Commission Leases Land to Oil Company

- Commission Leases Land to Oil Company

Thursday, June 09, 2011
Knight Ridder/Tribune Business News
by Josh Mitchell, Wyoming Tribune-Eagle, Cheyenne

The Laramie County Commission on Tuesday leased county-owned mineral rights for oil development.

Pacer Energy Acquisitions of Gillette is leasing the 9.7 acres on Chalk Bluff Road, south of Cheyenne, from the county for $500 an acre for five years.

The county also may lease more than 800 acres of mineral rights at the Archer Complex east of Cheyenne to the same company.

Pacer Energy is a third-party land broker acting on behalf of Texas-based Anadarko Petroleum.

For the Chalk Bluff Road lease, the county will get 18.75 percent of the royalties from any minerals extracted.

"The parcel is located near an area where we currently have ongoing operations," Anadarko spokesman Brian Cain said. "Land acquisition is a normal part of early-stage oil and natural-gas exploration."

The county owns 50 percent of the mineral rights under the property, county attorney Mark Voss said.

That means the county will get 18.75 of the royalties on 50 percent of the minerals extracted.

Voss and County Commission Chairwoman Diane Humphrey both said they do not know who owns the other half of the mineral rights.

Pacer has offered the same lease rate and royalty percentage for the Archer land as well, Humphrey said.

The county owns 100 percent of the mineral rights the Archer property, which totals 875 acres.

Humphrey said she is pleased with the amount of money the county is getting for the Chalk Bluff Road lease. She said a royalty of 18.75 percent is "almost unheard of."

It could take two to three years to see revenue from royalties, Commissioner Gay Woodhouse said.

The Chalk Bluff Road land is unlikely to generate hundreds of thousands of dollars in royalties because it is a small parcel, Humphrey said.

But the county could make significant money if it leases the Archer property and it pays off.

At $500 an acre, the lease itself at Archer would generate over $400,000. In addition, the county would make money from the mineral royalties.

The commission will advertise the property to other oil production companies as well to get the best deal, Humphrey said.

Since it is taxpayer-owned land, the county has an obligation to get the most money it can from the property, Humphrey said.

Voss said the county will solicit offers for the Archer mineral lease until June 17.

Money made off the oil leases could help build a new fairgrounds at the Archer Complex, Humphrey said. Also, it could go toward county employees and road construction.

Voss said it is unusual for the county to own mineral rights as it usually only has surface interests.

In Wyoming, there can be two owners to a piece of property -- the surface owner and the mineral owner. For the most part, the county only owns the surface rights to property.

It is unclear how many acres of mineral rights the county owns.

Woodhouse supports the leasing.

"I am in favor of getting the money we can for the leases," she said. "It's a good source of revenue."

Some of the revenue could help complete the indoor shooting range at the Archer Complex, Woodhouse said. She added that there remains about $700,000 worth of work to finish the project.

Copyright (c) 2011, Wyoming Tribune-Eagle, Cheyenne

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