Under threat: The Diamond Cross ranch in Montana
Posted on 01/09/2008 6:01:24 PM PST by bruinbirdman
A reclusive billionaire whose family owns the Mars confectionery empire has emerged as a determined opponent of the energy industry's plans to develop one of America's last wilderness states.
Forrest E Mars Jr, the 75-year-old former chief executive of Mars Inc, has drawn on his $14 billion fortune to fire off a clutch of lawsuits to prevent drilling for natural gas and coal on his 82,000-acre Diamond Cross ranch near the town of Birney in south-eastern Montana.
Under threat: The Diamond Cross ranch in Montana
The state is famous for its "Big Sky" and breathtaking scenery but, despite its natural beauty and considerable tourism value, local laws in Western states favour the miners and drillers.
Specifically, nearly half of the state constitutes "split-estate" land, whereby landowners do not control the minerals beneath their property.
The mineral rights under Diamond Cross are owned by Fidelity and another company, Pinnacle Gas Resources.
Although state law gives the companies the right to enter Mr Mars's land to drill, he has so far held them off.
"The perception is that it's the big guy - energy companies - versus the little guy. In this instance that's not the case," said Bruce Williams, the vice-president of Fidelity Exploration and Production.
Pinnacle was last night due to challenge in court a legal move by Mr Mars which has stopped its employees entering his land.
Chris Mangen, a Pinnacle lawyer, said: "As a lawyer it should come down to the facts and the law, but there's no denying that money talks."
Tom Richmond, the administrator of the Montana Board of Oil and Gas Conservation, pointed out that as Pinnacle's stock was worth about one per cent of Mr Mars's estimated fortune, he could simply buy the company.
Mars, which was recently ranked America's sixth-largest privately held company, was set up by Mr Mars's grandparents, who started selling chocolates from their kitchen.
Their grandson began to amass property in south-eastern Montana in early 2003, just as natural gas production in the area was booming.
The Mars family has long enjoyed a reputation for secrecy and Mr Mars was not listed as a party in any of the lawsuits launched by his ranch.
His ownership of the land, at the northern end of the Powder River Basin, was only revealed in a court affidavit 10 days ago. The ranch sits in an area with some of the most productive coal and natural gas fields in America.
Mr Mars has refused to comment on the dispute but Loren O'Toole, a lawyer for the Diamond Cross ranch, said his opposition to energy development was rooted in the vast amounts of water that drilling can consume.
For working cattle ranches, such as Diamond Cross, a steady supply of water is a crucial factor in America's arid West.
Mr O'Toole said the lawsuits were not meant to block development. "That's not the point. The point is we can't lose all that water and at the same time have no provision to put it back," he said.
That is true; it is a socialized commons. There is a certain logic to the other side's designation as such. An airplane traversing over your airspace is a temporary thing - wait 30 seconds and it is gone. Transmission of electronic signals is similar - if the TV station stops broadcasting, the atmosphere remains in place.
Extraction of minerals, oil, natural gas, or even water, is extraction of a physical thing (entity) which has a monetary value associated with it. I don't believe the same logic can be used to justify mineral or oil rights to be a socialized commons, or pieces of property whose exploitation rights can be given/sold to companies.
That’s the way property rights have worked in the west since the states were admitted to the US. For example, in Nevada, the state had to cede all lands not expressly claimed as private property to the US government when the state was admitted in 1864. Ranchers at that time were not interested in the land’s surface rights, only water and grass, so that’s what they claimed. Miners at that time were not interested in the surface rights, only the mineral rights. So the way they got to tie up the maximal value for their capital was to get only those rights.
The only outfits that got land in “lock, stock and barrel” deals were the railroads, the historic Mormon ranches and ranches that were deeded lands prior to the 1848 treaty with Mexico. When the trans-continental rails were completed, the US government gave the rail companies every other section for a path 20 miles either side of the rails themselves to the RR companies. This is today known as the “checkerboard” area, and in Nevada comprises a huge portion of what little private land there is in the state.
If I had my preference, the areas west of the 100th parallel would break away from the US and leave the eastern half of the US to wallow in their own problems. But that ain’t gonna happen any time soon, so split estate is what the easterners shoved down on the west over 100 years ago, and it is what the eastern powers use to control the west today, so westerners have to use what we’ve got.
I know a little about drilling for oil. Maybe you’re an expert on drilling for gas and coal.
As one who has knowledge of coal-bad methane gas production, Smokin' Joe is completely correct. Unlike other types of natural gas extraction (where as the field becomes depleted, increasing amounts of produced water [usually very salty] are extracted), coal bed methane production requires dewatering of the coal first so that the gas can be released and captured. Also, most of this water is fresh in the sense it can be used for irrigation and stock watering. The associated issues are complex and frustrating to both producer and landowner.
I wonder how many Billionaires there are on Mars.
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