Boom and Gloom

Montana's Blackfeet Nation recently signed the largest oil exploration deal in the tribe's history. Is it a vital step to saving the reservation, or an agreement destined for disaster?



Officials with the Blackfeet Nation last met December with representatives of the Newfield Exploration Company out of Houston, Texas, to sign over oil leases on 224,000 acres of tribal land in the eastern portion of the reservation. The deal called for the drilling of eight exploratory wells by the end of 2010 and full-scale development of a portion of the Southern Alberta Basin through 2014—including at least one deep well per year. The tribe has not made public the final dollar value of the deal, but says the Blackfeet stand to gain more than $12 million from Newfield. In short, it's the largest oil agreement the tribe has ever signed.

Grinnell Day Chief, oil and gas manager for the Blackfeet Department of Commerce, rattles off all the public details of the agreement from his desk in Browning. A camo cap with the orange Newfield logo emblazoned above the bill sits on a shelf behind him, a bonus gift from what is unquestionably a lucrative opportunity for the tribe. If Newfield teams hit the rich oil reserves they believe lie deep under the Cut Bank area, the Blackfeet will be raking in a 20 percent royalty check from every barrel sold.

"This is the first time we've had this deep exploration since the early '80s," Day Chief says. "This is the boom. We're in it right now. You can go ask anybody anywhere where everybody's doing business in Montana, and most of it is here on our reservation. ...If they find what they're looking for, next year we'll have 100 brand new wells that will be drilled. A year after that it will double to 200. We'll have up to 10 to 15 rigs working on the reservation if the play they're looking for is here. It's here, it's just how do you get it out of the ground?"

Newfield is hardly the first oil company to come calling in Browning. In the past five years, the tribe has entered into agreements with three different companies—Anschutz Exploration Corp. out of Denver, Colo., the Rocky Mountain office of Texas-based Rosetta Resources Inc., and now Newfield. The leases mostly cover tribal and allotted lands, Day Chief explains, with some private lands owned by tribal and non-tribal residents thrown in. Much of the drilling done by the three companies has focused on the Cut Bank area, but Anschutz has drilled two wells between Browning and East Glacier and has plans to drill two more.

In Day Chief's words, these are boom times for the tribe on the oil front, and the offers just keep coming; Day Chief says the latest are "just a little bit too late." The tribe's already leased out a majority of its available acreage. What's left is being saved for a day when the value of development grows even greater.

"We were just offered another $150 an acre for some acreage we have available on the south end of our reservation," Day Chief says. "But that's just an offer. I'm sure someone else is going to come up with a better offer...I've been here for six years. Five years ago, we probably got interest from one company a year. We always couldn't come to terms or we'd enter into some smaller agreements. But as of lately, I get calls almost every other day from companies looking for land to lease from us."

Oil exploration goes back a long way on the Blackfeet Reservation. Since the 1930s, an endless parade of companies has punched more than 1,400 wells in search of oil and natural gas. Some found nothing worth investing in and capped what they'd drilled. Other ventures proved more successful, and by the Blackfeet Department of Commerce's count the reservation currently hosts 240 producing wells operated by nearly a dozen different companies extracting a total of 550 barrels of oil a day.

Day Chief and his office have learned fast how to play the resource leasing game. Federal regulations regarding oil deals required a minimum royalty payment of 12.5 percent until the late '90s, when that figure jumped to 16.5 percent. But in recent years, Day Chief says, the number of offers has put the Blackfeet in a much greater negotiating position. They accept nothing below a 20 percent royalty return now, he says, and that means major revenue for a reservation suffering a 72 percent unemployment rate (according to the Bureau of Indian Affairs' 2005 Indian Labor Force Report) and a poverty level two and a half times the national average.

While much of the oil and gas development on the Blackfeet Reservation is focused on the Cut Bank area, companies like the Anschutz Corporation have already drilled wells near Highway 2 between Browning and East Glacier. Those skeptical of large-scale development fear that activity could harm native wildlife. - PHOTO BY ALEX SAKARIASSEN
  • Photo by Alex Sakariassen
  • While much of the oil and gas development on the Blackfeet Reservation is focused on the Cut Bank area, companies like the Anschutz Corporation have already drilled wells near Highway 2 between Browning and East Glacier. Those skeptical of large-scale development fear that activity could harm native wildlife.

