Seventy millions years ago, herds of duckbilled hadrosaurs, the cows of the Cretaceous period, plodded their way through conifers and cycads in what***image14*** Santa Feans today call the Galisteo Basin.
Forget ATVs; the imprint left by off-road vehicles would have paled in comparison to the footprints of these great lizards. The 25-feet-long, 6,000-pound hadrosaurs were herbivores with tiny arms and long tails and they competed for the tastiest ferns with the squat five-horned pentaceratops, beasts about the same length but twice as heavy.
New Mexico's weather back then was balmy, scorching. There were no seasons, just heat as the age of dinosaurs breathed its last gasps. The mountains hadn't even formed yet; New Mexico was half sea, half land.
"The Cretaceous was a time of global greenhouse," Spencer Lucas, director of the New Mexico Museum of Natural History and Science, explains. The coast was constantly in flux and the Galisteo Basin was more like the Amazon or Indonesian rain forests than the dusty landscape it is today-ideal circumstances for latter-day fossil fuels.
Over time and the right amounts of heat and pressure, all that organic material, the flora with the fauna (especially the dead marine plankton accumulating in prehistoric waters) eventually turned into oil or gas.
***image1***Now, Houston-based oil firm Tecton Energy is banking on the possibility that the Cretaceous-era rocks will yield between 50 to 100 million barrels of automobile-optimal light-sweet crude oil beneath the rolling, piñon-studded hills in and around Galisteo, Cerrillos and Madrid.
As Peter Scholle, the state geologist, says: No one will know for sure until someone actually drills.
With gas prices hovering around $3 per gallon, small oil firms such as Tecton think it's worth finding out. The company foresees a fortune in "unconventional resources" beneath the ground. It has the legal advantages, deep pockets and seasoned lobbyists-plus the stomach for a nasty fight.
So far, the fight has been, if not nasty, at least loud, with an army of agitated activists who turn up in the hundreds at every possible public meeting.
Tecton has made itself available for such public criticism, emphasizing community involvement as the process unfolds.
Yet at the same time, the company has been shielding its investors and colleagues from scrutiny.
The truth is, Tecton probably wouldn't be in Santa Fe County if local lease holders hadn't sold out. SFR has the names.
And it's possible Tecton also wouldn't be here if it didn't have big financial backers and covert intermediaries. SFR tracked the paper trail.
Finally, Tecton could be forced to pack up and go home if state and county officials stand up for their constituents. SFR has marked the angles.
Black Ferrill #1 pumps much to the annoyance of local landowners.
***image2***The mic shook in Dirk's hand as audience members yelled and cursed. Fifteen minutes before the end, one person asked Dirks about himself; his answers challenged the audience's preconceptions.
For example, Dirks does know what it's like to have someone drilling in his backyard; his home in Houston is situated on property owned by a major oil corporation. He signed an agreement not to protest if it places wells on the street medians.
He believes the world has, at most, a few decades worth of oil left and his mission is to keep producing-as cleanly as possible-the oil the US will need to make the transition. He has been a fellow, since 1999, at the Aspen Institute, a think tank, which, among other endeavors, is trying to find a sustainable, clean-energy solution.
And if, as one of the very last speakers suggested, Dirks thought Tecton's fracking chemicals could cause autism: "I wouldn't stand for it."
What he didn't explain, though, is why the acquisition process of the oil rights in Galisteo happened so surreptitiously.
Tecton began leasing mineral rights throughout the Galisteo Basin in March 2006. By August 2007, it had accumulated approximately 65,000 acres worth of rights. Tecton also has leased 50,000 acres in Bernalillo County from Albuquerque-based Atrisco Oil and Gas.
While the Albuquerque deal was made public in New Mexico Business Weekly, the Galisteo Basin transactions were conducted quietly and, one could argue, covertly.
Perhaps the most suspect transaction in the paper trail occurred in March 2007, when a "company" named Galisteo Green Energy Alliance Inc. successfully bid $213,200 on 4,495 acres of oil and gas rights owned by the state.
