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MAY 21, 2001

The Bush administration's energy policy is just a few days old but the Northern Ute Tribe of Utah is ready to play its part to combat what the President is calling a national crisis.

Having officially received the deed to 84,000 acres of mineral-rich land the government took away earlier this century, the tribe's plans are simple: open the land up to oil and gas development. To carry out this goal, the tribe has brought in one of the nation's biggest energy companies who stands to make more money off the venture than the tribe itself.

Unlike the push to open up the Arctic National Wildlife Refuge (ANWR) to drilling, there isn't much controversy over the proposal to harvest the newly returned land. When President Clinton last year signed into law the land transfer, it was understood the tribe would seek to extract the natural gas and oil deposits located within the former Navy reserve.

Yet like the Arctic proposal, the development of the Ute land won't result in any immediate impact on rising energy costs throughout the country. It will be at least two years before any drilling occurs, provided the tribe and its new partners find what they are looking for.

Since the Department of Energy estimates the land holds about 17.5 billion cubic feet of natural gas currently worth $60 million, there are some pretty good guarantees there is money to be made. For the 3,200-member tribe, where unemployment is about 76 percent and the annual income is about $12,000, drilling could bring some economic stimulus to the Uintah and Ouray Reservation in northeastern Utah.

But the tribe won't be reaping the financial benefits alone and are sharing the potential profits with a number of others. An agreement signed the tribe signed this month gives 50 percent of the exploration and development rights to Dominion Exploration & Production Inc, a subsidiary of the Virginia-based Dominion.

Dominion -- whose CEO Thos. E. Capps last week called Bush's policy "optimistic and realistic" -- is one of the nation's largest energy producers, supplying power to the Northeast and Midwest, where an estimated 40 percent of the country's energy is consumed. It also has major interests in some of Bush's drilling hot spots: the Gulf of Mexico and the Rocky Mountains.

As for the other half, the tribe is sharing it with three others including nearby relatives, the Southern Ute Tribe of Colorado. The Southern Utes are old hands at the development game, having formed their own energy company in 1992.

The Southern Utes have a 16 percent stake in Contango Oil & Gas Company, having raised raised $5 million for the Texas-based company. One of the company's directors, Robert J. Zahradnik, is a former Southern Ute executive and Contango owns 5 percent of the Northern Ute deal.

The federal government has its own interest in seeing the project go through as well. Last year, DOE awarded the tribe a $500,00 grant for a one-year project to evaluate oil and gas development tools.

Furthermore, DOE will receive a 9 percent royalty fee from any natural resources extracted from the Ute land. DOE is supposed to use this money to help cleanup 10.5 million tons of uranium waste in a mine in Moab, Utah.

Cleanup of the radioactive mine tailings is expected to cost $300 million and the DOE says $80 to $100 million could come from the tribe's drilling efforts. In the fiscal year 2002 budget, however, all cleanup funds for the Moab site have been cut.

The land returned to the Northern Ute Tribe was taken by the United States Navy in 1916 for use as an oil shale reserve. The government never developed it, though, and former Energy Secretary Bill Richardson announced the land transfer last year, the largest returned to a tribe in the lower 48 in more than a century.

At about 4.5 million acres, the Uintah and Ouray Reservation is the second largest reservation in the country. It is home to the the Whiteriver, Uintah, and Uncompahgre Ute bands.

View a Map of the Returned Land:
Naval Oil Shale Reserve No. 2 (Dept of Energy)

View a Photo of the Moab Mine Area:
Atlas Mines Tailing Pile (Utah Dept of Environmental Quality)

Relevant Links:
The Northern Ute Tribe - http://www.northernute.com
Southern Ute Tribe - http://www.utelegacy.org/index.html
Dominion - http://www.dom.com
Contango Oil and Gas - http://www.contango-oandg.com
Decommissioning of Moab, Utah, Uranium Mill Tailings - http://www.antenna.nl/wise/uranium/udmoa.html

Related Stories:
DOE Budget: Uranium cleanup funds cut (4/24)
Report: DOE wasting cleanup money (11/2)
Land returned to Ute Tribe (11/1)
DOE revises tribal policies (11/1)