Craig Daily Press

The city of Craig plans to build a picnic area, boat ramps and other facilities on a city-owned parcel of land on the eastern edge of Elkhead Reservoir.

But the Bureau of Land Management is offering the minerals under the city's 40-acre property for lease.

The prospect of drilling on the property could put the city's plans in jeopardy.

The city's property is part of 196,000 acres in Colorado being offered for oil-and-gas development at auction next month.

The Craig City Council will discuss the possible mineral leasing at its meeting Tuesday night.

City Manager Jim Ferree said that just because property is leased doesn't mean it will be drilled on.

But if the property is leased, the city wouldn't have any guarantee that drilling would not occur, Ferree said.

"I would prefer it not be drilled on," Ferree said.

A $32 million reservoir expansion project is under way at Elkhead.

The project, which started in 2004, is expected to be complete by 2007. Ferree said construction could begin on the picnic area after the expansion project is complete.

The city is working with Colorado State Parks and the Colorado River Water Conservation District on construction of picnic areas and boat ramps.

Elkhead also is a backup water supply for the city of Craig.

Ferree said the city could use Elkhead as a water supply if the city grows in the future, but the water supply isn't the city's chief concern right now. The city's main concern is surface activity on its property, he said.

David Boyd, a spokesman for the Northwest Colorado BLM, said the bureau is talking to the city about what options the city has to stop or limit drilling rigs on the city's property.

The city's options include protesting the lease or asking the BLM to put stipulations and restrictions on drilling activity, Boyd said.

Boyd said the energy industry nominated the parcel of land for lease but declined to say what company nominated it.

Barbara Blackstun, natural resources specialist at the BLM Little Snake Field Office in Craig, said there has not been development near Elkhead in recent years.

Blackstun, who specializes in oil-and-gas development, said most of the development in the Little Snake resource area occurs in northern Moffat County.