Copper And Silver Mine Under Lawsuit

MONTANA, Jun 27 2008 (Neo Natura) - A lawsuit seeks to block development of a copper and silver mine beneath the federal Cabinet Mountains Wilderness in northwestern Montana.

Conservation groups claiming the Rock Creek Mine would jeopardize sensitive bull trout filed a case this week charging the tentative state permit for the project is the wrong kind and imposes only run-of-the-mill requirements. The suit in state court seeks an order demanding a comparatively stringent permit for the mine proposed by Washington-based Revett Minerals Inc., which has said mining would not disturb the surface of the wilderness area. State work preceding that permit would include a study to assess the potential for water degradation from mining.

Plaintiffs Trout Unlimited, Earthworks, the Rock Creek Alliance and the Clark Fork Coalition also say the state's present plan for issuing a permit does not include sufficient public involvement.

The suit filed in Helena names Revett and the Montana Department of Environmental Quality. Other cases against the mine are pending in federal court.

Revett Vice President Carson Rife said Tuesday that he had not seen the suit, but based on a summary, the case appears "baseless." DEQ lawyer John North said he also had not seen the suit. North declined to comment.

The suit says that DEQ and Revett expect mine development to move forward with a general permit, rather than with a water-quality permit. The latter would require consideration of conditions surrounding the mine project, which stands to harm fish by increasing sediment in Rock Creek, according to the complaint. It says the steps for issuing a water-quality permit would trigger public involvement requirements, as well.

The general permit never was intended for projects where "unique ecological resources are at stake," said Trout Unlimited's Loren Albright. "If Rock Creek doesn't meet that definition, I don't know what does."

Native fish in Rock Creek cannot tolerate sediment beyond the existing level, the conservation groups say.

Rife said Revett plans sediment control, and expects to remove many tons before and after mining begins.

"The plan is to reduce existing sediment loads, not increase them," he said.

On the issue of the permit classification and public involvement Rife said, "We feel Montana DEQ knows the law, knows the process and is following the law."

Revett has for years sought approval for the mine and recently began constructing warehouse and office buildings at the site.

Ongoing federal cases against the mine include allegations that reviews by the U.S. Fish and Wildlife Service did not satisfy requirements of the Endangered Species Act. Besides bull trout, federally classified as a threatened species, mine critics have expressed concern about effects on grizzly bears.

XTO Purchasing Bakken Land

MONTANA, May 28 2008 (Neo Natura) - XTO Energy Inc. announced today that it has entered into a definitive agreement to acquire producing properties and undeveloped acreage from privately-held Headington Oil Company for $1.85 billion. Consideration in the transaction includes $1.06 billion of cash and 11,742,391 shares of XTO common stock valued at approximately $790 million, or $67.35 per share. The purchase includes 352,000 net acres of Bakken Shale leasehold in Montana and North Dakota.

XTO Energy's internal engineers estimate proved reserves on the properties to be 68 million barrels of oil equivalent, of which 60% are proved developed. Upon closing, the acquisition will add about 10,000 barrels of oil equivalent per day to the Company's growing production base. The acquisition is scheduled to close on or before July 15, 2008.

"Since 2004, XTO has aggressively pursued the best shale basins -- in terms of geology, productivity and economics -- to stake a claim for long-term growth. Our successful development results in these plays have created value for our shareholders and motivated additional investment for our future. With this acquisition in the Bakken Shale, our Company is now established as a leading producer and leasehold owner in this emerging oil shale play," stated Bob R. Simpson, Chairman and Chief Executive Officer. "As in our other producing arenas, the XTO team will bring experience and expertise to this multi-zoned, over-pressured and complex basin. We expect to grow production and reserves from this prolific shale into an environment of strong commodity prices."

"Across the 15,000 square mile Williston Basin, results from new Bakken wells, utilizing progressive horizontal drilling and completion techniques, are revealing the true potential of this extraordinary hydrocarbon target," noted Keith A. Hutton, President. "With over 3 billion barrels of oil held in place within our acreage position, our team expects to more than double the acquired reserve volumes over time. Drilling and operational activities should grow our production in the region by 12% to 15% annually, with about one-third of cash flow. Given the $3 per barrel production cost and high economic margin of these flowing oil wells, this expansive shale acquisition is a superb addition to XTO's portfolio of premier properties."

In a recent report, the U.S. Geological Survey published a new assessment of the Bakken Shale play of North Dakota and Montana. The report cites that 3 billion to 4.3 billion barrels of undiscovered oil are technically recoverable with current technology and industry practices. This estimate by the USGS made the Bakken Shale the largest continuous oil accumulation in the lower 48 states. In addition, the USGS has estimated total oil-in-place at 200 to 400 billion barrels.