As far as SFR can determine, there is no company named Galisteo Green Energy Alliance. The company filed its credentials with the Public Regulation Commission seven days after the purchase, listing as its purpose "energy conservation." It even registered a simple Web site, with a banner of stick-figure children holding hands with a tree to illustrate its mission:
"To provide a forum and educational opportunity for all Santa Fe County residents to understand the wind, solar, biomass, and other natural resources available to us to aid in our personal well-being and economic growth."
The site also claims the Alliance was formed by "neighbors and ordinary citizens" but, so far, SFR has not located a single Galisteo resident who had even heard about the Alliance before screen captures of the Web site were distributed by one affected landowner, James Ziegler, to other opponents.
On April 10, the Alliance transferred all the rights it had purchased to Tecton Energy and then vanished. The PRC revoked the Alliance's license when it failed to meet its reporting requirements 30 days later. The Web site, too, disappeared abruptly. Its PRC filing named Cassandra Hawkins as the company's president and Kerry Walsh as the incorporator. SFR was unable to locate Hawkins and Walsh, although individuals with those names are listed in New Mexico phone books in Portales and Messila Park, respectively. Neither returned phone calls.
However, the Alliance's registered agent is Business Filings Incorporated, a firm listed with an address at 123 E. Marcy St. in downtown Santa Fe, but with corporate offices in Madison, Wis. Among its services: advising business owners, particularly eBay resellers, on the advantages of fictitious business names.
Tecton's main investors are more concrete. By June 2007, Tecton had amassed $132 million in equity funding backed by two major investment firms: Jeffries Capital Partners and Quantum Energy Partners.
Quantum is a $3.2 billion investment firm that focuses on funding entrepreneurs like Dirks, who pursue speculative resources in areas like the Galisteo Basin. Quantum requires these entrepreneurs to throw in their own money and Dirks tells SFR he has a significant chunk of his net worth tied into Tecton's projects in New Mexico and Canada.
***image4***Clearly, investors expect to see big returns.
Quantum's cofounder Wil VanLoh, who also sits on Tecton's board, told Bloomberg news service in April 2007 that while a 1,000 barrel-a-day field that "can be raised to 2,000 or 3,000 barrels a day" is insignificant to big companies like Exxon and Chevron, "the management teams we deal with can get filthy rich off of that, and they do."
Some residents worry that Tecton's ultimate plan is, in fact, to sell out as quickly as possible to a large oil company. Indeed, there is precedent. In 2002, Quantum helped a small company called Rockford Energy Partners raise $15 million to drill for coal-bed methane in the Cherokee basin in southeast Kansas. Less than two years later, Rockford sold its assets for $56.8 million.
"Rockford's textbook execution of buy, exploit and sell strategy is a testament to what happens when you combine great management with a focused strategy and the proper capital structure," VanLoh said in an August 2004 press release. "Quantum is proud to be associated with such a fine team of oil and gas professionals."
If Tecton does plan to sell out, first it will have to see what exactly there is to sell.
Tecton isn't the first company to try to find out what lies beneath the Galisteo Basin, and it didn't pull its 100-million-barrel (and perhaps 10-trillion cubic feet of natural gas) estimate out of thin air.
Drilling in the region goes as far back as 1918, but it was a wildcat geologist named Bruce Black who, in the 1980s, produced the fever-inspiring research and drilled the wells Tecton currently is pursuing.
According to news reports at the time, Black mapped the Cretaceous geology and proceeded to drill the first test well in 1980. Fifteen more test wells were drilled and, while some did find relatively small amounts of oil, those early wells proved a commercial disappointment.
A quarter century later, in 2005, Tecton announced it had retained Black's services as a geological consultant "working on prospect development in the US and Canadian Rocky Mountains," according to a Tecton press release.
Contacted by SFR, Black, president of Farmington-based Black Oil Inc., declined to comment on his research or Tecton's current plans. He said he needed to get permission from Tecton, but its chief officers have been in rural Canada and, as a result, were unreachable. Subsequent calls to Black were not returned.
But SFR has obtained a technical paper Black wrote sometime after 2001 in which he argues that the time is right to reconsider exploration in the so-called Rio Grande Rift.
"Further discoveries of commercial oil and/or gas accumulations are considered probable," Black writes, "but this new frontier area is deceptively complex."
