A decision by the U.S. Supreme Court in June has
answered a long-standing question over who owns vast deposits of
methane gas found in coal beds in several states across the West.
In a case brought by the Southern Ute Indian Tribe of southwest
Colorado, the court sided 7-1 with Amoco Production
Co.
The ruling means that coalbed methane gas
underlying 200,000 acres in southwest Colorado does not belong to
the tribe even though it owns the coal from which the methane is
extracted. In this case, the gas is owned by Amoco, which owns the
rights to mineral development. An earlier federal appeals court had
considered methane gas an integral part of the coal deposit,
placing ownership with the tribe.
The case has
ramifications that extend beyond the reservation. The federal
government holds identical coal development rights underlying some
16 million acres across the West. Like the tribe, the federal
government had claimed it owned the methane gas recovered from its
coal beds.
Tom Throne, a Sheridan, Wyo., lawyer,
says the Supreme Court decision will put coalbed methane rights
back in the hands of private landowners in Wyoming, where the
Powder River Basin is experiencing a boom in coalbed methane gas
development. Throne represented Campbell County in the Supreme
Court case, which signed on with Amoco and other energy companies
as a friend of the court.
The Southern Utes say
not all is lost. A recent royalty agreement with Amoco gives the
tribe 32 percent of future methane gas development revenues. The
deal is worth millions, though the tribe wouldn’t specify how many
millions.
“I don’t think we’ve completely lost,”
says tribal chairman Clement Frost. “We’re satisfied with the
agreement that we signed with the Amoco people.”
*Dustin
Solberg
This article appeared in the print edition of the magazine with the headline Court puts gas in private hands.
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