Navajo panel looks at oil, gas drainage

Copyright © 2009
Gallup Independent
By Kathy Helms
Diné Bureau

WINDOW ROCK — Are oil and gas being sucked out from under Navajo lands like a milkshake through a straw without the Nation’s or individual allottees’ knowledge, and if so, where are the federal agencies that are supposed to protect them?

These are a couple of the questions raised Monday during a report to the Resources Committee regarding the drainage of oil and gas from within the San Juan Basin.

Kevin Gambrell, who has worked as a trust manager of Indian allotted lands and was hired by Eastern Navajo Land Commission to provide an update on the drainage issue, told the committee that the Bureau of Land Management has looked at 811 drainage cases in Eastern Agency since 1979.

Out of those 811 cases, “there are 300 cases out there on the BLM list that there has not been any conclusions,” he said. “The San Juan Basin is one of the most developed basins in the world, the second largest gas basin in the United States and the most complex natural gas basin in the country.”

Because of the number of operators and the different formations in terms of gas, oil, and the type of land status — such as tribal trust, Navajo allotted, federal, fee and state lands — management of the basin is very complex and requires a lot of monitoring, he said.

Typically, an oil and gas operation drills a well next to a property and the oil or gas migrate across the property and are drained, especially in areas where there are highly porous rock formations.

“I saw one case back in 2002 where an Indian allotment had a trespass. We went out and looked at the property and within 100 feet of the property line was a well. We went back out to BLM to do the drainage review and they hadn’t looked at the property ever,” Gambrell said.

When they did the review, the well actually was draining the Indian allotment and had been for 20 years, he said.

“We then tried to lease the Indian allotment, because if you don’t lease the property, there is no protection. It’s what they call the rule of capture.

“The rule of capture basically says if this person drilled a well and they start producing oil and gas, they have a right to capture as much as they want, and it’s up to the entity of the adjacent property to build a protective well and to lease that property, or to develop a compensatory royalty agreement in order to protect that mineral asset.

“In this case where we have Indian allotments and we have a federal lease, we have to lease that property in order to protect that Indian allotment’s minerals,” he said.

Out of the 811 cases, only 415 actual properties — Indian allotted and tribal lands — have been reviewed, according to Gambrell. “In the last nine years, BLM has reviewed 188 drainage cases. In all those cases, there are actually five cases that BLM has determined drainage did occur.

Within those five cases, there are two unleased properties and three leased Indian properties that were being drained back in 1994 and 1984.”

Gambrell said he looked at 60 cases where BLM performed an administrative review and the result was positive for drainage occurring. “They did not go on to the geological review. At that point, it stopped. That’s potentially 60 more cases that were not completed in terms of the logical process.

“If you start a drainage case and you fail to go through the process and fail to go through the administrative, geologic, engineering and the economic reviews, and you just stop at one point, that case is still open, still pending. However, on BLM’s spreadsheet it shows there are 129 cases where they didn’t complete all the steps.”

Now that they have BLM’s spreadsheets on the case reviews, he said, they need to go back and look at the actual files for each case to determine whether they have potential drainage implications. If there was a withholding of information where the damaged party did not see the data to know they were being harmed, then the statute of limitations would not apply.

Phil Harrison of the Resources Committee remarked that energy development exploitation has been going on for years. “We’re getting robbed in daylight.”

Committee Chairman George Arthur said there have been Navajo individuals who have expressed drainage concerns over the past several years. The Bureau of Indian Affairs has generally failed in protecting interests of this nature, he said. “We are quite aware that they have mismanaged individual accounts in the past.”

Larry Rodgers of the Eastern Navajo Land Commission said the Bureau of Land Management also raised the question of who protects the rights of the individual allottees. “They know that Window Rock is not necessarily the main protector; it’s BIA. They have the responsibility to make sure those lands are protected.”

Arthur told Resources Committee members, “It’s this committee’s responsibility to step up to the plate and become aggressively engaged in discussions and express an elevated concern that individual Navajo real estate owners may be being shortchanged. I think it falls to this committee to pursue this discussion in a more aggressive environment.”