The acquired properties are located in the Bar Trend and Nesson Anticline of the Bakken Shale development. At present, the primary producing field is Elm Coulee in Montana. Undeveloped leasehold comprises about 215,000 net acres of the total. Production volumes are 88% oil, but the associated natural gas is Btu rich in composition, realizing a 30% premium to NYMEX pricing.

"They come into a basin and they're very aggressive," Brian Corales, an analyst at Coker & Palmer in Metairie, Louisiana, who rates XTO shares a buy and doesn't own any, said in a telephone interview. The Bakken Shale "is a very hot play."

XTO said drilling and operational activities should increase production in the region by 12 percent to 15 percent annually. The acquisition brings the total of XTO's purchases this year to more than $4 billion.

"With over 3 billion barrels of oil held in place within our acreage position, our team expects to more than double the acquired reserve volumes over time,'' Keith Hutton, XTO's president, said in the statement.

A federal magistrate fined XTO Energy Inc. $10,000 and ordered it to pay another $10,000 in restitution in the deaths of two golden eagles electrocuted in 2006 by power lines leading to energy production sites near Gillette. They were charged on May 22, 2008.

Chief Executive Officer Dominic Domenici, resident agent in charge of the U.S. Fish and Wildlife Service for Wyoming and Montana, said Wednesday that XTO Energy, Inc. pleaded guilty last month to a misdemeanor violation of the federal
Bald and Golden Eagle Protection Act.

Dominic Domenici, the federal magistrate that charged them, said U.S. Fish and Wildlife Service Special Agent Tim Eicher of Cody found the dead eagles during a survey. Domenici said the birds were electrocuted after they touched improperly constructed power lines.

The Fish and Wildlife Service together with the Wyoming Game and Fish Department investigated the case, which was prosecuted by the U.S. Attorney's Office.

In addition to the court fine and restitution, Domenici said the company spent $988,000 on an avian protection plan that involved retrofitting miles of power line to make it safe for birds.

Jackson lawyer Hadassah M. Reimer represents XTO Energy. She said the company examined 95 miles of existing power lines and made improvements as necessary to make sure all of it was safe for birds.

According to a Fish and Wildlife Service statement, electrocution has been identified as one of the leading killers of eagles, hawks and owls since the 1960s. The agency said current standards in the electrical industry require power lines be placed at least 5 feet apart or insulated to make them safe for birds.

The agency statement says the $10,000 restitution that XTO Energy agreed to pay will go to the Murie Audubon Society in Casper, which rehabilitates sick or injured migratory birds.

John R. Barksdale, assistant U.S. Attorney in Casper, prosecuted the case. He said the company was responsive when contacted by his office and had already taken steps to address its power lines.

"We don't like to have any birds killed, but XTO was responsive when we contacted them," Barksdale said.

New Mexico-based Yates Petroleum Corp. last year also agreed to make improvements to its power line facilities in Wyoming and New Mexico to help prevent bird deaths.

A settlement between Yates, the U.S. Department of Justice and the U.S. Fish and Wildlife Service stemmed from the discovery of four dead eagles found near power lines owned by Yates at its coal-bed methane facilities in the Powder River Basin of northwest Wyoming.

DOE Evalution on Water Quality Law

MONTANA, May 08 2008 (Neo Natura) - During 2005, the Montana Board of Environmental Review (BER) announced proposed changes to Montana water quality regulations. The proposal was directed to discharges of water from coal bed natural gas (CBNG) production, and if adopted, could substantially reduce the amount of CBNG production in Montana. Potential impacts could also extend to Wyoming CBNG production through much greater restrictions on water quality that must be met at the interstate border.

DOE’s interest in this proposal stems from the importance of CBNG to U.S. natural gas supply. CBNG currently accounts for 9 percent of U.S. natural gas production and the Powder River Basin, situated in Montana and Wyoming and having a recoverable resource potential in excess of 25 trillion cubic feet, is a prime future source for U.S. natural gas supply. This is especially important in these times of tight natural gas supply and high prices.

DOE conducts technical and regulatory analyses to assist federal and state agencies in developing regulatory requirements that provide environmental benefits commensurate with their economic and energy impacts. These analyses serve to provide a scientific basis for regulatory and land management decision making.

For the proposed Montana CBNG water management rule, DOE tasked Argonne National Laboratory and Sandia National Laboratory to evaluate various aspects of the proposal. Argonne focused on regulatory and policy issues and their interrelationships with technology, and Sandia focused on water treatment and engineering, hydrologic and geologic technical issues associated with the zero discharge requirements of the proposal. The findings of these efforts were submitted for the record to the Montana BER.

