Raiding the Roan

Rich in wildlife and natural resources, the Roan Plateau survived the last energy boom. Will this one destroy it?

Two and a half years ago, he and his wife, Vicky, had their wedding at his base camp on the plateau's Long Ridge. "I can't spend enough time in that country," Goddard says. "There's no place like it."

Of course, Goddard's preoccupations are of little matter to people in Denver or Omaha. Not when their heating bills are going through the roof, thanks to hefty increases in natural-gas rates. If there is any kind of clamor for increased gas drilling in places like the Roan Plateau, other than the salivating in the industry itself, it is from folks unaccustomed to emptying their wallets to keep warm. But there are plenty of reasons to believe that raiding the Roan won't solve their problem.

Demand for natural gas has remained relatively flat in the past decade, and the supply in proven reserves has actually increased. The chief cause of this year's price spikes, according to several energy-industry critics who testified before Congress in recent months, is a lack of storage capacity, restricting the ability to meet seasonal surges in demand and spurring volatility in the market.

Former Rifle councilman Joe Clugston a regular visitor 
to the Roan Plateau, says that widespread gas drilling 
will bring roads, people and pollution -- and drive 
wildlife from the area.
Mark Manger
Former Rifle councilman Joe Clugston a regular visitor to the Roan Plateau, says that widespread gas drilling will bring roads, people and pollution -- and drive wildlife from the area.

"Drilling more wells will not bring down price if storage capacity is the limiting factor that drives up price," Pete Morton, a resource economist for the Wilderness Society, told a congressional task force on affordable natural gas last August. "More importantly, lack of access [to gas on public lands] is not a problem. Industry has plenty of access to public land -- perhaps too much."

While gas-industry advocates argue that it's practically their patriotic duty to drill on public lands in order to open up more reserves, USGS research suggests that, if all federal lands with untapped resources were opened to drilling, it would supply the nation's thirst for gas for less than two years.

The Roan Plateau's reserves, locked in tight sand formations, are particularly unpromising. While media reports routinely mention figures in excess of 5 trillion cubic feet of gas, that assumes an 80 percent recovery rate -- which could be realized only by having lots of gas rigs and lots of costly directional drilling all over the plateau. Williams's own study of its yield from wells at the base of the plateau found that twenty-acre well spacing recovered less than half of the gas in place; wells with bottomhole spacing of ten acres recovered 80 percent. And the existing wells on top of the plateau took, on average, seven times longer to drill than those at the base, making them even more expensive.

"Areas like the Roan Plateau are very high-risk," notes Morton. "You have to drill a lot of wells to get the gas out."

So why bother to drill on the Roan? One explanation might be the tax credits that gas companies receive for pursuing "unconventional" reserves -- credits that would be extended by the energy bill that's now stalled in Congress, following howls of protest over the billions of dollars in pork it contains. Another theory, popular in the Grand Valley, is that the Roan makes a convenient and possibly profitable target, even if there are less daunting gas fields elsewhere, because of its proximity to existing drilling operations, pipelines and an interstate highway.

"There's not enough gas under that plateau to make America energy-independent," scoffs the GVCA's Cox. "It's a drop in the bucket. But its proximity to their transmission lines, to rail and a major highway makes it more cost-efficient for them to drill there. That's wonderful for them, but what about us?"

There's a certain value to gas leases even in questionable areas, Morton points out, particularly for energy companies still reeling from the Enron debacle and related government investigations. "A lot of these companies are highly leveraged and are trying to refinance their debt, including Williams, which has been selling off assets," he notes. (Williams recently reported $3.1 billion in net proceeds from asset sales in 2003, part of an aggressive effort to reduce interest expense and debt.) "One reason you might want to get as many acres leased as possible is simply that you're more likely to get your refinancing; the leases become part of your collateral for your loan."

The federal government ought to require gas companies to "run the numbers," Morton contends, to show that a given operation is truly economically feasible before it leases public lands to those companies. And it ought to factor in the environmental cost of that drilling, he adds. If the goal is to create jobs, then a better policy would be to focus on energy conservation and efficiency efforts; a 1996 DOE study indicated that investing in such areas would produce a net gain of 8,400 jobs in Colorado alone -- along with cleaner air and $1.2 billion in savings in lower energy bills.

But to achieve such results would require a different sort of energy policy, one focused on extending existing reserves through conservation and ramping up development of alternatives to fossil fuels. "Everything you read says that by the year 2050, all the oil and gas reserves are going to be history," Elderkin says. "Then what are we going to do? Nobody's talking about that. It ain't going to bother me, because I'm going to be dead and gone, but my kids will have to face that."

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