Jim Donaldson, Lexam’s U.S. Operations Manager, did indicate a willingness to listen to community concerns and consider mitigation where possible. He also made it clear that Lexam would be working with Ron Garcia of the Baca Wildlife Refuge to negotiate terms for proceeding with the exploration. Mr. Donaldson reminded the community that two previous exploratory wells drilled in the 1990s had been plugged and successfully remediated.

Colo. Oil & Gas Commission presentation
Bob Macke and Patricia Beaver of the Colorado Oil and Gas Conservation Commission (COGCC) made presentations on the permitting process, the role their organization plays in regulation, oversight and remediation should problems occur, and reviewing well construction and sonic devices used to monitor the sealing of casings—ideally preventing water contamination.

The COGCC will conduct baseline water quality sampling to compare to later samplings. Brian Macke said, “If contamination occurs, the operator must remediate any kind of environmental impact.” Macke also pointed out that there are no water wells within a mile of where Lexam is drilling, so the possibility of contamination is remote.Lexam would also be required to provide financial assurance ($5,000 per individual well, and $25,000 for the seismic testing).

There are many ways and new technologies to mitigate surface impacts and address landowners’ concerns. Peggy Utesch, a Colorado rancher/poet from the Western Slope, shared her experiences in working with “the industry”. Not all of her experiences have been positive. She started out angry because she discovered as a property owner that she had no rights when it came to mineral exploration. “All the laws are written in their favor.”

Her advice was to develop a plan utilizing community values as a vehicle to establish strategies for protection. By joining with others in her community, Ms. Utesch helped to formulate the Rifle, Silt, New Castle Community Development Plan. Her main message was for citizens to educate themselves and to be involved—“serving as the eyes and ears on the ground to force accountability”.

Lexam plans to proceed with seismic testing as soon as all the permitting and surveys are complete—as early as January or February of 2007. Drilling could commence as soon as early Spring 2007. There is still time to form a community negotiations team, but time is of the essence.

Community action group meeting to be held Oct. 3
A third meeting has been scheduled, Tuesday, October 3, 6:30pm at the Baca Grande POA Hall to determine the next steps and community interest in forming a community action group.. Information about the two previous meetings is posted at www.saguachecounty.net. Questions can be directed to Ron Garcia, U.S. Fish & Wildlife at 719-256-5527; ron_j_garcia@fws.gov or Jim Spehar at the Sonoran Institute Central Rockies Office at 970-263-9635; jspehar@sonoran.org.



The Crestone Eagle, January 2008:

U.S. District Court temporarily halts drilling in Baca Wildlife Refuge
by Ceal Smith

Citizens and wildlife in the San Luis Valley were granted important protections for the Baca National Wildlife Refuge (NWR) when Colorado Federal District Court Judge Walker D. Miller ruled on Nov. 29 that the US Fish and Wildlife Service “shall prohibit all ground disturbing activities related to the exploration and development of the mineral estate underlying the Baca National Wildlife Refuge during the National Environmental Policy Act process.”

Judge Miller issued the ruling in response to a lawsuit filed in May 2007 by the San Luis Valley Ecosystem Council (SLVEC) against U.S. Fish and Wildlife Service (USFWS) to address Canadian owned Lexam Explorations, Inc’s. (Lexam) “high-risk” proposal to drill two 14,000-foot oil or gas wells in the newly established Baca NWR.

The suit asked the Federal District Court to ensure that drilling activities cease until potential impacts are fully assessed and the public is allowed to participate in the formal decision-making process as required by federal laws. These laws, including the National Environmental Policy Act (NEPA), require USFWS to show whether a proposed action serves a legitimate purpose and to disclose significant environmental impacts, alternatives and mitigation measures.
USFWS took the initial position that it had no regulatory authority over Lexam’s activities due to the dual ownership of surface and mineral rights, also known as a “split-estate.” SLVEC’s lawsuit asserts that USFWS has ample legal authority, based on Colorado and federal laws, to protect the Baca NWR—even where the mineral interest is owned privately. The Court’s ruling is a major victory that halts Lexam’s plans to drill in the Baca NWR until a full examination of potential impacts is completed under NEPA, a process that could potentially take years.

The NEPA process is now in effect on several fronts. In Aug. 2007 USFWS initiated a 30-day scoping period to identify public concerns about the drilling as required by NEPA. The agency was flooded with almost 50,000 letters, virtually all opposed to the drilling. These citizen concerns, and others identified by USFWS and other affected agencies, form the basis of the impacts and alternatives to be addressed in the forthcoming draft Environmental Assessment (EA).

Although USFWS was expected to release the draft EA for public review in early December, there have been a series of delays. One possible reason for this is the failure of USFWS to engage other Federal and non-federal agencies in the NEPA process in a timely manner. The Council on Environmental Quality (CEQ), which is responsible for overseeing NEPA, requires that Federal agencies implement NEPA “in cooperation with State and local governments.” CEQ cites many benefits of cooperating agency participation including: early disclosure of important information; application of technical expertise; avoiding duplication with other Federal, State, Tribal and local procedures; and establishing a mechanism for addressing intergovernmental issues.

The Saguache Board of County Commissioners (BOCC) expressed an interest in being a cooperating agency with USFWS early in the process. In November they sent a letter to the USFWS Washington office requesting a formal cooperating agency agreement. They did not receive a response and sent a new request to the USFWS District office (see: www.saguachecounty.net for a copy of the letters) on Dec. 20. Citizens groups have requested that USFWS delay the release of the draft EA in order to give the County, and other eligible agencies time to formalize cooperating agency agreements.

On the State level, it’s not yet known how the Court’s decision and NEPA will affect the Colorado Oil and Gas Conservation Commission’s (COGCC) process of approving Lexam’s drilling permits. The COGCC is pressuring the County to comply with the old industry-biased rules, accept the same flawed conditions applied to Lexam’s original permits and sign an MOU with Lexam.

There are enormous gaps in understanding about sensitive species, wetlands and the potential impacts of drilling 14,000’ through the complex Closed Basin—North America’s largest contiguous—aquifer system. Until an Environmental Impact Statement (EIS) or Comprehensive Conservation Plan is completed for the Baca NWR, these impacts cannot be determined.

Both NEPA and the COGCC new rule-making processes could lead to more effective protection for the vital resources of the Baca NWR, as well as the health, safety and welfare of the affected communities. Citizens groups are requesting delay in approval of Lexam’s permits until after the NEPA process is complete and COGCC has had the chance to review the 18 proposed permit conditions under the spirit, if not the actual rules, currently being developed.

For more information about NEPA or for a schedule of upcoming actions and events, call 256-5780, email: slvwater@theriver.com or visit the Lexam webpage at www.slvec.com.