Montana oil lease sale could mark Bakken expansion

2012-10-24T22:00:00Z 2014-08-25T17:39:13Z Montana oil lease sale could mark Bakken expansionThe Associated Press The Associated Press
October 24, 2012 10:00 pm  • 

A Texas company has bought oil and gas leases on almost 75,000 acres in northeast Montana's McCone County in a move that could portend a significant westward expansion of the Bakken oil patch, government officials and a company representative said Wednesday.

San Antonio-based Donco Inc. paid more than $13.5 million for the leases in a competitive auction held Tuesday by the federal Bureau of Land Management. It marks one of the largest federal lease acquisitions by a single company in Montana in recent years, BLM spokesman Kristen Lenhardt said.

Donco is the parent company of Shale Exploration LLC.

Shale Exploration President Sam Tallis said Wednesday that the company aims to amass leases on roughly 200,000 acres in McCone and neighboring Garfield counties. He said drilling could begin next year.

The Bakken region of western North Dakota and Eastern Montana has emerged in recent years as one of the most productive oil patches in the U.S. The area being targeted by Shale Exploration has seen only limited drilling to date, said Tom Richmond with the Montana Board of Oil and Gas.

"It's new interest in the area," Richmond said.

Tallis said his company is confident the McCone-Garfield area has other oil-bearing geological formations in addition to the Bakken, located at different depths beneath the surface.

"This is a step away from where most people believe the conventional Bakken is," Tallis said. "A lot of people call it the end of the road because it's the last possible place for the Bakken, to go that far. But we tend to like it because there are other formations."

The leases bought by Donco accounted for 153 out of 244 oil and gas parcels sold at Tuesday's BLM auction, Lenhardt said. Total proceeds from the sale topped $16 million. That included 7 parcels sold in South Dakota, with the remainder in Montana.

Shale Exploration previously has been active in other parts of Montana, including Daniels County, where it partnered with the much-larger Apache Corp. to drill on leases it amassed there.

Richmond said it's too early to say if the intensive drilling activity seen in Montana counties closer to the North Dakota border is repeated in McCone County.

For now, he said, it remains a "lease play," meaning companies such as Shale Exploration are scrambling to snap up leases on public and private land in anticipation of future development.

"Lots of time leasing plays get a life of their own," he said. "The leasing starts first, and at some point in time the assumption is that somebody's going to drill a well someplace, and prove or disprove the play."

Tallis, who works out of Billings, referred to Montana as "the best kept secret in oil and gas" and said he and majority owner Sid Greehey are in it for the long haul.

In April, Shale Exploration donated $130,000 to the Scobey Public Schools in Daniels County to purchase iPads — tablet computers made by Apple Inc. — for all the district's students. A month later, the company donated $20,000 to the Montana Rescue Mission Women's and Family Shelter in Billings.

Tallis said he hopes to establish a similar close relationship with residents of Garfield and McCone counties.

"Whether it's iPads or something else, we want to partner with the community," he said.

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(12) Comments

  1. WileE2
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    WileE2 - October 25, 2012 3:02 pm
    The petty jealousy in your comment is overwhelming. But then coming from a 13 year old girl it isn't surprising I guess.
  2. Our MT
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    Our MT - October 25, 2012 2:02 pm
    Banger, they are speculating. By buying a lease they are just hoping it might be worth drilling. They risk their money up front buying the lease. Then they decide if they want to risk more by drilling or not. During the debate the President was either uniformed or trying to mislead the public. His administration didn't "take away leases where they wouldn't drill to let them again." That stipulation is already part of every mineral lease. The oil companies pays the government up front for the right to drill during a specified length of time. If they don't drill during that time the lease expires and they lose it. The problem with what Obama has done is his administration has slowed down the process to get drilling permits after the lease is bought.
  3. thehippie777
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    thehippie777 - October 25, 2012 9:56 am
    Interesting take, Reg. Guy. I recently spoke to a Geologist with a PHD who has worked with oil companies for a long darn time and he is very much an environmentalist. He claimed very few people understand fracking and that the way it's regulated to be done has very little impact. What is happening with people who feel their ground water or land has been polluted? If Mother Nature does it, then who is to blame? The Geologist was adamant that oil/gas fracking is very safe. He drives a green car, and lives very energy efficient. Alls I can say is yay jobs!!!
  4. Still Here
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    Still Here - October 25, 2012 9:49 am
    Boy I hope they drill on the land that I still have mineral right to. I am mostly glad I do not have to live there. The parade of out of state oil field workers moving into there small towns will be a thing of wonder. Shiny trailer villages all over. Home Sweet Home. By the way, they come into Montana to make money, there is not a wall keeping them out. Drill Baby Drill.
  5. Jus Wundrin
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    Jus Wundrin - October 25, 2012 9:39 am
    ......and the company you started is working diligently on that.

    You forgot to mention the sky will fall.
  6. Jus Wundrin
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    Jus Wundrin - October 25, 2012 9:38 am
    Good news, for very good paying jobs!
  7. billy banger
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    billy banger - October 25, 2012 7:56 am
    Are they speculating on leases or actually going to drill? Along with the leases should come a stijpulation that if drilling does not take place in a certain amount of time then the leases go back to the government to reissue to someone that actually wants to drill.
  8. Regular Guy
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    Regular Guy - October 25, 2012 7:36 am
    PS: Speaking of "fat" cats...
  9. Regular Guy
    Report Abuse
    Regular Guy - October 25, 2012 7:35 am
    We are going to regret (and our children will regret) this headlong rush to get Montana fracked. Climate change and contaminated aquifers (along with other problems) are going to dramatically change Montana in the coming decades. We need to move away from fossil fuels as quickly as possible.
  10. fountain of smart
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    fountain of smart - October 25, 2012 1:03 am
    hang on to your hats mccone county, cuz you are in for a ride
  11. WatchingU
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    WatchingU - October 25, 2012 12:04 am
    I think it is great that this company is willing to bet on Montana. This is a great opportunity to truly see jobs created. I wish this company much luck.
  12. Our MT
    Report Abuse
    Our MT - October 24, 2012 10:34 pm
    Nice to see interest in a new area of the state. Hope this develops into something.

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