La Plata County commissioners on Tuesday approved an oil and gas lease with BP American Production Co. for minerals located under a strip of U.S. Highway 160 near Bayfield.
According to county records, BP has been extracting natural gas from a mineral estate underneath almost 7 acres on a right-of-way strip of Highway 160 through Gem Village, an unincorporated community just west of Bayfield.
La Plata County, which owns a one-sixth interest on the minerals, has never entered a formal lease agreement with BP, despite the company’s effort in 2009. The reasons for a lack of agreement are unclear, said County Attorney Sheryl Roberts.
“BP identified this issue in 2009 and believes it sent a letter to the county offering an arrangement and financial package to the County but believes the County did not respond,” county records show. “The County does not have specific information as to such an offer.”
Regardless, BP representative Tom Dugan said BP has been tracking the amount the county would have received in royalties since 2009, and the company has agreed to pay that amount – $322,154 – with Tuesday’s approval of the lease.
La Plata County will also now receive one-sixth of the royalties from the well’s production going forward.
“It’s an unusual situation,” Dugan said, “but it’s really water under the bridge now.”
Commissioners Gwen Lachelt and Julie Westendorff voted to approve the oil and gas lease. Commissioner Brad Blake was not in attendance.
“I appreciate their due diligence there,” Lachelt said, “and finally making this official.”