ENERGY: Rancher challenges energy industry

James Fenton
Rio Arriba County rancher Don Schreiber is featured in a new TV ad campaign that calls attention to royalties lost every year because of venting, flaring and leaking of natural gas during extraction operations on public lands.

FARMINGTON — A Gobernador rancher who appears in a new television ad that promotes stronger federal methane rules related to leaks and the practices of venting and flaring by the oil and gas industry has found himself straddling the line between environmental activists and the industry.

Earlier this month, a nonprofit conservation group based in Montana and Colorado launched a television ad campaign to call attention to royalties lost each year related to methane escaping from current production practices on public lands.

The Western Values Project rolled out the TV spot featuring Rio Arriba County rancher Don Schreiber, who said that like the ongoing debate over oil and gas operations in the San Juan Basin, his appearance in the ad is complicated.

In a phone interview, Schreiber said that when he and his wife, Jane, both retired from life in Farmington and bought the 480-acre Devil's Spring Ranch in Gobernador in 1999, the couple, though familiar with oil and gas operations in the Four Corners area, had a lot to learn.

Schreiber said that trying to develop the ranch to preserve the land and "reclaim some of the ranching heritage that was so rich in the state" meant he faced a learning curve on how oil and gas operators produce oil and gas, from building roads to flaring natural gas.

"We tried to get a grip on the process (of oil and gas development) and had a lot of head-knocking with companies and the regulations," Schreiber said. "We weren't trying to stop them from drilling. We were trying to get them to change the way they did it."

Schreiber said that at one point, he chained a small trailer to a temporary gate that blocked one of the access roads on his ranch and stayed put in it for three days in the dead of winter before oil and gas company workers showed up with a fig leaf — a box of donuts.

He said his impulsive act of protest taught him a lesson in diplomacy — a balance of "actively resisting and actively engaging with (the industry)" — which he said he stands by today.

"If you are in that big of a struggle, my advice is to try everything," he said. "Ultimately, engaging with industry and regulators will provide something more constructive and lasting than chaining yourself to a stock gate until they recognize your resolve."

Schreiber said that he grew up next door to local oilman Tom Dugan, who often held opposing points of view on many issues with Schreiber's family. Schreiber said that despite the disagreements, he remembers the two families were good friends and never dissolved into acrimony..

And unlike today's polarized politics and the highly inflammatory debate over oil and gas development in the Four Corners area that often pits operators against environmentalists, Schreiber said he feels like a bit of an anomaly.

But Dugan said the two couples agreed over more than Schreiber remembers.

"They were really nice people. I don't know how a guy that had such nice parents could turn out to be such an a--hole," Dugan said with a laugh. "The fact is, we agreed on most everything. His dad wasn't trying to tell us how to run our business. We bought insurance from him for years and years. But (Schreiber) has no experience at all in producing a gas well like I have no experience in ranching."

Dugan said that the perception that oil and gas companies don't care about the release of methane — a greenhouse gas 80 times more potent than carbon dioxide over a 20-year time period, though not as potent over longer periods of time — is incorrect.

"We're trying every day. Every day we try to do a better job (of capturing methane)," Dugan said. "You can follow that logic a little bit: We make money selling that gas, not letting it go up in the air. Some people make mistakes."

Dugan did say his opposition to proposed federal rule changes doesn't mean that he doesn't want to listen to his former neighbor. He's just not excited about the proposition.

"I want to try to understand him," Dugan said.

Dugan has been in the oil and gas business in the San Juan Basin for 57 years. His business, Dugan Production Company, operates about 900 wells it owns and another 100 for other operators, he said.

"The whole industry is that way. Natural gas at a dollar and a half is pretty cheap," he said. "If they pass all these rules now and double our costs of operation, those wells will get plugged and they'll never be drilled again."

Dugan remembers the 1980s when there were three prices for crude oil based on the age or quality of the well, whether it was a stripper, newly drilled or older well.

"The stripper wells got  a higher price to try to keep them from being plugged," Dugan said. "Now they're making it harder to operate these old wells. This is a terrible time to be putting in new rules. We're right on the edge of going broke with these prices and then you complicate it even more. It's going to put many of us out of business."

But taking a cooperative approach has led to some successes in Gobernador.

In 2008, Schreiber instituted the Holistic Site Management program, part of the Open Space Pilot Project, at his ranch. The project encourages cooperation between landowners, operators and federal agencies like the U.S. Bureau of Land Management to better manage how natural gas wells are developed and maintained.

A big part of that, he said, was promoting the "twinning" of natural gas wells — drilling a new well on an existing well pad — in order to reduce land disturbance.

Schreiber said that the practice materialized in an agreement with an operator to change its plans from drilling 40 new natural gas wells and four new twinned wells to "twinning" 40 wells and drilling only four new wells. The flipped drilling plans saved "the land 40 times over," he said.

Although Schreiber appears in the Western Values Project ad, he said he maintains "a good relationship" with the industry while at the same time voicing his criticism of it.

The waste of natural gas by the industry practices of venting and flaring as well as the leaks from oil and gas well site equipment has led Schreiber to speak in February at the most recent BLM public hearing at San Juan College to take comment on the Bureau of Land Management's proposed rule updates.

"Growing up in Farmington, they flared wells," he said. "We didn't look at it as anything other than normal. But the full smell of the realization is that it's just harmful gas going up in the air and that it represents a taxable dollar that is going up as well."

In a press release, Western Values Project Director Chris Saeger agreed with Schreiber. He said budget-strained New Mexico could use the royalty revenue to fund key areas, such as education and infrastructure.

"The industry is literally burning money just at the time when New Mexico can least afford it," Saeger said. "Wasted natural gas means less money to fund education and new roads and bridges.”

Opponents of the proposed changes say a significant number of wells will be shut in because they will no longer be profitable, which means a drop in the overall royalty payments.

In New Mexico, oil and gas revenue makes up about one-third of the state's general fund budget each year.

Schreiber was on his way to Washington earlier this month to meet with Senators Tom Udall and Martin Heinrich and give them "a ground-level look" at the proposed BLM rules, oil and gas operations and preservation of open space in New Mexico.

"I'm as involved in this process as a kid from Farmington can get," he said. "We're never going to weave a magic wand and make oil and gas go away and we never want to. We have tremendous talent in Farmington. I would like to see it turn in a positive direction to better capture tax dollars, improve the environment and put people to work. That's hard to convey in a 30-second ad."

James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621.