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For decades, American Indians have relied on non-Indians to develop their energy
resources. But in the past few years, more than a dozen tribes from Arizona to
Montana have taken control of mineral wealth on their reservations.
The move toward tribal control increases employment on reservations
and allows tribes to control their land base - a fact that is of
critical importance, says David Lester, executive director of the
Council of Energy Resource Tribes (CERT) in Denver. "As Indian nations,
these tribes should be making the decisions about how and when their
resources are developed," he says.
With 6 percent of the nation's oil and gas and 30 percent of its
strippable coal on reservations, Mr. Lester says native Americans could
play a key role in domestic energy policy. But their contribution has
been limited because they have been forced to rely on non-Indians to
develop energy resources.
"As long as the tribes stayed as just the royalty owner, the
value-added activities (such as refining or processing) happened off the
reservation, outside of tribal economies," Lester explains.
Founded in 1975, shortly after the Organization of Petroleum
Exporting Countries sharply reduced oil production, CERT was originally
touted as the "Indian OPEC." While the 57 member tribes - 53 United
States and four Canadian tribes - do not have the same influence as OPEC
ministers, they have brought jobs and increased revenue to reservations.
Some tribes have formed independent production companies; others have
entered into joint ventures or production-sharing arrangements.
The Southern Ute tribe of southwestern Colorado has been a leader in
the move toward tribal control of energy resources. Last month, the
tribe completed an $87 million deal to acquire and operate a pipeline
and gas-processing facility. The facilities will allow the tribe to
upgrade gas production and processing. Red Willow Production Company,
the tribe's energy company, has some 35 billion cubic feet of gas
reserves. The tribe operates or has interests in 169 gas wells on its
reservation.
The Jicarilla Apaches of northwestern New Mexico are another success
story. Thurman Velarde, the Jicarillas' oil and gas administrator, says
the tribe got into the business because companies shut down marginal
wells and left the reservation. Marginal wells produce five to 20
barrels of oil per day, and many large oil producers prefer to plug them
rather than operate them.
"We were losing royalties," Mr. Velarde says. "The companies that
had the wells had high operating costs. The tribe could operate them and
still make money on them." Launched in 1980 with five wells, tribally
owned Jicarilla Energy Company later acquired four more wells and
drilled seven more on tribal land. Velarde says the tribe is eager to
expand.
"We are looking to buy existing production or drill more wells,"
he says. However, lack of capital hampers the tribe. Drilling plans have
been put on hold because the tribe lacks money to drill new wells, which
can cost several hundred-thousand dollars each.
David Harrison, an Albuquerque, N.M.,-based consultant to
energy-producing tribes, is encouraged by the activity. He says tribes
are pursuing joint ventures with outside energy companies because "they
want to share in the greater profits of mineral development." But the
member of the Osage tribe of Oklahoma adds that a capital shortage and
the downturn in the domestic energy business have slowed progress. More
jobs, he notes, have been lost in energy in the last 15 years than in
the steel and auto sectors combined.
The weakness of the domestic energy business has hurt tribes seeking
increased energy independence. "It takes a viable industry around them
to make this work," Mr. Harrison says. "The industry itself has been
in such doldrums since the mid-'80s."
While some tribes are looking for increased drilling activity,
others are pursuing different goals. The Navajo tribe is building a
high-powered electric line that will connect the four-corners region of
Arizona, Colorado, New Mexico, and Utah with cities in central and
southwestern Arizona. It is also looking at solar power and other
alternatives that may prove useful to rural tribal members. The
Blackfeet tribe of Montana, which also produces oil and gas, is
analyzing its wind-energy potential.
CERT's goal is to use tribal energy resources to develop viable
tribal economies while preserving tribal values. Toward that end, the
association provides members with technical, geological, and financial
help. Also, it sponsors scholarships to Indian students attending
college in business and technical fields.
Education is the key to continued development of tribal energy
resources, Lester says. "We have to develop tribal people with
technical and professional skills," he says, "so we can eliminate our
technical dependence on others."
ROBERT BRYCE
Christian Science Monitor, 14 September 1994, p. 4.