He concludes that after reinterpretation and reprocessing of seismic data, the question "is now more a matter of when, rather than if, a commercial discovery will be found."
That's heady stuff in a world of ever-climbing petrochemical prices. But Black's conclusions-and Tecton's aspirations-might not be purely based on science.
"A company can issue an announcement that says there's a lot of oil there," Peter Scholle, also the director of the New Mexico Bureau of Mines and Mineral Resources at New Mexico Tech, says. "They do that to attract a lot of investors. And they might be right, but it's really like buying a ticket in a lottery."
Scholle says while the odds of finding oil may not be quite as far-fetched as winning the lottery, they are long.***image5***
When it comes to gaining approval for its work in Santa Fe County, however, Tecton doesn't appear to be leaving anything to chance.
No lobbyists. That's what Dirk told residents, also at the contentious November meeting. Tecton, he said, was not paying anyone to try to influence the Legislature or the County Commission on its behalf.
SFR has since learned that Luke Otero, a veteran Roundhouse lobbyist for clients like Chevron and the Alliance of Automobile Manufacturers, approached Santa Fe County Commissioner Mike Anaya and offered to take him on a site visit to Black Ferrill #1. Otero tells SFR that he's been working as Tecton's "government relations guy," but that county rules don't require any registration or disclosure.
While Otero has not listed Tecton as one of his clients with the state, he says he'll do so prior to the January legislative session. "I'm just one of many that are part of the team," he adds.
Bob Gallagher, president of the New Mexico Oil & Gas Association, is another one of Tecton's insider advocates. He's defended the company's plans at meetings and in published newspaper commentaries. According to Gallagher's bio on Refinery Science Corporation's Web site, for which he serves as chairman of the nominating and compensation committee, he also "worked closely and provide[ed] input" to Vice President Dick Cheney's highly secretive national energy policy task force. Gallagher didn't return calls seeking comment for this story.
Tecton may have heavy hitters working on its behalf, but in some ways the law is already on its side. Unfortunately, Galisteo Basin residents learned this too late.
Architect Scott Taylor and his wife, Amy, bought their plot of land on the Cash Ranch in April 2006 and moved into the ranch's old headquarters in October.
In the spring, Tecton set up operations and that's when the nightmare began.
The architect's home is a quarter mile from Black Ferrill #1 and he says the carbon monoxide stink from the drill's propane generator is carried
by the breeze. The noise from the generator, a low bass rumbling, was omnipresent during the summer, Taylor says. He plans to contract audio ecologists to determine how the noise is affecting the land, the animals and his own mental health.
Under archaic common law in New Mexico and most of the West, land is split into two types of estates: the surface land and the mineral, gas and oil rights beneath it.
Surface owners are legally obligated to allow the companies that lease the mineral rights onto their land. Eric Jantz, staff attorney with the New Mexico Environmental Law Center, concedes that the mineral rights are the "dominant" legal estate, dating back to a time when the development of a wide open frontier was the goal.
***image6***Originally Taylor had bought the land with plans to develop a self-sustaining organic farm and add to his menagerie of animals, which so far includes six collies and two horses.
"To tell you the truth, we've been working a lot on this property, but I've been in a kind of depressed state," Taylor says. "Our dream has just evaporated right before our eyes."
SFR has learned that a man named Don Cash sold Taylor's dreams for $1.
SFR's paper chase was long and winding, from the State Land Office to the Santa Fe County Clerk's Office to the State Engineer's Office and back to the county clerk. According to the County Clerk's Office, mineral rights holdings are not usually kept on record, and those the office does have are often confidential. In the end, SFR was able to obtain documentation for five deals between Tecton and private sub-surface rights' owners in Santa Fe County.
Hardly a month after Taylor bought his property, Cash, as special administrator for the Hazel Cash Ferrill estate, the original owners of Cash Ranch, sold seven existing well bores to Tecton for a buck.
"Why should I tell what I did?" Cash told SFR over the phone, from his home in Rio Rancho. "It's nobody's business but mine and my lawyer."
