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Water Issues Could Hinder Powder River Growth
The Powder River Basin of Wyoming and Montana has become one of the fastest growing gas production areas in the nation, maybe even the world, but that could change if agricultural interests and environmentalists succeed in blocking the issuance of water discharge permits by the Wyoming Department of Environmental Quality (DEQ).
"This could affect the pace [of coal-bed methane production]," said Gary Beach, administrator of the water quality division at the DEQ. "I think the basin will continue to be developed, but there is a question now about how fast. We're still accepting permits and putting them out for public notice. Right now were not issuing some of them in certain areas. The question [going forward will be] which wells can be permitted and by what methods."
Each well drilled in the basin begins with a discharge of about 20-90 gallons of salty water a minute and that water typically is dumped right on the land surface and makes its way to streams and rivers in the region. In order to discharge the water, however, producers must file for and receive permits from the DEQ.
The department has been under pressure for some time from irrigators and environmentalists about the quality of the water. Now landowners have stepped in with concerns that the brackish water discharged from coal-bed methane wells could adversely affect their crops. In addition, the state of Montana jumped into the fray and sent a letter to the DEQ expressing concerns about the affects the well water could have on the Powder and Tongue rivers. Attempts also have been made to draw in the EPA by alleging the DEQ violated provisions of the Clean Water Act.
"With that kind of building concern and increased attention from EPA, we felt it was time to have a hearing on how we are issuing permits and making these decisions," said Beach. DEQ has scheduled a hearing for Jan. 3 in Gillette, WY, at City Hall between 1 p.m. and 7 p.m.
In the meantime, the DEQ will continue to evaluate data on water quality with participation from the gas industry and help from the University of Wyoming. It also is continuing to issue permits in the Belle Fourche River drainage area where the wells being drilled discharge better quality water with a lower level of salinity. That area encompasses about one-third of the basin but includes most of the current permit requests.
Much of the development in the basin is moving toward the Powder River. Permits for wells that would drain into the Powder (which represent about 30% of all current permit requests) are being delayed until the outcome of the hearing.
"I think the concerns [about production] delays are true, particularly when you get into the Powder and the Tongue River drainages, the western part of the play," said Beach. "We've got to come up with a resolution of how we deal with Montana's concerns, and that's pretty significant because if we get into a dispute with Montana that brings in other players, including EPA, to resolve it. As you move into the Powder and Tongue River drainage basins, the quality of the water gets much worse and that's where the future gas production is. There's no doubt there are some real challenges."
Beach said water quality is not an issue unless the water is used for irrigation. As a result the DEQ may come up with a seasonal plan in which water can be discharged on the surface in particular areas only certain times of the year.
"I'm not sure I can look in my crystal ball and tell you what the outcome will be. There may be restrictions during certain parts of the year."
If producers want to discharge well water on the surface, whether they are on state, private or federal land they still have to get a discharge permit. "There are other ways to manage the water: re-injection, use it for irrigation. But none of those are as attractive as surface discharge."
Producers also are looking at developing large water collection areas, in which the drainage water is collected and diverted to areas with minimal environmental impact. What water discharge restrictions clearly will do is affect the economics of the Powder River play.
Powder River producers have other things to worry about as well, however. Producers have run out of federal well permits. In August, they had drilled up all of the wells for which they had received permits from Bureau of Land Management (BLM) and had done so five years too soon.
The BLM has been scrambling since April to come up with a quick short-term extension to the federal well limits.
"One of the problems is that nobody really did foresee how extensive a development and a play this was going to turn out to be," said BLM Project Manager Paul Beels. "When we started into [the WyoDak coal-bed play] back in the spring of 1998, we were working closely with industry and were anticipating 3,000 wells initially. We told industry 'let's go to 5,000 wells' and they said, 'geez no, that's way too much'" to cover in the first five to seven years. "Well, it happened in eight months."
The BLM and industry currently are looking at a more realistic 10-year projection of 45,000 wells. "We just have a lot better idea now of what we're looking at. We're looking at somewhere in the neighborhood of 25 and 28 Tcf of recoverable reserves." A year ago the projection was 9 to 13 Tcf. "I wouldn't doubt that [this basin] is now the fastest growing gas production area in the world," said Beels.
The industry reached the federal limit of 5,890 wells on Aug. 11, and BLM started work on the WyoDak Drainage Environmental Assessment in April to add up to 2,500 additional wells over the next 15 months. "We're looking at probably sometime in January at the earliest" for the release of the EA.
In the meantime, producers are drilling as many state and private wells as possible to make up for the slow down on the federal environmental review. However, the DEQ delay on water discharge has hindered their progress.
"I don't look for the DEQ hold-up to last much beyond January," said Beels. "They've basically said that after the end of January they probably will be issuing discharge permits again. I don't look for that to be a long-term situation."
BLM and industry now are planning far ahead with an EIS that covers nine million acres or the entire Wyoming portion of the Powder River Basin. "We're waiting on the final proposed action from industry. We're looking at a draft release for the EIS sometime next summer in June or July and a final EIS sometime around December 2001.
"There is plenty of fee acreage out there to drill," Beels noted. "The industry has modeled the situation and stated that they probably have three to four years of state fee land to operate on, and after that point the federal lands minerals will be driving the plate." The DEQ, however, will be involved all the way through the process having to do with water issues, and could put the brakes on development in the short-term.
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