SUBLETTE COUNTY – Jonah Energy LLC plans to consolidate and complement its natural-gas holdings with its agreement this week to acquire LINN Energy’s properties in the Jonah and Pinedale fields.

Separately, Jonah and LINN’s proposal for five years of continuous year-round development (YRD) were approved with added wildlife mitigation in March 2016 in the Bureau of Land Management’s (BLM) Pinedale Field Office (PFO).

The purchase agreement, announced Tuesday with an estimated price tag of about $580 million, will add LINN’s interests in more than 1,200 currently producing wells – more than half now operated by Jonah – and 27,000 net acres, of which more than 80 percent are undeveloped.

“This acquisition is an extremely important one for our company,” said Paul Ulrich of Jonah. “Of all of the potential acquisition targets out there, this is the one we’ve coveted the most. The acquisition of these assets further concentrates and expands our operating position. It adds a significant amount of existing production and doubles our reserves. Most importantly it provides us with significant and very attractive drilling inventory.”

This transaction, to be completed this quarter, makes Jonah the largest operator in the Jonah field, Ulrich said, with production of more than 450 million cubic feet equivalent per day net from more than 2,100 producing wells, across 145,000 acres of the Jonah, Pinedale Anticline and Normally Pressurized Lance (NPL) fields.

The PFO’s environmental assessment (EA) acknowledged that crucial pronghorn winter range and migration as well as two sage-grouse leks are located in or near the YDR project. The 2016 decision record states with added mitigation the seasonal restrictions would be lifted for drilling and fracking, with a “finding of no significant impact.”

Jonah and LINN received the PFO’s green light and planned to begin development later this year; Jonah is already gearing up, according to Ulrich. Buying LINN assets means Jonah Energy to develop further under the YRD project, he added.

“We are currently running three rigs in Jonah and expect to begin developing the acquired acreage in the second half of 2017,” he said in an email Tuesday. “Linn was a partner in the YRD EA project and the benefits of that project will certainly be enhanced by this acquisition.”

Ulrich added, “For those who aren’t immediately familiar with LINN Energy’s assets in the Jonah and Pinedale fields and NPL area, they hold interests in over 1,200 producing wells (approximately 400 of which LINN Energy operates and about 750 of which Jonah Energy operates), and approximately 27,000 acres – more than 80 percent of which is currently undeveloped.”

The operators had asked the BLM to lift seasonal and time-of-day restrictions from March 15 through June 30 at the Piceance Creek location due to greater sage-grouse nesting and early brooding, pronghorn migrating and winter foraging. It also requested and received lifting of the Nov. 15 to April 30 restrictions due to pronghorn presence.

In return, Jonah (and LINN) proposed year-round development on a greatly reduced development footprint “relative to what is authorized under the current (Jonah Infield Project Development Area) record of decision (ROD).”

They proposed drilling the same number of wells authorized in the 2006 ROD, but from 24 multi-well pads rather than 245 single-well pads, citing total disturbance would drop from 1,315 acres to 232 acres.

Ulrich explained at the time that the operators need “a sustainable level of development” to make further projects economically responsible. He also said modern and improved technology to drill directional wells from one pad – not anticipated in the Jonah in 2006 – would result in less human activity, traffic and disturbances at the Jonah Infield.

“The EA took a very close look at impacts to both pronghorn and greater sage-grouse and found that under the proposed action habitat loss would be more than 1,080 less than what was analyzed under the 2006 JIPD FEIS,” the BLM said in 2016. “… Overall the EA found that the proposed action reduces impacts to wildlife.”

In the YRD ROD, the BLM noted, “In terms of oil and gas development, the BLM mitigation alternative is identical to the proposed action.”
In addition, “under the BLM mitigation alternative, the BLM will require operators to convert 3 miles of problem fencelines into drop-down fences and modify 10 gates/ crossing locations in known pronghorn crossing areas.”

The ROD also addresses noise levels near two nearby sage-grouse leks: “The BLM … requires noise mitigation to reduce noise levels 40 decibels or below.” A noise-level study was posted with the PFO documents, advising mitigation for one well pad during drilling and fracking.

Ulrich is positive about the benefits from the new acquisition, stating the new larger Jonah Energy will bring a lot of good to Sublette County.

“As we grow, the local economy will,” he said. “Increased production and activity results in increased employment opportunity and also increased tax revenue, which has a huge benefit to the local economy.”

Jonah Energy is also planning to increase development in the Pinedale Anticline and the NPL fields. 

“We will also be getting a nice foothold in the Pinedale Anticline Field with about 40 operated wells and a large number of drilling locations,” Ulrich said of the transaction.

“We remain focused on obtaining authorization to develop our acreage in the NPL area,” he said. “The NPL holds the potential for substantial incremental oil and natural gas reserves and has the benefit of being located adjacent to our existing infrastructure and operations. We are continuing the process of finalizing an environmental impact statement (EIS), which upon completion will allow full-scale development operations in NPL while protecting agriculture and wildlife resources.

The NPL’s EIS has been awaited; Ulrich said they expect to see the draft EIS for public comment “in the coming weeks and a final decision and authorization late this fall. We see a lot of potential in our future.”

To read Jonah Energy, LINN and PFO documents for the JIPD Year-Round Development, go to http://1.usa.gov/1Kv2HEf.