December 15, 2011
Oklahoma

Testimony begins in Osage County wind farm trial

By DAVID HARPER World Staff Writer, www.tulsaworld.com 14 December 2011

A Tulsa-based independent oil and gas company plans to drill in an area that is targeted to be the site of a proposed massive wind farm in Osage County, according to testimony heard by a Tulsa federal judge on Wednesday.

U.S. District Judge Gregory Frizzell is presiding over a non-jury trial in a lawsuit brought by the Osage Nation, which seeks to stop construction of the potential 94-turbine facility northeast of the town of Burbank.

The Osage Nation, through the Osage Minerals Council, filed the complaint on Oct. 18 against developers Wind Capital Group, Osage Wind and WC Investment Management.

The lawsuit asserts the tribe is the owner of all the minerals located “in and under” Osage County and claims that construction of the wind turbines – as well as an associated network of electrical lines and roads – would interfere with future oil and natural gas production.

The tribe stated in its lawsuit that revenue generated from the mineral estate through such production provides “essential” income for eligible Osage citizens and that “several million dollars in annual revenues generated from the Osage Nation mineral estate are paid to Osage County and the State of Oklahoma for roads and schools.”

The developers countered in subsequent court papers that the tribe is attempting to stop an effort “to harness a clean, environmentally friendly energy source” based on theoretical barriers the tribe says the project would create for “possible future oil and gas exploration at unspecified locations.”

However, Orion Exploration vice president Daniel B. “Skip” Honeyman III testified Wednesday that the Tulsa-based company is planning to drill in the same area where the wind farm would be built.

According to the tribe’s trial brief, the Osage Nation entered into an agreement with Orion Exploration – a pact which was approved by the Bureau of Indian Affairs on Sept. 23 – to drill at least 18 horizontal oil gas wells by early November 2014, with the first five wells to be completed by Nov. 4, 2012.

A document filed by the defense this week states that the tribe’s agreement with Orion involves more than 19,000 acres, with less than 2,500 of that total overlapping with the location of the proposed wind farm.

Honeyman, who is a certified professional geologist, testified Wednesday that while the first two anticipated drilling sites lie outside the wind farm area, the third one is within the boundaries of the planned wind farm development.

The tribe argued in a document filed Monday that the cost to drill a horizontal well starts at $45,000 to $50,000 a day and that moving a horizontal well even 100 feet from its ideal location costs an additional $100,000 to $200,000.

Yet, the defense has argued that Orion has outlined “tentative well locations” but that the final sites will not be determined for some time. It also asserted Orion is not obligated to drill within wind farm boundaries to keep to the terms and deadlines of the Tulsa company’s agreement with the tribe.

Defense attorney Craig Fitzgerald said during an October hearing that the wind project must start no later than mid-December or it will not be completed by the end of 2012 – which he said is the cut-off to qualify for a vital federal tax credit.

Because of that urgency, Frizzell took the unusual step of consolidating the preliminary injunction hearing in the case with the trial itself.

The testimony is slated to last through Thursday, although it’s unclear whether the judge will rule from the bench then or whether he will take the matter under advisement and then issue a prompt written ruling.