Today in a unanimous 5 to 0 vote, the Colorado State Land Board (CSLB) commissioners voted to award the winning bid for the Lowry Bombing Range leases to ConocoPhillips for the development of oil and gas resources on the Lowry Bombing Range (LBR) property held by the state in stewardship trust.
The ConocoPhillips bid for the oil and gas leases on LBR is the highest recorded in state history at $6500 an acre with a 20% royalty of the oil and gas produced. The property is comprised of more than 21,000 acres. The deal would bring into the State’s School Trust, 137 million dollars plus the continuing revenues from the royalties of oil produced over the lifetime of the wells.
This award concludes a 12 month process during which the CSLB issued a RFQ and required criteria for partners in the development project. The CSLB then narrowed down the prospective bidders based on a list of stringent requirements to ensure responsible development of oil and gas while preserving water, air and wildlife quality.
A few of the key factors to ConocoPhillips winning bid were:
- Their record of following Best Management Practices (BMP)
- Voluntary participation in the Colorado Oil and Gas Association (COGA) Groundwater Monitoring program (which includes baseline and continuous monitoring for possible contamination)
- Their safety record on over 4000 hydraulically fractured wells
- Their creation of citizens advisory boards consisting of local stakeholders
- A successful track record of permitting wells of this type
- Successful development of wells on the Roswell Army Air Field which closely resembles conditions present on the LBR due to unexploded ordinance (UXO) and working with Army Corp of Engineers on avoiding potential hazards on the Range.
- Their track record of operation on Alaska’s North Slope and preserving habitat in its current condition
- Their commitment to restore the LBR to a state that is more natural than its current condition
- Their commitment to a continuous adaptive Air/Water/Wildlife management plan
- A Surface Use Agreement with a bond posted by ConocoPhillips
The commissioners also pointed out that when fully developed only 650 acres, or 3.1% or the LBR will actually have a surface disturbance due to drilling and production. The commissioners were excited that 3.5 million dollars of the bonus payment will be set aside for use in the Stewardship Trust with dispersal approval by the State Treasurers Office and the Colorado State Land Board.
The deal is scheduled for closure on Tuesday, March 6th 2012 with the leases granted by April 1, 2012.