The sale did affect others, however. The well bores are all on the Cash Ranch, which, according to legend, was won by Hazel Cash Ferrill in a poker match. After her death, and a dispute over her will, her estate was assigned to 20 other individuals and estates. These stakeholders include several prominent Albuquerque residents, such as Hazel Tull-Leach, executive director of the University of New Mexico Hospitals (and Lobos booster) and Bruce Black, the geologist.
Supreme Court Justice Richard Ransom is also named in the ownership of the trust. Ransom says he acquired a stake in the estate as payment for services rendered in the will dispute a quarter of a century ago, well before there was any real prospect for oil exploration.***image7***
"I have no control over any decision, but I think there have been some distributions from oil exploration or leases," Ransom says. "I do know that I have some interest because I did a get check sometime several months ago."
Although Cash's lease only lists a $1 sale, there may have been other considerations left unlisted. Ransom tells SFR he recently received a check for $250 from the Cash Ferrill estate for his 0.09 percent interest in the land's oil and gas rights. The total royalty, by reverse calculation, would have been $277,000.
"Most people don't want the public to know exactly what their business is," John Michael Richardson, president of J Bar Cane Inc., an oil exploration firm in Stanley, says. "So, if I give you $10 and 'other valuable considerations,' it shows the consideration was paid, the contract is a legal document, but it doesn't reveal either party's personal business."
Richardson is a contractor for Tecton; he researches the ownership of certain tracts of land, reports back to Tecton and then, with Tecton's go-ahead, acquires the rights. On July 26, 2007, Richardson signed over to Tecton two oil leases he'd bought from John J and Michael Cunningham. SFR was unable to locate either individual. The leases are for land near the Ortiz Land Grant in the Galisteo Basin. Neither lease was presented on the list of proposed wells Tecton made public earlier in the fall.
***image8***Knute H Lee Jr., president of KHL Inc., is another Tecton middleman. On Dec. 4, 2006, Lee handed over to Tecton 223 acres worth of oil and gas leases near County Road 42.
"It's very difficult to find [mineral rights owners]," Lee says. "Almost always, an extremely high percentage of people lease…and then they usually get a bonus on the front end."
Lee acquired the leases from Gary Kirk, a retiree living in Placitas. Kirk claims the lease he signed stipulates Tecton use "sound methods" that will leave only a "minimum impact" on the land. He also says he inserted significant "verbiage" to protect water resources.***image9***
"Why would you keep them forever if no one's ever gonna use them?" Kirk asks. "I think it's best to try to control it. And I don't think we can stop it. I'm surprised they found what they've found so far. I wasn't planning on [getting anything financially], but the way it looks now, maybe it's a possibility."
The standard royalty for mineral-rights owners is one-eighth or 12.5 percent, Lee says. However, in June 2007, an owner named Sue Harivandi scored three-sixteenths or 18.8 percent royalty from Tecton on top of her $10. The 812 acres of oil and gas rights is comprised of three tracts of land in the Galisteo Basin and includes the eastern part of Cash Ranch, where Tecton hopes to drill the Bruce Black #5-1 well.
Harivandi is the daughter of the late oil entrepreneur Caswell Silver, whose legacy includes a foundation that provides more than $100,000 each year in funding to the University of New Mexico Department of Earth and Planetary Sciences.
According to county records, Harivandi sold the rights to Tecton through Blue ***image10***Door Inc., a company registered in Colorado in 1999. The company shares identical registration data with another Colorado company, P&M Petroleum Management, which is also listed on the lease. (Incidentally, P&M was fined $13,000 last year for violating Safe Drinking Act reporting requirements regarding its three oil wells on the Unitah and Ouray Indian Reservation in Utah.) Harivandi did not return calls seeking comment for this story.
The largest sale of oil and gas leases was brokered between Tecton and Anne P Russ of Ortiz Mines Inc. on Aug. 3, 2006. For an undisclosed sum, Russ leased to Tecton 54,067 acres of the Ortiz Mine Grant, a tract of land on a gold vein in the Ortiz Mountains. The contract is for a minimum of five years, provided Tecton's four planned wells produce profitable quantities of oil and gas. Russ also did not return SFR's calls.
The landmen who brokered these deals say if the surface folks are unhappy, they only have themselves to blame-often times, the land is cheaper because the subsurface rights aren't included.
