A new agreement between state and federal officials could soon bring a gusher of oil-related wealth to Navajo families in the Four Corners Area who want to lease their lands to energy companies.
And it could speed development of an oil-rich zone in the Mancos Shale, a hard-rock layer in the San Juan Basin that companies are now exploring for the first time.
The agreement, announced by Gov. Susana Martinez on Thursday in Farmington, authorizes San Juan College to provide technical assistance to expedite the processing of land-lease agreements between energy firms and Navajo families whose ancestors received individual land allotments from the federal government in the late-19th century.
Navajos in New Mexico already have signed about 280 leases with energy firms, representing an estimated $198 million in bonus payments and future royalties from oil companies, said Daniel Fine, associate director of the Center for Energy Policy at the New Mexico Institute for Mining and Technology in Socorro. But no payments have yet been made because the energy companies can’t move forward with drilling and exploration until the land-lease agreements are fully processed by the Bureau of Indian Affairs.
And that process has been stalled by a chronic shortage of human and monetary resources at the BIA’s Federal Indian Management Office (FIMO) in Farmington, said Fine, who is now co-leading an effort with the New Mexico Energy, Minerals and Natural Resources Department to draw up a new statewide policy for energy development.
“Very little has been done on these leases because the BIA lacks the staff and budget, and that’s backing up oil and gas development on those lands,” Fine told the Journal. “Those lands are located in an oil-rich area of the San Juan Basin, and oil companies have been waiting since September, but there’s no approval process underway.”
To cut through the backlog and expedite future leases, state and federal authorities have agreed to allow San Juan College’s School of Energy and School of Business to manage the lease-approval process for the local BIA office.
“San Juan College has the capability to do it,” Fine said. “The college will provide the technical assistance and the state will provide the funding for the school to become the BIA’s technical and clerical processing unit.”
The BIA has faced increasing pressure to rapidly process Navajo leases because of growing interest among energy companies to explore the Mancos, an oil- and liquid-gas-rich zone in the San Juan Basin that was largely ignored until recently. That area encompasses about 3,400 square miles straddling four counties, including San Juan, Rio Arriba, McKinley and Sandoval.
Canada’s Encana Corp. and WPX Energy Inc. of Oklahoma have spearheaded oil exploration on state and federal lands there for the past two years using modern hydraulic fracturing and horizontal drilling technologies to permeate the zone’s hard-rock shale. Those companies have budgeted a combined $500 million for new oil-related investments in the Mancos this year. Together, they account for about 100 of the new Navajo land leases.
The other 180 leases signed with Navajos were negotiated by different energy industry firms for sale to oil developers once approved by the BIA, Fine said.
Apart from speeding up drilling and exploration in the area, the leases could bring needed wealth to many poor Navajo families. There are an estimated 30,000 Navajos with allotted land that could be leased in New Mexico, and 60,000 such land holdings throughout the Navajo Nation.
It’s estimated that a single 160-acre parcel has the potential to generate hundreds of thousands of dollars for the owner, said EMNR Secretary David Martin.
“The potential exists to open up unleased parcels that could generate over 1,000 jobs and provide revenue for over 60,000 allottees,” Martin said in a statement. “This type of agreement could be a model for other states seeking to develop allotted land.”
Martinez said second- and third-generation Navajo land owners who inherited parcels from their parents and grandparents will benefit from the new lease-processing agreement.