Tribes look for black gold

Paul Covers Up of the Crow tribe lights a natural gas flare recently northeast of Hardin, Montana. Gas is among the natural resources the tribe wants to develop on its land.

CROW AGENCY, Mont. — They tried casinos on the Crow Indian reservation. The one designed to bring in the biggest crowds, Res-a-Vegas, went bust within a year and is now a fireworks stand.

But now the Crow are convinced a really big jackpot lies below the surface: coal.

With energy prices soaring, the poverty-stricken Crow want to tap the vast deposits underneath their 2 million acres of land. The tribe estimates the ground contains 9 billion tons of extractable coal, or enough to meet the nation's needs for almost a decade.

"We're not just trying to help ourselves today," said Joanie Rowland, who directs the 12,000-member tribe's nascent energy program. "We want to set up the reservation so that it will prosper and help the future generations."

Federal red tape, turbulent tribal politics that can scare off big business and environmental worries have prevented some of the West's impoverished tribes from fully exploiting their oil, gas and coal deposits. But now, rising demand for energy, along with new federal laws giving Indians more say over their mineral resources, could help the Crow and other tribes get their way.

"There's a misconception about Indian tribes that they all have big gaming revenues. We don't have that," said tribal Chairman Carl Venne. "But we do have vast resources."

The Crow reservation lies about 60 miles from the nearest city of any consequence, Billings. It is on the remote northern edge of the Powder River Basin, which produces nearly half the nation's coal and hundreds of billions of cubic feet of natural gas annually.

Life on the reservation, however, is defined by a different set of numbers: 47 percent unemployment, a per capita income of just $7,400 (one-third the national average) and federal health care subsidies that run dry six months into the year.

Much of the land on the reservation is used to grow wheat and sugar beets and raise cattle. The reservation also has natural gas and oil deposits, and the tribe is working to exploit those, too. But the coal is believed to hold a much bigger potential.

The tribe is looking to extract the coal and build a multibillion-dollar coal-to-liquids plant that would process the rock into diesel and other fuels. Tribal leaders say that if they could tap their underground riches, they could expand their clinic and upgrade the reservation's aging roads and water system.

Not all the tribe's coal remains buried. An outside company has been extracting coal since 1974 from a mine just off the reservation. Since the tribe owns the mineral rights, it has been receiving royalties, about $10 million last year alone.

But tribal leaders say that is not enough to relieve the reservation's poverty. And rather than just leasing land and collecting royalties, they want to become an actual partner in such projects.

Around the country, at least a dozen Indian tribes are pushing for agreements with the government that would help them exploit their oil, gas and coal, said Robert Middleton, director of the Interior Department's Office of Indian Energy and Economic Development.

Nationwide, energy royalties paid to tribes doubled over the past five years to $475 million in 2007, according to the government's Minerals Management Service. The increase was driven mainly by rising oil and gas prices, not new projects; actual production remained flat.

Two million acres of tribal land have been developed so far for oil, gas and coal, according to the government. Estimates show an additional 15 million acres have the same potential.

The Crow and other tribes received a big boost when laws governing energy development were rewritten in 2005 to give them more autonomy. The changes were meant to streamline federal approval of projects, though some tribes say they still face a two- to three-year wait for permits.