The Newfield deal alone has already had a $5.5 million impact on the reservation. The tribe's roughly 16,000 enrolled members each received a Christmas gift of $200 last year, with another $200 on the way this summer. There's talk of constructing a new grocery store in Browning to create jobs and compete with the existing IGA store. And the Blackfeet Tribal Business Council is even considering using some of the money to buy back fractionated trust lands on the reservation.

With promise like that, how can the oil bid lose?

"We were $20 million in debt a couple years ago as a tribe," Day Chief says. "We're out of debt now, and that's just from the oil deals we're doing. It's good to be out of debt."

The situation playing out on the Blackfeet Reservation in many ways reflects the flurry of oil and natural gas activity near Sidney just a few years ago. Between 2000 and 2006, Montana's oil production leapt from 16 million barrels a year to 33 million. Multi-national corporations like ConocoPhillips and Halliburton flocked to northeastern Montana to drill wells alongside local energy companies, offering jobs and millions of dollars in royalties primarily to Richland County. The word "boom" has since been tossed around frequently in relation to development near Montana's border with North Dakota, where the Bakken Shale Formation promises an estimated 3 to 4.3 billion barrels of recoverable oil, according to the U.S. Geological Survey (USGS).

Output from that portion of the state has subsided during the recession, dropping to 25 million barrels in 2009, but still accounts for more than 90 percent of the state's oil production. And interest persists, says Tom Richmond, division administrator for the Montana Board of Oil and Gas. The number of producing wells in northeastern Montana has increased in the past four years, from 1,877 in 2006 to 2,052 in 2009, and activity is creeping toward the Fort Peck Reservation. Should the Assiniboine and Sioux tribes there enter into large-scale negotiations with oil and gas companies, it could open a whole new front for development.

"In the case of the Blackfeet, it started on the reservation and maybe it will go into areas that are off the reservation. In eastern Montana, a lot of it started off the reservation and may be headed toward on-reservation areas," Richmond says. "It's just a matter of where the thing starts to develop and what direction it goes."

But oil development comes with grave ecological and societal risks no matter where development occurs. For two months now, the nation's attention has been fixed on the Gulf of Mexico and the growing oil slick that's already devastated fisheries, wildlife and local businesses in Louisiana, Mississippi, Alabama and Florida. The blowout of British Petroleum's Deepwater Horizon well on April 20 is now considered the greatest environmental disaster in U.S. history, spewing more oil into the Gulf in a day than most Montana counties produce in a year.

Grinnell Day Chief, oil and gas manager for the Blackfeet Department of Commerce, knows there are ecological risks involved in fossil fuel development. He also knows the tribe stands to gain millions from just one oil agreement. With the reservation facing a 72 percent unemployment rate, the payoffs seem more than worth the gamble, Day Chief says. - PHOTO BY ALEX SAKARIASSEN
  • Photo by Alex Sakariassen
  • Grinnell Day Chief, oil and gas manager for the Blackfeet Department of Commerce, knows there are ecological risks involved in fossil fuel development. He also knows the tribe stands to gain millions from just one oil agreement. With the reservation facing a 72 percent unemployment rate, the payoffs seem more than worth the gamble, Day Chief says.

You don't have to visit the Gulf Coast to witness the hazards inherent to the oil industry. On June 10, the U.S. District Court in Great Falls sentenced Provident Energy Associates of Montana to 18 months probation and demanded a $5,000 fine for violation of the Migratory Bird Treaty Act. The Cut Bank-based firm is responsible for a storage tank leak in Pondera County in September 2008 that created a 10-by-20 foot pond of oil and caused the deaths of 18 migratory birds, including several vesper sparrows and an owl. The birds died as a result of ingesting or becoming coated with oil.

Richmond downplays the severity of the risks in Montana. Yes, the state has had problems with leaks or blowouts in the past, he says, but nothing spectacular. Those accidents have been more an economic problem than an environmental one.

"Most of our issues are just really where the wells are located and the infrastructure required and the surface occupation, not so much the safety and health aspect of it," Richmond says. "We have had oil tanks hit by lightning, which makes kind of a mess."

Day Chief insists the Blackfeet have taken precautions in each of their oil agreements to protect the tribe should any disasters occur. Despite the proximity of the 2008 Provident spill to Glacier County, he has few concerns about potential risks in this latest rush for oil.

"We have a liability clause in every one of our agreements," Day Chief says. "So if there's a spill or anything that happened recently with the well being drilled and then there was a big leak, it's the company's responsibility. We're not responsible at all."

