Watching Government Drilling for paperwork

With Patrick Crow from Washington, D.C. [email protected] Danny Thompson bought a lease in 1984, little knowing it would draw him into a 9 year journey through a federal bureaucratic quagmire. Thompson is president of Carlton Oil Corp., Newport, Ohio. In January 1984, he leased 213 acres from James and Dorothy Littleton. They had sold the land to the U.S. Forest Service in 1971-to become part of Wayne National Forest-but retained the mineral rights for 20 years.

July 8, 1996

3 min read

Danny Thompson bought a lease in 1984, little knowing it would draw him into a 9 year journey through a federal bureaucratic quagmire.

Thompson is president of Carlton Oil Corp., Newport, Ohio.

In January 1984, he leased 213 acres from James and Dorothy Littleton. They had sold the land to the U.S. Forest Service in 1971-to become part of Wayne National Forest-but retained the mineral rights for 20 years.

Thompson proceeded to drill a producing well on the lease in April 1984. It was permitted and operated under Ohio's relatively strict oil and gas laws.

Bureaucratic quagmire

In mid-1987, the Bureau of Land Management informed Thompson that when the minerals ownership reverted in 1991, he would have to bid for his well and lease at an auction.

After his congressman threatened to intervene, BLM decided in 1989 that a compensatory royalty agreement could be issued. But a year later, BLM legal staff vetoed that.

Thompson and other producers again went to Congress, and a provision was inserted in the National Energy Policy bill in 1991 that would allow transfer of lease rights. That bill was signed into law in October 1992.

But Carlton had been forced to shut in the Littleton well in May 1992, after BLM threatened prosecution for mineral theft.

During the following year, Thompson met several times with Forest Service personnel to discuss procedures for transferring lease rights.

In January 1994 BLM ruled Carlton had failed to submit the required application for the Littleton lease and could not renew it.

Carlton appealed and lost, appealed higher within BLM and lost again.

Thompson said he talked many times with BLM officials to attempt to resolve the issue, but finally "gave up and informed BLM that if it would put the Littleton lease up for sale, Carlton would travel anywhere in the U.S. to bid and buy the Littleton lease."

Through 1995, the Forest Service and BLM failed to schedule the lease up for sale. Initially the Forest Service "overlooked" the lease, then lacked the necessary time for paperwork, and subsequently decided it needed more time for public notice.

Last January BLM scheduled the tract to be leased in March. It wasn't. Federal budget shutdowns delayed the lease preparation process.

Finally the tract was slated for a June 20 sale. Thompson said "The lease was burdened with heavy stipulations such as no surface occupancy over three fourths of the acreage, which includes areas already developed."

But he went to Springfield, Va., and bid on the lease. It cost him $426. He was the only bidder.

Bitter experience

Thompson spent much more than $426 in time and trouble over the 9 years. The delay also cost the federal government $2,000-5,000 in deferred royalties.

Thompson was bitter at the Forest Service when he recently testified about his experiences before a House resources subcommittee.

He said "The real problem that small oil and gas operators like myself face is over regulation."