Theodore Roosevelt Administrative History

Unquestionably, many national parks are underlain with commercially exploitable petroleum reserves, for oil is no respecter of boundaries. Theodore Roosevelt is only one of many NPS areas (numbering fifty-nine in the late 1970s) encumbered by non-federal oil and gas rights. [1] With just a few exceptions extraction is forbidden in the parks, so the point may at first seem academic. It is not, as is evident from recent events at Theodore Roosevelt—events unprecedented in the history of the National Park System. Yet what has happened is nothing more than a variation on the reservoir unitization problem discussed in the last chapter.

When the Fryburg-Scoria oil field went into production in 1953 just outside the South Unit, it was of no particular concern to the park staff. [2] Over the next twelve years the field produced thousands of barrels of crude oil without anything being thought amiss. But in 1966 a private company, Tenneco Oil, proposed to expand the effective area of the Fryburg-Scoria field by drilling into a number of adjacent tracts of parkland in Painted Canyon. These tracts had severed mineral rights, with the government owning the surface but not the minerals underneath. Tenneco possessed the mineral estate and wanted to open these tracts to production.

The company knew surface occupancy of the parkland was out of the question, regardless of the dominant estate doctrine. Tenneco's solution was to apply to the North Dakota Industrial Commission, the state agency regulating oil and gas matters, for permission to use "directional drilling" to get at the oil. In other words, the well head would be outside the park in the already-developed Fryburg-Scoria field, but instead of going straight down the drilling would proceed obliquely, at a slant, to points within Tenneco's mineral estate underneath the park. Although twice as costly to put in as a regular well, slant wells would allow the company to extract oil and gas from beneath the park without disturbing the surface inside the boundary.

The Industrial Commission approved the Tenneco plan. [3]

Its decision must have been unexpected, for only after the fact did the government call in the U. S. Geological Survey to evaluate the reservoir Tenneco wanted to drill into. The Survey's report was startling. It turned out that the oil reservoir which had already been supporting the Fryburg-Scoria field extended underneath the park to areas where the United States held the mineral rights. USGS estimated that conventional straight wells operating entirely outside the park had been draining federally-owned oil from this reservoir since 1958, and dramatically so since 1962. The agency placed the public's loss for the period 1962-1966 at over $10,000—at a time when crude oil sold for $2.10 a barrel. And USGS calculated that further drainage of adjacent federally-owned oil would increase to a cost of $19,000 per well per year if the new Tenneco plan were carried out. [4]

Tenneco clearly had a legal right to exploit its mineral estate. It was up to the government to unitize the reservoir and stop the uncompensated drainage.

In its report USGS came out in favor of "protective leasing" of the federally-owned oil. Protective leases are nothing more than standard leases issued in cases where leasing is normally not allowed. They are authorized under the United States Code when oil and gas reserves are being drained from federal lands not subject to the Mineral Leasing Act.

Today, protective leases involving national parks require the producer "to minimize adverse effects that might result from oil and gas activities in proximity to parklands." [5] But in 1966 the Service had no regulations to guide them. The Midwest Regional Office knew that issuing protective leases might open a Pandora's box:

With the limited information at our disposal we are reluctant to accept the proposal that protective leasing is the most desirable procedure. Certainly if this were undertaken in the Memorial Park there would be considerable pressure to apply the same principle to other areas in the System where we have consistently resisted any such proposals.

Yet the NPS Solicitor's Office concluded that protective leasing was the only option that would ensure payment for the public's oil reserves. [6] The Regional Office unenthusiastically agreed:

Protective leasing would, we realize, set a precedent with far-reaching consequences; however if oil is being removed from under Federally-owned lands at Theodore Roosevelt, without compensation, it would appear that the public interest dictates some corrective action. We cannot simply ignore the situation. Criticism would inevitably result if we permit depletion of this valuable underground resource without compensation to the Government. [7]

Debate on the issue continued for the rest of the year and into 1967. By March it looked as though the Department of the Interior was ready to lease, [8] but a few months later the project was postponed indefinitely because of last-minute doubts about the legality of the title to some of the land. [9] Also, the passage of the National Historic Preservation Act in 1966 had further complicated matters. The law placed all of Theodore Roosevelt, as a historical area of the National Park System, on the National Register of Historic Places. Section 106 of the new law mandated protection for National Register properties and it was unclear whether slant drilling would be a violation. [10]

The project was delayed six years in all, [11] during which the Department of the Interior moved no closer to a Systemwide policy on slant drilling. Nor did it devise any alternatives to protective leasing. So when the Amerada Hess Corporation, which had acquired Tenneco's mineral rights, decided in 1972 to press the slant drilling plan, the government had no choice but to allow it and hold a protective lease sale.

