Drillers probe Rocky Mountain Front seeking next big oil play

2012-03-05T00:05:00Z Drillers probe Rocky Mountain Front seeking next big oil playBy ROB CHANEY Missoulian The Billings Gazette
March 05, 2012 12:05 am  • 

DUPUYER — The well cap sticks out of the gravel, claiming this windswept site along the Rocky Mountain Front for possible oil production.

It marks the spot where, in the middle of last fall's hunting season, an exploratory drilling crew exercised its mineral rights in the middle of the Boone and Crocket Club's Theodore Roosevelt Memorial Ranch.

"Legally, we had no right to stop them," ranch manager Mike Briggs said, standing in the shadow of the Bob Marshall Wilderness. "But Fairways Exploration has been real good to work with."

The Houston-based company is one of several petroleum firms drilling wells, running seismic tests and gathering up leases to learn if this stretch of the Rocky Mountains between Choteau and the Canadian border could be the next big oil play. Intensive drilling began about two years ago on the Blackfeet Reservation. Activity shifted to Teton and Pondera counties last summer.

"They came back a couple weeks ago to swab out the well, and their hardhats kept rolling across the pad," Briggs said. "We warned them — you're from Texas, and there are some things you need to know about working here. It was blowing 60 or 70 mph, and they could only set up their rig in 30 mph winds. I told them there might be days in winter when you can't get here, no matter how bad you want to."

There are a lot of things the people of Dupuyer, Choteau, Bynum and other ranching towns along the Front want to know about oil work. On Thursday, almost 250 people sat through four hours of presentations about hydraulic fracking, water rights, man camps and other oil patch topics in a Choteau hotel's meeting room. The one thing everyone agreed on was the need for more presentations.

Searching for oil

Just up Highway 89 from Choteau, the lights of a portable drilling tower shone brightly on a bluff above the Miller Hutterite Colony. The rig moved from place to place, spending about 30 days boring vertical holes more than 4,000 feet deep into the Bakken formation.

This geological layer has offered hints of oil and natural gas wealth since the 1920s. But other than a few pump-jacks pulling up two or three barrels of crude oil a day, the big play has never materialized.

That lack of success emboldened Republican U.S. Sen. Conrad Burns and Democratic U.S. Sen. Max Baucus to pass legislation removing all federal land along the Rocky Mountain Front from mineral exploration in 2008. A coalition of conservation, hunting and environmental groups built on that to draft the Rocky Mountain Front Heritage Act, which Baucus introduced last year. It would designate 208,000 acres of recreation areas, 67,000 acres of federal wilderness and coordinate noxious-weed-control efforts across the Front.

"I credit the current oil and gas exploration to the overzealous protection of the save-the-Front folks," said Choteau resident Dan Lindseth. "They just got under the skin of two guys who said, ‘This isn't fair.' "

Lindseth grew up in Choteau and left for a career as an IBM engineer before retiring to his hometown. There, he and Choteau rancher Harold Yeager formed a partnership they called Montana Overthrust Management. They set up an office in Yeager's shop building at the Teton County Airport.

In 2005, Lindseth and Yeager started visiting private landowners who controlled the mineral rights below their properties. They put together a package of 125,000 acres of lease options, which they sold to the Canadian firm Primary Petroleum.

Primary Petroleum did a bunch of seismic testing and drilled four exploratory wells in 2007. Although indications of oil were found, the collapsing global economy put the company's plans on hold.

Then in 2009, fields across the border in the Alberta part of the Bakken formation started showing potential. Lindseth and Yeager by then had 300,000 acres under option. Primary Petroleum found a new joint venture partner and committed to spend $41 million on Rocky Mountain Front exploration in 2011, Lindseth said, with another $48 million to be spent in 2012.

"We have a poor county in Teton," Lindseth said. "We know what the revenue from oil severance taxes could lead to. And all the money that's come in during the last three months has benefited everybody up and down Main Street. I don't think anybody was left out."