The Hardrock Mining and Reclamation Act of 2007

MONTANA, Mar 28 (Neo Natura) - Although now 135 years old, the 1872 Mining Law still governs mining on public lands for precious minerals such as gold and copper. Signed into law by President Ulysses S. Grant, the 1872 Mining Law allows mining companies to stake claims on public land and take whatever minerals they find without royalties to the U.S. citizens that own these resources.

EarthWorks has written the following to congress, "The 1872 Mining Law places the interests of mining corporations above those of U.S. citizens. In 2001, for example, the U.S. Forest Service approved a silver and copper mine that would tunnel directly into the heart of the Cabinet Mountains Wilderness Area in northwestern Montana – one of the ten original Wilderness Areas established by Congress in 1964. The mine would pollute the famed Clark Fork River, deplete an important native bulltrout fishery and jeopardize one of the last remaining grizzly bear populations in the lower 48 states. Even though there is broad opposition to this mine, the Forest Service argued that the 1872 Mining Law left them no choice but to approve it."

The Hardrock Mining and Reclamation Act of 2007 (HR2262) consists of the following major points.
• Protect water resources and habitats by establishing strong environmental and cleanup standards specific to mining;
• Provide a fair return to taxpayers, by providing for a reasonable 8% royalty on the value of the precious minerals mining companies take from public lands;
• Defend local communities and special places from irresponsible mining, by giving land managers the ability to balance mining with other uses of the public’s lands;
• Abolish the giveaway of public lands to private mining interests; and
• Create an Abandoned Mine Land Fund and a Community Impact Assistance Fund to address the long-standing hazards of abandoned mines to drinking water, fish and wildlife habitat, and the well being of local communities.

Corp vs. Corp - Update 1

MONTANA, Jan 09 (Neo Natura) - The Mars candy empire's billions of dollars couldn't stop a state judge from ruling Tuesday that a Wyoming company can drill for natural gas beneath Forrest Mars' southeastern Montana ranch.

Drilling was expected to begin within days.

Mars had sought to block Pinnacle Gas Resources Inc. from drilling on a 10,300-acre mineral lease it holds beneath his sprawling Diamond Cross cattle ranch. But Montana law gives oil and gas companies the right to drill on private land as long as they hold valid mineral leases and meet basic notification requirements.

Forrest Mars, who is worth an estimated $14 billion, owns more than 82,000 acres along the Tongue River in Rosebud and Big Horn counties. That "surface ownership" does not include rights to much of the underground minerals, including a type of natural gas known as coal-bed methane.

"Who the surface owner is should not make any difference, and it didn't today," Pinnacle attorney Bryan Wilson said after Tuesday's ruling.

Pinnacle's lease is set to expire if the company does not begin drilling by Friday. State District Judge Blair Jones said blocking Pinnacle because it notified Mars' son-in-law of its drilling plans -- rather than Mars himself -- would have amounted to a "death sentence" for the company.

Corp vs. Corp

MONTANA, Jan 07 (Neo Natura) - A reclusive billionaire whose family owns the Mars candy empire is emerging as a formidable opponent to the energy industry's development plans in southeastern Montana.

Through his previously undisclosed ownership of the 82,000-acre Diamond Cross ranch, Mars is bringing his fortune to bear on the side of ranchers and conservationists trying to curb the companies' ambitions. Mars is worth an estimated $14 billion.

“The perception that it's the big guy (energy companies) versus the little guy (ranchers) – in this instance, that's not the case,” said Bruce Williams, vice president of Fidelity Exploration and Production, a defendant in one of several lawsuits brought by Diamond Cross over natural gas drilling.

The Mars family has a long-standing reputation for secrecy, and Forrest Mars' name is not listed as a party in any of the lawsuits pitting Diamond Cross against coal and natural gas developers. His ownership in the ranch was revealed in a Dec. 28 court affidavit reviewed by The Associated Press.

Mars did not respond to requests for interviews made through his son-in-law, Lonnie Wright, and through Diamond Cross attorney Loren O'Toole.

O'Toole said Mars' opposition to energy development stemmed from the vast amounts of water such projects can consume. In the arid West, water is essential to keeping working cattle ranches such as Diamond Cross alive.

The ranch sits on the northern end of the Powder River Basin, an area with some of the most productive coal and natural gas fields in the nation. Development of those resources was concentrated over the last decade in the southern portion of the basin, in Wyoming.

However, in recent years, exploration began pushing north into Montana. And Mars' ranch soon began to push back, with lawsuits against the companies involved.

Yet despite his hefty legal and financial resources, Mars' influence on the rolling plains of southeastern Montana could be put to the test by state and federal laws favoring oil and gas development.

