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Wyoming Proposes Increased Drilling Setback Distances

The Wyoming Oil and Gas Conservation Commission (WOGCC) on Tuesday proposed increasing the setback distances for oil and natural gas drilling to 500 feet from 350 feet and recommended landowner notification rules.

The Petroleum Association of Wyoming (PAW) said it supported the rules, which also include landowner notifications, but with some reservations. The changes follow on  expanded exploration and production activity in the southern Powder River Basin and Laramie County in southeast Wyoming.

PAW Vice President John Robitaille told NGI’sShale Daily that the state commission has been "very proactive in listening to both sides of this issue," and "we will continue to follow the process for rule promulgation and provide comment and additional input to WOGCC."

Robitaille emphasized that the industry association's intent is to "create a fair and equitable rule." He called the proposal a "good first step to better inform the public," and that the added mitigation measures eventually taken will be "well thought out and respectful of every situation."

PAW is concerned that the increase in setbacks would carry some economic consequences on operators and for state royalty/tax revenues.

"We're building some data to show exactly how much resource may be lost in certain situations” because of the setback revisions, Robitaille said. "The potential is there for lost revenues in taxes and royalties for the state. But to what extent that  is I am not sure, and those are questions we are currently working on and hope to have something ready by the time we submit testimony” for any public hearings. He called it a "hot button" issue.

A bigger concern may be the so-called "communication zone" requirement for any occupied structures within 1,000 feet of a wellsite whether or not it is on leasehold lands. Going off the lease is where PAW has concerns, Robitaille said. Legal rights of occupants on and off leases differ. For those people not on a lease, WOGCC proposed that information be provided up to 180 days before drilling begins.

"Notification implies a right that does not exist" for occupants off of a lease, "so that is why we are calling it a 'communication zone,’" said Robitaille. He said the requirement when the drilling is near a subdivision or city limit, the operator would be required hold a meeting to explain plans for drilling in the 1,000-foot zone.

"If you were trying to drill on a lease line, and across the lease was an occupied structure, and it fell within the 1,000 feet, you would be obligated to give people a variety of information on your plans," Robitaille said. He acknowledged that WOGCC incorporated input from environmental groups and industry in its proposed changes.

"Historically, operators have only worked with landowners who are on lease," he said. "This proposed rule would require operators to expand into areas off lease to better inform and communicate."

Following a public comment period, WOGCC expects to finalize rules by the end of March.

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