About 1,800 people live in Choteau, the Teton County seat. City Council president Blair Patton said the quality of life has kept the population remarkably stable.

"I made career choices that allowed me to move back," the owner of Black Sheep Sports and Graphics said. "It's a place where your kids can walk down to the Roxy (movie theater) with $5 in their pocket and nobody worries. It's a sort of Norman Rockwell town, and we're all wondering how that's going to contrast with the oil business."

Patton predicted that opinions would break along age lines. Younger people would support something that brought jobs with good pay. Retired folks would resist an industry that might unravel the place's ranching and farming heritage.

"A lot of people would love to live here if there were jobs," Patton said. "But every landowner around here is part environmentalist. I'm not talking the chain-yourself-to-a-tree version — there's different degrees. But we all care about the land. And a lot of us don't know enough about the oil business to make an educated statement."

Many questions 

That includes subjects like: Whose water right gets tapped for the million gallons needed for a hydraulic fracking effort? Will the area need a pipeline or refinery if big oil gets hit? Are there enough inspectors to ensure that the drilling doesn't pollute local wells and irrigation supplies? How will the Front's internationally famous wildlife populations react to all this industrial activity? And who gets a share of the money, if any gets made?

"Everything about the oil business is really complicated," said David Hanna of The Nature Conservancy. "That's the first take-home message."

Hanna monitors many of the conservation easements ranchers and farmers placed on their properties to ward off future subdivision and housing. TNC set up the easement on the Boone and Crockett ranch. And when Fairways Exploration showed up, one of the first things Hanna learned was that a conservation easement doesn't apply to mineral development.

"The mineral owner has implied easement to use whatever part of the surface they reasonably need to get at their minerals," Hanna said. "In the 1980s, the Legislature had some laws enacted requiring a mineral owner to compensate a surface owner for lost value of production and land value. But there's no set formula for that — it's just whatever the surface owner and mineral developer work out.

"So the company shows up and says we're going to do something out there, and they're required to work something out. In a lot of cases, surface owners think they have no choice, and they may not negotiate as strongly as they could. But people have more options than they think."

In the Boone and Crockett case, the club bought the 6,000-acre ranch in 1986 as a research center, exploring ways livestock and wildlife could co-exist. Club executive director Tony Schoonen said the question of mineral rights was never an issue until he got the phone call last year from a land man in Houston.

With Hanna's help, the club was able to negotiate for wildlife and water quality monitoring as part of the surface use contract. Fairways also agreed to adjust its drilling pad excavation to spare an aspen grove.

"At this stage of the game, it's been a very positive experience for the club," Schoonen said. "We won't get any residuals or things like that if they find anything. But they've gone through great lengths to maintain the integrity of our property."

History of drilling 

People have punched holes in the Rocky Mountain Front many times before. The first industrial oil operations came in the 1920s. In the '50s, a new kind of digger showed up: the U.S. Air Force.

"That was probably the wildest time," Choteau rancher and outfitter Dusty Crary said. "Everybody was running around building missile silos."

Military humvees still zip back and forth between chain-link-fenced silo pads that dot the Teton County landscape, although Crary wonders how many nuclear warheads still lurk down there. Oil men were also busy in the 1950s, doing seismic work along the mountain foothills. They returned in the 1970s and '80s, finding a few spots that still produce oil today.

Crary has run a backcountry hunting camp in the Bob Marshall Wilderness since 1993. His family raises about 500 cattle on a spread where his children may grow up to be the fifth generation of ranchers in Teton County.

"I don't have an axe to grind against the oil guys," Crary said. "We all drive, and that's where we get it. If they can get some out of here and people can make some money, that's good.

"But I don't want something to rear its head 10 years from now and turn out to be an irreversible problem. I don't want to see Choteau change. I like Choteau the way it is. I wish this industry was a little different, and that people had a little more foresight."

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