Those familiar with oil companies' tactics don't buy it. Stoney Burk, a Choteau attorney and outspoken advocate for environmental conservation in Montana, has little faith in liability clauses. He's fought for years to keep oil companies from leasing tracts of land along the mountains just south of the Blackfeet Reservation for the very reason that oil companies have a bad history of keeping their promises to clean up when a leak, spill or blowout occurs.

Choteau attorney Stoney Burk has dedicated most of his life to preserving Montana’s pristine landscapes and wildlife populations. Oil is a dirty addiction, he says, and the growing boom on the Blackfeet Reservation is proof of yet another Montana community getting hooked. - PHOTO BY ALEX SAKARIASSEN
  • Photo by Alex Sakariassen
  • Choteau attorney Stoney Burk has dedicated most of his life to preserving Montana‚Äôs pristine landscapes and wildlife populations. Oil is a dirty addiction, he says, and the growing boom on the Blackfeet Reservation is proof of yet another Montana community getting hooked.

"I'm not at all opposed to drilling, to oil and gas exploration in non-pristine areas. But number one, you've got to do the safeguards," Burk says. "You've got to make sure the enforcement mechanism for keeping these companies honest is in place and that it is enforced. I don't have any bad feelings about the Blackfeet developing the oil and gas resources, except they have neighbors, they have their own people and their own land that they have to consider."

If a leak does happen on the Blackfeet Reservation, Burk's convinced the tribe will be left holding the bag.

"I guarantee you they will get their oil and gas money," he says, "and it would not surprise me if they get cheated in the process somewhere. And they will be left with the environmental cleanup—or the United States government will—when it's all over. Because that's the history of oil development in the United States."

The concerns go well beyond exposing wildlife and landscapes to oil. Development means infrastructure—heavy equipment, trucks and especially roads—that can prove more damaging to the environment than an isolated spill. With roads comes increased traffic, Burk says, and increased poaching and fractionalized migratory routes for native species. The proximity of Anschutz's operation to the mountains around East Glacier puts the company right next to a grizzly bear recovery zone.

"The dollar is society and we know it," Burk says. "And the tendency for development never puts environmental issues as a primary consideration. That's almost an afterthought, 'Oh, by the way, if we have a blowout like they did in the Gulf, or if we have a pipeline break or if we have toxic fumes escaping into the air, what do we do at the very start to make sure we have the safety mechanisms to respond?' That's never a primary issue."

Mitigation measures can be taken to reduce the impacts on local wildlife, Day Chief points out, and the Blackfeet are working with the U.S. Fish and Wildlife Service to monitor the effects of continued development. It isn't that the tribe wants to see any harm come to the land, he says. But the financial benefits in the Blackfeet's case would seem to outweigh the ecological risks.

"We do have 16,000 members to provide for," Day Chief says. "You can't just stop because there's a bear there."

Not all communities in Montana have welcomed the oil industry as warmly as the Blackfeet. Seventy-two miles southeast of Browning, residents in Choteau spent the better part of three decades opposing oil and gas development on the Rocky Mountain Front. Yes, there were promises of jobs, money and growth like those on the Blackfeet Reservation. But the unlikely band of ranchers, outfitters and businessmen known as the Friends of the Rocky Mountain Front (FRMF) recognized the cost in ecological, historical and emotional sacrifices that such benefits required.

"I'm just saying, if you have a house, you have a living room, you have a dining room, you have a bathroom, you have a bedroom. You don't go to the bathroom in your dining room," says Burk, a core member of the FRMF and continued advocate for conservation. "You have certain areas that are too pristine, of too much national significance or too much aesthetic, emotional significance that those values far outweigh the returns that you might get even if there was gold under it. I ask people this: Would you take Glacier Park and doze it flat because there's gold under it?"

Choteau's battle with development began in 1977, when the U.S. Forest Service announced plans to lease all land on the Front within the Lewis and Clark National Forest to oil and gas companies. Geologists all but guaranteed that the pristine corridor offered a rich source of fossil fuels, and many locals were sold on the plan, convinced it would mean future growth and sustainability for the community.

Others, however, found the Forest Service's announcement distasteful. Choteau resident Gene Sentz, a retired teacher and former Forest Service employee, remembers calling together the first meeting of FRMF, a group of 15 or 20 locals who gathered over beers in late 1977 to discuss how to oppose the leasing plan. The movement steadily gained momentum and by the following spring they were openly protesting the Forest Service's actions and demanding the agency stop.

