"Ohhhhh, doughnuts....."

"Rancher, driller reach accord"
1/20/08
By Don Schreiber

“Rancher, driller reach accord; Confrontation ends peacefully” was the Farmington Daily Times front page headline on December 7, 2001. I was that rancher, Burlington the ‘driller’, and the confrontation did end peacefully enough, the oil company bombarding me with doughnuts instead of bulldozers. That Sunday’s Daily Times editorial reviewed the situation and said, in part, “While oil and gas are still the biggest moneymakers in the area, tourism is gaining ground, accounting for 30 percent of the local economy.”

Our entire argument was about one well, the 418s, that Burlington wanted to drill on our ranch. Burlington was going to ‘twin’ the 418s, twin meaning drill it from an existing well pad, in this case, the 155M. Burlington’s road to the 155M was a disaster, the worst on the new Devil’s Spring ranch that my wife Jane and I had just bought. The 418s was the first well that Burlington ever drilled on the Devil’s Spring ranch with us as the owners. We thought they should fix the bad road before drilling a new well, and that they should pay us something for the 30 year disturbance we were facing.

They disagreed; we confronted.

It just didn’t make sense to me. While we didn’t own any mineral rights, we did for sure own the property and they were about to cause a whole new disturbance and double the traffic for the next 30 years. Wasn’t that worth something? And shouldn’t they have to fix an existing problem, the access road, before beginning to drill again? “Nope,” said Burlington’s construction supervisor at the time, Chuck Smith, with whom we were was negotiating. “Chuck, I can’t back down. I’m putting up a temporary gate to stop you.” “Fine. Do it and we’ll come through that gate with a bulldozer and negotiate with you after the well is drilled. We will be there in the morning.” I ran to put up the gate and hauled my son’s little camper down and chained it to the gate and moved in.

And waited. And waited. No Chuck. No bulldozer. I was afraid to leave and the roads were so bad I couldn’t ask Jane to bring me any food. There were some leftover snacks from hunting the the camper, a few. I really thought the sheriff would come, I’d refuse to move, he’d throw me in jail and then I could get something to eat. My plan wasn’t what you would call well thought out. They let me sit down there living on sunflower seeds and Jujubes.

So when Chuck and another Burlington employee showed up with a box of doughnuts on the third morning, I was eyeing that box pretty carefully. Their mistake, I can now reveal, was that they politely offered me a doughnut before we got down to business. Thus revived, I gathered enough strength to hang in there and, after some private cell phone calls to someone, Chuck announced that they would pay damages and fix the road. Deal. Fix the road, drill from the same well pad, pay up for damages.

The newspapers wrote it up and included a quote from then Burlington General Manager Richard Fraley, “He (Schreiber) has things he wants to try and we’re accommodating him in that regard.”1

In the following seven years, we’ve had other wells drilled on our ranch, both our private land and on the public land that surrounds us and is our grazing permit. We’ve had a variety of other negotiators, some better than Chuck, some worse. And we’ve had some real donnybrooks now and then. It’s only fair to say that no well is good news for us, but we know we can’t stop the drilling, so we try to make the best of it. And we’ve bumped along like that since the great Doughnut Summit back in ’01.

This Christmas, however, brought a different kind of present from ConocoPhillips in the form of registered mail informing us that, in addition to the two wells they had already said they would drill on us in 2007, they were going to drill seven more. A total of nine. I don’t think we had ever had more than three in a single year.

To be honest, I had thought they must be about through drilling out here, or at least cutting new roads and building new well pads. I was thinking about 80 acre spacing, meaning one well every eighty acres and I knew we had more than that already, it was easy to count them up on a map. Each section has 640 acres, so with one well every 80 acres, that’s 8 wells per section. And when you put that many wells in each section and connect them up with the roads necessary to get to them and the pipelines necessary to get the gas out, it starts to look like a maze. And take it from me that ninety percent of the roads go down the middle of each little valley, grass flat or draw, right where your best grazing opportunities are.

But what I didn’t realize is that it was not just eight wells per section, it was eight wells per section, per formation! We have four or five formations present in most of the San Juan Basin so it is more like 40 wells per section! We’ve got about twelve wells per section2 now and it looks like your lymphatic system already. Now we’re going to more than triple that number? It just didn’t make sense. And the roads were in really bad shape, lots of wells pads never reclaimed, exposed pipelines and electrical, and we’re going to drill nine new wells on our place? Worst of all, eight of the new wells would be drilled each from a brand new well pad. New road, new well pad, new pipeline. Only one would be ‘twinned’. The problems were so much worse than the old original standoff we had with the 418s and with these nine wells scattered down five different routes all over our ranch there would be no temporary gate and camper maneuver. No possibility here of a Doughnut Summit.

At the current level, the drilling impacts have us just at the breaking point of being an industrial zone and not a ranch. You’re never out of sight or sound of a well location, oil field traffic is constant, trying to raise calves a real struggle. But with such an escalation of new locations, man. I just went into the fetal position under the Christmas tree for several days seeing the situation as hopeless, seeing the ranch disappear under one well after another, seeing our family plan to leave the ranch to our five kids blown apart. Jane had just bought a youth saddle for our granddaughter Sadie who is five. For what? So she can race in front of speeding water trucks and try to slow them down like Grandpa does? Grandpa can’t do it with 12 wells per section, much less 24 or 40.