Under a property regime known as split estates, landowners in many Western states do not necessarily control the minerals beneath their property. In the Diamond Cross case, Fidelity and another company, Pinnacle Gas Resources, have oil and gas leases on the ranch that predate Mars' ownership, according to public records and company officials.

State law gives the companies the right to enter Mars' land to drill on those leases. So far, however, he's held them at bay.

“Forrest has a lot of money, but he's in the same boat as anybody else,” said Beth Kaeding, chairwoman of the Northern Plains Resource Council, a conservation group of which Mars is a member.

“If you don't own the mineral rights, it doesn't matter how huge your ranch is, how politically powerful you are, how much money you have,” Kaeding said. “Mineral rights trump surface rights.”

Mars Inc. – maker of Snickers, the Mars bar, M&Ms and a variety of other food products – is one of the country's largest family-held companies, with an estimated 40,000 employees and $21 billion in annual revenues. Forrest Mars and two siblings, John and Jacqueline, each ranked among the top-20 richest Americans in 2007, according to Forbes Magazine's annual list of the wealthy.

Forrest Mars, who is in his 70s, is no longer chief executive but still contributes to the company, company spokeswoman Bertille Glass said.

Public records show the billionaire, who reportedly also has a residence in McLean, Va., began to amass property in southeastern Montana as early as 2003 – just as natural gas production in the area was booming.

Since then, Mars has launched or joined multiple court fights through Diamond Cross. The suits have challenged the industry's depletion of water reserves, a proposal to build a new coal railroad through the ranch and, most recently, efforts to drill on Diamond Cross itself.

Diamond Cross controls more than 82,000 acres in Rosebud and Bighorn counties – equivalent to roughly 130 square miles, public records show. The court affidavit lists Mars, his wife Deborah, daughter Pamela and son-in-law Wright as the co-owners of Diamond Cross Properties. Its headquarters are across the border in Wyoming, where Mars keeps a permanent residence, according to the affidavit.

Ranch manager Denise Wood said Mars had kept the Montana property as a working cattle ranch and that all its employees were “native Montanans.” She said his concerns about energy development mirrored those of many longtime residents, particularly the practice of pumping out underground water reserves to access trapped pockets of natural gas.

Those reserves are depended on by farmers and ranchers to water their fields and livestock. Energy companies sometimes capture the water and hold it in stock ponds that ranchers can use, but often it is lost as runoff. Mars attorney O'Toole said the lawsuits were not meant to “at any cost block development.” “That's not the point,” he said. “The point is, we can't lose all that water and at the same time have no provision to put it back.”

In the most recent legal case involving Diamond Cross, Wyoming-based Pinnacle Gas Resources is attempting to begin drilling on a lease it holds to more than 10,000 acres of Mars property.

When the company notified Diamond Cross last month that it planned to begin drilling on the ranch by early January, O'Toole responded with a letter barring Pinnacle employees from the ranch. If they came on the property, O'Toole wrote, Pinnacle would be “nothing more than a trespasser” attempting to “breach the peace.” Pinnacle sued, demanding access. The first hearing in the case is scheduled Tuesday, in state district court. Attorneys and a state official in charge of oil and gas development said they could not recall a similar situation over the last two decades where a landowner had to be sued for access to valid leases.

“As a lawyer it should come down to the facts and the law, but there's no denying that money talks,” said Pinnacle attorney Chris Mangen.

A Mars victory would mark “a significant change in the interpretation of state law that says you do have access,” said Tom Richmond, administrator for the Montana Board of Oil and Gas Conservation. That agency is a defendant in a separate Diamond Cross lawsuit, over its approval of some of Pinnacle's drilling plans.

Richmond offered another solution to the dispute: Pointing to the gas company's size – its stock is worth about 1 percent of Mars' estimated personal fortune – he suggested the billionaire could simply buy the publicly traded company if he was determined to keep it off his land.

Rock Creek Project Progresses

MONTANA, Jan 02 (Neo Natura) - From the Missoulian: "A controversial mining plan to tunnel beneath the Cabinet Mountains Wilderness north of Noxon has passed a 'significant milestone'."

The Kootenai National Forest issued a letter of determination notifying Revett Minerals, Inc. "that they may conduct surface disturbing activities as authorized by their Plan of Operations after all the applicable conditions have been met as outlined in the Kootenai's Record of Decision (ROD) with respect to the Evaluation Audit."

Additional information on the Rock Creek Project, including supplemental information reports on fisheries and wildlife, the record of decision, and final biological opinions, are available on the Kootenai National Forest website.

Revett Minerals has a website devoted to the Rock Creek Project which includes permitting documents and technical reports.