On November 18, 1974, bids were opened on leases for the mineral rights to nine parcels covering 1288 surface acres. Amerada Hess was the only serious bidder, paying anywhere from $2729.83 per acre (parcel #8) to $51.60 per acre (parcel #5). The government realized $1,276,816.35 from the sale. [12] The leases were drawn up for the Department by the Montana office of the Bureau of Land Management. All were standard leases with an attached page of special stipulations (Figure 4.1). The production royalty to be paid to the government depended upon the number of barrels of oil and natural gas produced per well per day. [13]

As stipulated in the lease, before the company could begin drilling, an environmental assessment of the well area had to be conducted. In December the superintendent and chief ranger of Theodore Roosevelt, as well as representatives of the U. S. Geological Survey, the Medora District of the Forest Service, and Amerada Hess, inspected the drilling site. They concluded that the new wells would have "a minor impact on the environment" with the only potential adverse effect being a small loss of grazing land. After Amerada Hess filed a plan for controlling well blowouts and signed a standard surface reclamation agreement, they began drilling. [14]

Five slant wells were successfully completed in 1975 [15] and are still producing today. For Amerada Hess the risk of doing the expensive directional drilling has paid off: in their first five years, the slant wells produced nearly 830,000 barrels. "These wells have extended northward the known parameters of the long-producing Fryburg field," wrote one industry analyst, "and have seemingly justified the company's paying of such a large amount for leasehold acreage." [16]

By their willingness to meet the special conditions of the lease, Amerada Hess gratified the park. Because Interstate 94 interposes between the park and the site of the slant wells the added aesthetic intrusion was considered negligible. [17] So, in a letter thanking the company "for their fine cooperation during the location and drilling of the five directional wells," Superintendent John Lancaster waived the stipulation requiring above-ground fixtures to be either screened from view or painted earth tones "because of the relatively unobtrusive location of the wells." He praised the helpful attitude of Amerada Hess "under this rather unique lease and development agreement." [18]

The decision to enter into this agreement had been a difficult one, made "at the highest Departmental level." [19] The opinions of two of the NPS principals involved fell on the side of keeping Theodore Roosevelt's situation unique. Calling protective leasing "contrary to and incompatible with the overall pronouncements of broad policy by Congress for areas within the National Park System," the Midwest Regional Office asked that such leasing be discontinued because the operations authorized under protective oil and gas leasing have a significant adverse impact on maximum public enjoyment of the affected and surrounding park lands." [20] And despite the cooperation extended by Amerada Hess, Superintendent Lancaster sensed that his park's relative good fortune could not be replicated elsewhere. He hoped that the Service would "immediately set a policy on future slant drilling activities. Slant drilling under the majority of this area and other National Park Service areas would be quite detrimental." [21]

A Servicewide minerals management policy review eventually appeared in 1978. It recommended thorough documentation, monitoring, and reclamation of oil and gas projects affecting non-federal parts of the parks, but could not rule out slant drilling and protective leasing until the complete mineral rights to all the parks were acquired. [22]

Although Theodore Roosevelt is still the only national park encumbered by slant wells, the petroleum industry has not failed to take notice of the box lid opening a crack. An article in the trade magazine Montana Oil Journal confirmed the fear voiced by the Midwest Regional Office in 1966 when the Tenneco plan was first conceived. Entitled "Will National Park lands be developed for oil and gas exploration?," the article expressed the hope that Theodore Roosevelt "could be used in the future as the precedent for establishing exploration activity on or close to national park and monument lands." Declaring that "Amerada Hess has proved that oil companies can develop necessary domestic reserves on Federal lands with out harming the environment," the author saw no reason why slant drilling could not be adapted to other parks. Dinosaur, Glacier, and Grand Teton were three which came immediately to his mind. [23]

The problems of slant drilling and protective leasing may well confront other NPS units soon. If so, decisions will ride not only on the merits of the case at hand, but on what has happened at Theodore Roosevelt.