"We weren't against a little bit of oil and gas development, but by gosh what they were doing was committing the whole east front of the national forest outside the Bob Marshall to oil companies...for a 10-year lease," Sentz says. "We had a meeting in the spring, March of '78, down in the pavilion and about 250 showed up just by word of mouth. We had the Forest Service there and after that they backed up and agreed to do an EIS [environmental impact statement]. So we kinda won the first round there."

The tall, distinctive peaks of the Rocky Mountain Front, including Ear Mountain, on the left, prompted locals to fight for 30 years against nearby oil and gas development. - PHOTO BY ALEX SAKARIASSEN
  • Photo by Alex Sakariassen
  • The tall, distinctive peaks of the Rocky Mountain Front, including Ear Mountain, on the left, prompted locals to fight for 30 years against nearby oil and gas development.

The FRMF managed to delay the Forest Service's plans through much of the '80s, but by 1990 the issue had come up once more. Oil and gas companies were pressing the Forest Service hard to complete an EIS. The fight may have dragged on indefinitely—or with disastrous results—had Gloria Flora not been named forest supervisor on the Lewis and Clark National Forest in 1995. By then most people across the nation knew of the FRMF's bitter 20-year battle, and Flora entered the position with an immediate sense of skepticism based on the public outcry.

"Hearing what people felt about this landscape, it became abundantly clear to me that this was an incredible treasure," Flora says. "I started to explore: What could I do, what was I responsible for doing, and what were the people who owned this land asking me to do? I was responsible for being responsive to industry, I had a mandate to ensure the people of the United States had energy as well as water, so it was not just, 'Well hey, this is special, go away.' And industry was extremely interested in getting in there, so it was a very interesting dilemma I found myself in."

The call was Flora's to make, and her final decision proved an unpopular one with the oil industry: In 1997, she announced a moratorium on all oil and natural gas leasing on the Rocky Mountain Front. She'd spent a year mapping wildlife areas and sensitive habitats, layering those maps to get a sense of the stipulations the Forest Service would have to place on surface occupancy and other aspects of drilling.

"It goes without saying the ecological values along the Rocky Mountain Front are almost unparalleled, and it's been called the Serengeti of the West or of the United States," says Flora, who now runs a Helena-based nonprofit specializing in sustainability of public lands. "It has tremendous wildlife populations and wildlife values as habitat, not only for every large charismatic mega-fauna but also a host of threatened and endangered species—grizzly bears, wolves, wolverines, lynx—you name it, they're all there. It provides nesting habitat for one-third of the birds in the state of Montana...The migration corridor for golden eagles is right along the spine of the Rocky Mountain Front, and there's thousands and thousands of them literally."

Her moratorium remained in effect—a protective though temporary measure—until 2006, when Sen. Max Baucus carried a permanent ban on development along the Front through Congress. Those with the FRMF still consider Flora the pivotal voice in preserving the area.

"To me, it was like the start of the civil rights movement in terms of this environmental battle," Burk says. "It was the Parks on the bus, it was the massacre of Martin Luther King, it was the march across Pettus Bridge in southern Alabama. It was the final rallying cry that gave all of us who believed in this Rocky Mountain Front the impetus to say somebody, somebody else cares about the significance of this place."

But Flora insists her decision was partly prompted by the incredibly convincing arguments made by local residents. Very few wanted to see development, she says, even if it meant fleeting jobs and fast cash. The Choteau community recognized an addiction to oil and, in refusing to make irreversible sacrifices, became one of the country's greatest success stories in fighting the push for more development. It's a story, Burk says, many would like to see repeated in Montana.

Internationally renowned activist and two-time Green Party vice presidential candidate Winona LaDuke makes no efforts to sugar coat her low opinion of oil and gas development. She's a former member of Greenpeace and has spent the past two and a half decades stressing the importance of preserving native landscapes and plugging renewable sources of energy like wind farms and solar panels. On her home reservation in northern Minnesota, LaDuke practices what she preaches by powering her home with those same renewables.

LaDuke visited western Montana in early June to raise awareness of clean energy on the Flathead and Blackfeet reservations. She appeared alongside the Grammy Award-winning musical act the Indigo Girls and moderated panel discussions on the importance of turning the nation's attention to renewable resources. The thought that the Blackfeet Reservation, and large swaths of land across the state, might house present and future booms in fossil fuel extraction disgusts her to no end.

"When you're an addict to oil, you do a lot of bad shit and hang out with junkies, hang out with dealers," LaDuke says. "Look at America. The tar sands are the problem, right there. That's like hanging out with a big dealer, sitting there watching the planet get seriously scarred. You're so addicted and you're so blinded by your addiction, that's what's so shameful. We're the spirits of this world. A horse will remember stuff, but a horse isn't thinking or planning for a year from now. We have this gift where we can think ahead. We've got this gift of reason. Too bad we don't use it."