But you can’t roll up in a ball and feel sorry for yourself forever and besides, the kids were all calling to say, “Dad! Do something!” I was just absolutely without an idea of what to do until I remembered a conversation back in John Zent’s Burlington office a few years ago when John, talking about future drilling plans said, “Our goal is to drill fifty percent of all wells off existing pads.” I set about gathering the data in the nine sections that encompass our ranch and found that, in the entire history of the area, only ten percent of the wells had been drilled from an existing pad.3 In the last ten years, only six times. And, of course, of the nine proposed new wells, only one to be drilled from an existing well pad. I took that information directly to ConocoPhillips. I took along some pictures of the condition of the roads and well pads that lay all around the proposed new wells.

Couldn’t you, I asked, couldn’t you drill the new wells from existing pads? And then, instead of creating a new problem, set about fixing the ones that already existed? Some of the new wells can be drilled straight down from an existing pad, some would have to be drilled directionally. They said they would look at it and get back to me. I’m still waiting, but at least I’m not chained to some gate eating dried-out peanut butter crackers. And I have the word of honor of ConocoPhillips head land man, Mike Mankin, his word of honor as a Texan that they will not start even the survey process until we meet again. “Gotta be win-win, pard.”

Now, I know that it is more expensive to drill from an existing pad, either straight or directional because the well that is already there has to be turned off (shut-in) and the equipment dismantled and moved, an extra expense and loss of income. In the past, both Burlington and ConocoPhillips have both said such drilling is ‘uneconomical.’ But ‘more expensive’ and ‘uneconomical’ are two different things. So I looked around for some data beyond my discovery that only ten percent of our wells have been twinned. (I only know of one that is directional.) I didn’t have to look very far to find that in Colorado in 2007, fifty-seven percent of all well permits applied for were for directional wells.4 And far beyond twinning, Encana Oil and Gas spokesman Doug Hock said Encana can drill up to 28 wells from a single pad.5 Directional drilling isn’t ‘uneconomical’, it’s just not as fast and as cheap as drilling a straight hole on a brand new pad. And using an existing pad does hold long term safety and financial benefits for the company. Long term. For a company with $30 some billion in profits in 2006 and more in 2007, doesn’t fast and cheap seem, well, cheap?

You can never reduce nature to a dollars and cents equation. The value of the fish you kill with arsenic mining gold will just never equal the value of the gold recovered. Never. And besides, if you try to apply an economic ruler to everything you risk becoming a cynic, someone who, Oscar Wilde said, “Knows the price of everything and the value of nothing.”

While we have been waiting, I wouldn’t say I’ve been standing still and waiting. Once up out of the fetal position, I found I could get around pretty well and the more data I had, the more I thought others might like to see it. Others who might be in a position to encourage an oil company beyond my personal plea for reasonableness. So I went to see the Lieutenant Governor, who was filling in stateside for our presidential candidate, and the New Mexico Secretary of Energy and Natural Resources, and her Director of the Oil Conservation Division, and the Secretary of the Environment. They spent a little time looking at my data and asking me questions, then jointly signed a letter to ConocoPhillips saying, in part, “It is our hope that you will take a leadership position in developing your mineral interests by utilizing existing roads and well locations (pads) in the area and by so doing allow enough open space for other meaningful uses of the land and a chance for the State to study the effects of surface disturbance on wildlife and water quality.”5 That was Friday, January 11.

Last week, Senator Bingaman reviewed the material, as did Congressman Udall and both put in calls to ConocoPhillips on behalf of drilling at the Devil’s Spring ranch from existing locations; Congressman Udall called Todd Creeger, now the General Manager in Farmington, and the Senator’s office called a little higher up the ladder.

An interesting piece of new data popped out as a result of Congressman Udall’s call to Todd Creeger. Remember how John Zent had said that Burlington’s goal, now ConocoPhillips, was to drill fifty percent of the wells from existing pads? When I met with Mike Mankin, (“Gotta be win-win, pard.”) on Wednesday, January 10, the day before going to Santa Fe, Mike told me he was concerned about the ten percent ratio on our ranch because, “Our goal is to drill forty percent from existing locations (pads).” Then when the Congessman spoke to Mr. Creeger on Tuesday the 15th, Mr. Creeger said ConocoPhillips was drilling thirty percent of its wells from existing pads. 50%, 40%, 30%? That’s a lot of slippage in a hurry, and all in the wrong direction.

Not that it’s overly material for our ranch since we already know it’s ten percent over a 50 plus year history and that eight out of the nine wells were proposed to be drilled each from a brand new pad. Okay, one out of nine is actually 11.11% if you want to be that way about it.