"I understand the people in the Galisteo Basin are upset, but the reservation of minerals is a real property right," Richardson says. "It's in every state in the Union and has been ever since we've been the United States…when these people buy these properties, the responsibility is on their part to find out what they're buying."
And now it's the responsibility of government officials to explore what options are left.
It's Dec. 6, and the county attorney, the entire Board of County Commissions, a few legislators and state Oil Conversation Division officials sit at a long table on a hardwood basketball court listening to the concerns of approximately 800 concerned residents. ***image11***
The visual metaphors of the Santa Fe High School gymnasium are clear and accurate: The ball is clearly in the government's court. The county is drafting a new ordinance to regulate oil and gas drilling operations. After it approves it-probably sometime early next year-Tecton can then submit both its county and state permit applications to drill.
The crowd fills both the lower and upper bleachers, and stomps hard-like it's a Demons playoff game-whenever a speaker argues for regulation that will make it nearly impossible for Tecton to drill. Candidates for upcoming elections, like Democrat Brian Egolf, who hopes to succeed state Rep. Peter Wirth, D-Santa Fe, position themselves in the crowd. Egolf is in a suit and tie, sitting second row, center court, behind Kim Sorvig, an environmental landscaper who will be directly affected if Tecton expands its well operations. Meanwhile, County Commission candidate Mark Martinez is up above, leaning on a railing. He's passing out a flyer that makes his position as a would-be commissioner clear: "I will push to impose as many restrictions as possible so that no company will want to drill in Santa Fe County."
This pressure puts Stephen Ross, the county attorney, in a precarious position. He knows the natives are restless, but argues that the Commission must craft an ordinance that will keep the county out of expensive litigation. Tecton, he tells the crowd, does have some rights to drill. Last week, Ross revealed the first draft of the ordinance, which has generated mixed reactions, to put it mildly.
***image12***Commissioner Mike Anaya, too, is in a difficult position. At the public meeting on Nov. 15 at El Dorado Elementary, Anaya promised the crowd he'd strengthen the existing regulations. In an interview with SFR, the Galisteo native says that some provisions might, in fact, be weaker even if the overall ordinance is stronger than the existing hard-rock mining ordinance.
Anaya moderates this second meeting (a third is scheduled for Jan. 7) and reaffirms his commitment, though it is Commissioner Harry Montoya, a candidate for Congress, who comes out hard and strong against drilling, almost to the point of pandering. Meanwhile Commissioner Virginia Vigil remains planted in her seat, awkwardly silent, just as she did during the previous meeting.
Commissioner Jack Sullivan tells SFR he also wants to see strong regulations, but is concerned that the ordinance could cross the legal threshold and open the county to a Tecton lawsuit. (On that point, Jantz, of the New Mexico Environmental Law Center, isn't persuaded. He predicts litigation regardless of how the final ordinance reads.)
But this isn't only a county issue. The state Oil Conservation Division is in the process of approving new rules for drilling pits, which will affect the oil industry as a whole. OCD Director Mark Fesmire sits near Wirth, who was instrumental in passing the Surface Owner Protection Act in the 2007 session. Wirth in turn issued a letter to the OCD, asking for a six-month moratorium on drilling in the Galisteo Basin. The County Commission took similar action, at Anaya's behest, passing a three-month moratorium.
Activists like Johnny Micou, who runs the informational blog DrillingSantaFe.org, hopes to stall the decisions long enough to cement an election issue.
"I've never been political in my life," Micou says, adding that he plans to hold Anaya's "feet to the fire and make sure he's true to his word."
Directly affected landowners, including Scott Taylor, state absolutely they won't vote for anyone who makes it easy for Tecton to drill. However, it will be up to individual voters to decide whether the issue, which on the surface seems to affect only a few isolated rural residents, is a deal-breaker.
So far, that seems likely: Voters are clearly engaged.
Take, for example, André Jones, a 19-year-old who owns no land whatsoever and lives on the north side of Santa Fe, nowhere near the Galisteo Basin. He's already energy conscious, spending only approximately $10 on gas each month to ride his scooter to Ecco, the downtown café where he works.