The Blackfeet Reservation and the mountains of East Glacier offer a powerful backdrop for LaDuke's sentiments. The area has enormous wind and solar potential, she says, a much more appealing alternative to rampant oil and gas drilling. Just as subterranean basins are rich with fossil fuels, the plains butting up against the mountain range offer strong and constant winds.

Despite the appeal of her renewable energy pitch, LaDuke recognizes that harnessing that power raises a host of challenges. LaDuke has struggled on the White Earth Reservation to get power companies to recognize the need for renewable energy infrastructure. She spent nearly a year haggling with power companies in order to install her own residential wind turbine. Renewable energy could solve economic problems in Indian Country just as easily as fossil fuel development. But without ready access to local power grids—one of the biggest issues facing developed wind energy in rural communities—how can the tribes not turn to the fast-though-dirty dollar of oil?

"You have tribes that have growing populations, immense poverty—which isn't their fault, it's a result of their history and everything being taken from them—and you have the potential to move into renewables. But they're stuck," LaDuke says. "The old paradigm of oil exploration is courting this whole region. You know Fort Berthold [in North Dakota] signed? These guys are looking at it and a lot of these reservations are going to see this whole new wave [of oil development] simply because of the economics. ...The reality is it's moving us away from a post-petroleum world. That's not what Montana should be doing."

In 1997, the U.S. Forest Service issued a temporary moratorium on new oil and gas leasing along the Rocky Mountain Front. Sen. Max Baucus carried a permanent ban through Congress in 2006. - PHOTO BY ALEX SAKARIASSEN
  • Photo by Alex Sakariassen
  • In 1997, the U.S. Forest Service issued a temporary moratorium on new oil and gas leasing along the Rocky Mountain Front. Sen. Max Baucus carried a permanent ban through Congress in 2006.

Proponents of renewable resources over oil development agree it's going to take a massive shift in the mentality of the nation, if not the world, to affect change. LaDuke continues to tour the country hoping to spark that shift. But she and others admit it will take something more, something bigger to shed light on the grave and inevitable dangers of our addiction to oil.

"The Gulf disaster has focused attention on how catastrophic development can be to both people and resources," Burk says. "What we have to do is the same thing we did with drugs, the same thing we did with smoking, and recognize that this is hazardous to the individual health of the nation and to the personal health of the individual. We have to simply change the attitude to focus on cleaner methods of satisfying our needs, which to me are the wind, the solar, the battery, the alternative energy. ...Our job as a nation is to recognize that we have an addiction and that there's a way out."

Day Chief has heard the arguments. He's fielded the complaints and addressed the concerns—spiritual, cultural and environmental. That's part of the job, he says. Someone's always going to have a problem with what you're doing.

"You're going to have friction with anything you do in life, not just oil and gas development," Day Chief says. "Anything you do, you're going to have environmental groups that are going to say, 'You're harming this,' or, 'You're doing what you shouldn't be doing.' We live in a beautiful area...We make sure environmentally that we protect it. But I mean, yeah, there's been calls to us saying maybe we shouldn't be developing this close to the mountains."

However, Day Chief reiterates that the tribe can't simply pass on such a reliable source of revenue. The current price of crude oil is $75.67 a barrel, about $10 below the going rate in April but indicative of another rise into late summer. Oil and gas development account for the majority of the tribe's income now, Day Chief says. The last few years of activity on the Blackfeet Reservation have made Glacier County the sixth largest county in the state for production, with 432,906 barrels recorded in 2009.

Perhaps the biggest question facing the tribe is how long this development will last. The oil industry is notorious for a boom-and-bust cycle in Montana. And even if interest holds out, the reserves below the reservation will someday run dry—as will the royalty checks when that day comes. Development is a dangerous gamble, not just for wildlife and landscape but also for the sustainability of the entire community. It's a gamble Day Chief says the Blackfeet are willing, at present, to take.

"Eventually all the oil and all the gas will be gone. I mean, once you take it out of the ground, that's it, it's gone," he says. "But if it's something that's there, and with the price of oil now, you want to get what you can out of the ground. What if 20 years from now a barrel of oil is worth $20? Well, we'd lose out on a lot of money if we waited...It's a gamble. What if 20 years from now it's $200 a barrel? Hopefully we're still producing oil. You just have to go with the market."

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