So all this friction rubbing up against public officials created a spark that landed me an appointment with the Senate Energy Committee staff and the House Natural Resources Committee staff this coming Thursday. The United States Senate. The US House of Representatives. This coming Thursday, in Washington, DC. There I’ll be presenting the same data and examples that the State officials and the Senator and the Congressman have seen, but I’ll also be looking for more data that I believe those Committees can help me with. Data concerning the success rates that oil companies, including ConocoPhillips, have with the Applications for Permits to Drill. Data pertaining to any possible fines that may have been levied against the oil companies, including ConocoPhillips, for failure to meet the minimum BLM specifications. Fines levied in any amount. Fines for things like, say, multiple access to well locations; unrehabilitated well pads; serious erosion on roads ; importation of noxious and invasive weeds and plants like Russian Knapweed and Salt Cedar. I’m pretty sure the data is available.

I watched with interest the Otero Mesa drilling conflict, and the Galisteo Basin moratorium. Lots of good data there, good people working hard to protect those areas. I met some of them and was impressed.

But we can’t all be voted Miss Georgia Peach or Homecoming Queen. Don’t get me wrong, those places are special and deserve protection, but, Otero Mesa is more beautiful than what we have here at Devil’s Spring Mesa where we look north to the La Platas and San Juans and south to Angel Peak and Huerfano? Galisteo Basin is more culturally rich in artifacts and lore than Gobernador, the birthplace, both in legend and in fact, of the Navajo People? The absolute first place that their specific evidence as a people was found on the face of the earth?

Here’s a little story about that place, a specific site about nine miles east of our ranch. According to Navajo legend, it was there that the baby who came to be known as White Shell girl was found and raised by First Man and First Woman. She grew up to give birth to the Hero Twins. Called Monster Slayer and Born For Water, the brothers ridded the world of the Monster Gods and made it a fit place for the peoples of the Navajo Tribe to come forth. And those ancient people, according to the legend, first set foot upon the face of the earth at a very particular spot beneath a small, sacred peak near the ranch.7 At this six thousand foot altitude you can see that peak, Gobernador Peak, from 100 miles away.

Hey, I know we’re drilled-up like Swiss cheese around here, but don’t tell me we’re not culturally rich.

And as for Spanish culture, if you were looking at that same Gobernador Peak in 1705, you would have seen Captain Roque Madrid and his Spanish expedition ride into Gobernador to subdue the Navajo and make them subjects of the Spanish Crown.8 The natives fought many battles and lost, of course, against the Spanish professional cadre mounted on horseback and with the most advanced weaponry and armor of the day.

But the Navajo didn’t lose them all. There were some spectacular defeats of the Spanish, one at the twin mesas of Santos and Magdelena just a few miles from their sacred peak of Gobernador. And when they did lose, it didn’t necessarily mean they gave up. In one famous case, a captive man threw himself off the Largo Canyon cliff rather than submit.

Just how culturally rich do we have to be to beg a little cooperation, beg to save a little remaining open space?

A few of Captain Madrid’s descendants live here still, probably, and certainly the mark of the Spaniard is everywhere you look; Santo Nino, Jaramillo, Ojo de la Cueva, and, of course, Gobernador. There are no more mythic monsters, no more savage conquistadores, and very, very few ranchers. Gone are all the little communities, the churches, the schools, the livestock drives, replaced now by 20,000 miles of dirt roads connecting 20,000 gas wells and countless miles of pipelines sending $28,000,0009 worth of natural gas a day, a day, through the nearby processing hub of Bloomfield. And the new folks renamed the area. It’s called, “The Oil Patch” and that sacred peak, birthplace of the Navajo Nation? The roughnecks call it Molly’s Nipple.

So yesterday, that would be Saturday, the 19th, I was talking to former state land commissioner Ray Powell at a land use conference in Albuquerque and reviewing our situation. He said, “Speaking of culture, let me tell you something I think will interest you. Corporate culture can play a big part in how a company conducts itself. When I was Land Commissioner, I was just stunned one day when an oil company representative came to me with a check for $4 million and said, ‘There has been a little glitch in the accounting systems of the State and of our company that have allowed us, over time, to cut this $4 million from what we pay you. It’s a technicality, but it’s wrong and we owe you the money. Other companies are doing it.’ We looked into it, and sure enough, 16 companies owed the State of New Mexico a combined $144 million. Fifteen companies paid up voluntarily. We had to sue only one, Exxon, for $27 million. We won. That money went straight to the school kids of this state. The company that came to us first with the $4 million check? Conoco. I think you’re going to be all right.”

“Well,” said the Zen master, “we’ll see.”


Footnotes:

1. FDT Dec. 7, 2001 pg. A5.
2. GO-TECH http://octane.nmt.edu.
3. Ibid.
4. FDT Dec. 30, 2007 pg. B7.
5. Ibid.
6. Letter attached.
7. Dr. Hugh Rogers, “Navajo Legends”, summer, 1999 private lecture
8. ”The Navajo In 1705, Roque Madrid, John P. Wilson, Rick Hendricks and David Brugge.
Merle Dennis, Natural Gas Consultant, Jan. 1, 2008 private lecture