Is an anonymous energy company actually a front for a conservation group? I hope so!

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An article on federal oil and gas auctions by Natasha Geiling at ThinkProgress caught my eye.

The ThinkProgress story mostly is concerned that quasi-anonymous companies can secure oil and gas leasing rights on federal land, and anonymity might make it harder to enforce regulatory protections and lead to environmental problems. The object of her concern is Ayers Energy, LLC, which recently acquired several development leases in southeastern Utah.

But, as Geiling suggested, while is it likely Ayers is fronting for a larger oil company or investing entity, it is also possible that Ayers is fronting for a conservation group. That is to say, perhaps the regulatory provisions Ayers wants to evade are the “intent to drill” requirement imposed on leaseholders. Anonymity might be helping avoid oil and gas development on nearly 30,000 acres of federal land near the Hovenweep National Monument.

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Now that would be an interesting development!

Along with Shawn Regan at the Property and Environment Research Center, I have long advocated the idea that conservation groups be allowed to bid on and hold federal oil and gas development leases. The idea is that such bidding offers an open, non-politicized way for people to protect specific sites on federal land from oil and gas development that would harm conservation interests. There was some hope that the approach would be tried two years ago when conservationist-author Terry Tempest Williams secured two federal leases after a BLM auction. The BLM ultimately denied the lease agreements on the grounds that the leaseholder had indicated an unwillingness to develop the resource.

Ayers could have the same intent as Williams, but wishes to disguise itself as much as possible to avoid having to explicitly declare intentions to BLM. Technically speaking, by entering into the leasing agreement Ayers has already indicated an intent to develop energy resources. So long as BLM believes Ayers has that intent, Ayers-the-hypothetical-conservation-front can hold the leases without actually developing.

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The company just needs to stay out of headlines, pay binary options auction fees, and keep up annual rental payments, and it could potentially hold the property out of development for ten years. In return, U.S. citizens benefit from the million dollars or so of payments the company would make to hold onto the leases. (And if Ayers wanted to extend the lease beyond ten years, some clever legal and regulatory maneuvering might do the trick so long as they keep themselves out of the headlines.)

For more background on this and related issues see the following Knowledge Problem posts: one, two, three, four, and five.

Of course, Ayers probably is just the agent or arm of an oil and gas development company. And that’s fine by me, just not so interesting to speculate about.

ADDED: More from the Salt Lake Tribune.

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