Jones attended the Dec. 6 meeting as a youth representative, he says, because drilling "is gonna hurt our water and the ecology and everything."
Jones' county commissioner is Harry Montoya. Despite the commissioner's vocal opposition, Jones says he wasn't impressed with the overall silence that came from the meeting's panel of politicians. He'll "definitely" vote against any official who enables Tecton.
"It pisses me off," Jones tells SFR the next morning. He's fuming about the possibility of oil drilling and the culprits, both private and public, who may succeed in making it happen.
There may be oil under the Galisteo Basin, but Jones wants to prove that people are Santa Fe's dominant natural resource.
Back to the Future***image13***
Scoping out the worst/best-case scenarios.
Tecton's controversial push to open up the Galisteo Basin to oil exploration could lead to a number of different outcomes-both good and bad, but mostly bad. Here's a rundown:
2. Speaking of emergency plans, residents are so far unimpressed with Tecton's plan in case of fire or an explosion. The nearest fire station is seven miles away from Black Ferrill #1 and, according to Santa Fe County Fire Chief Stan Holden, Tecton has yet to meet with the department to discuss emergency response plans. Nor are they required to do so, something Holden says he would like to see changed. Like many roads in Santa Fe County, the narrowness of County Roads 55A and 55B would barely be able to accommodate emergency vehicles, let alone provide residents a clear escape route. Furthermore, Holden echoes the concern of many residents that the dry vegetation and high winds in the area could fuel a large-scale brush fire if something went wrong with one of the wells.
3. Tecton could indeed find the 50 to 100 million gallons of light-sweet crude oil in the Galisteo Basin. Dirks has already told the public that in that case, residents could expect major oil corporations, such as Shell and Conoco, to swarm the region, drilling their own oil wells. Residents point out that San Juan County was a victim of such an oil surge and have superimposed the San Juan's well infestation upon the Galisteo Basin. This image is used in newspaper ads the group as purchased. Such a development, residents say, would transform the area into an industrial wasteland in which the value of their residential properties would plummet.
4. Instead of oil, Tecton could find large natural gas deposits in the region. In fact, many opponents reckon that is Tecton's ultimate plan, since oil exploration permits also allow for gas exploration. Gas is a different beast altogether, and could require Tecton, or whomever it passes the lease to, to build a network of a gas pipelines across the landscape. Again, this also would significantly impact property values. If the gas turned out to be sulphur-rich gas, residents would also be confronted with a rotten-egg stink; direct exposure to such "sour" gas may be lethal.
5. Tecton could live up to its ecologically sensitive promises, including the use of the environmentalist-supported "closed loop" mud systems, recycling of frack water, directional drilling and restoration of the land following drilling. If nothing went wrong, residents-many of whom moved out there to pursue green, ecologically low-impact lifestyles-will be reminded of America's wasteful energy practices with a giant metallic phallus in their front yards. In the case of Steve Sugarman and Jim Ziegler, their view of the road will be almost totally eclipsed by Tecton's relatively small pump set-up.
1. Tecton's exploration could prove a bust. It could abandon the project and be unable to find another drilling firm willing to take the financial risk.
2. Peter Scholle, the state geologist, says there are many ways Tecton could drill for oil and minimize its footprint. He lists camouflaged oil wells in the heart of Los Angeles, and directional drilling techniques that use one pad to drill out in multiple directions. "The technology today is totally different than what it was 20 years ago," Scholle emphasizes. He also suggests that contaminating underground water supplies is unlikely given the use of steel casing that isolates the hole that is drilled for each well.
3. Tecton could hold onto the leases, find a compromise with the community and, as a result, the oil drilled could directly benefit New Mexico consumers, perhaps even ease the price of gasoline. Dirks says he predicts that the US only has a few decades of oil left, and drilling operations such as this would serve as the crutch to move the US onto alternative energy sources.
4. Lastly, drilling could be a boon to dinosaur fossil hunters like Spencer Lucas. "Oil exploration has always helped paleontology," he says, adding that oil drilling dredges up bits of fossils that are often used to determine the age of rocks. As such, Tecton's operations could provide a new glimpse into the Galisteo Basin's prehistoric history.