A U.S. district court judge has denied a preliminary injunction by environmental groups to shut down development of a coalbed methane (CBM) natural gas drilling project along Wyoming's Atlantic Rim.

The memorandum opinion was issued Nov. 30 by U.S. District Judge Richard Leon in U.S. District Court for the District of Columbia (Natural Resources Defense Council, et al., v. Dirk Kempthorne, et al,, No. 07cv1709).

In his review of relevant case law, Leon said the plaintiffs had failed to demonstrate the merits of their claims "or that they face irreparable harm" if the court failed to grant a preliminary injunction. "Moreover, the court concludes that the imposition of an injunction would impose a significant hardship on the defendants and does not further the public interest in either Wyoming or the nation."

The Atlantic Rim project comprises more than 270,000 acres of land in south-central Wyoming that is managed by the U.S. Bureau of Land Management (BLM). The area has been under development by oil and gas producers since the 1950s, and it now is estimated to provide more than 5% of Wyoming's total gas production. In May 2001 a consortium of producers that ultimately included Anadarko Petroleum Corp., Warren Resources and Double Eagle Petroleum submitted a proposal to BLM to drill more than 3,880 gas wells in the area.

After four years of study, the BLM released its final environmental impact study (FEIS) in December 2006 to allow development of the area. In May BLM also issued a Record of Decision (ROD) to allow drilling about 2,000 wells in the area, limiting development at any one time to no more than 7,600 acres -- 2.8% of the total project area (see NGI, May 28). Designated the Atlantic Rim Natural Gas Development Project, the project is expected to produce 1.35 Tcf over its 30-50-year life span.

The Natural Resources Defense Council and the Biodiversity Conservation Alliance, among others, appealed the ROD and FEIS to the Interior Board of Land Appeals, but their appeal was denied in September (see NGI, Sept. 10).

In the meantime, BLM in June approved Double Eagle's drilling permits in the Catalina area of the Atlantic Rim. In August, Anadarko's applications to drill in the Sun Dog area of the Atlantic Rim also were approved. Before approving either proposal, BLM conducted site-specific environmental assessments and concluded that the environmental impacts "were not expected to be significant," and therefore, an additional EIS was not required for either site.

The plaintiffs filed a lawsuit in September, and they subsequently moved for a preliminary injunction to enjoin further development of the 90 sites already approved for drilling and to bar BLM from considering other permits now pending (see NGI, Oct. 1).

Leon said there was no basis to issue a preliminary injunction, and he said the lawsuit had little merit. He noted that BLM had provided for public participation to the extent required under federal law, considered the impacts of the project and took measures to mitigate those impacts. BLM also had "adequately considered alternative mitigation measures" to protect the indigenous sage grouse in the area, and BLM's approved drilling plan "ultimately...includes various mitigation measures designed to minimize the impact of the project on local wildlife," Leon wrote. BLM, he said, "did take a 'hard look' at potential impacts."

The plaintiffs also failed to demonstrate "that they will suffer irreparable harm if a preliminary injunction is not issued," Leon wrote. "Although they argue that development in the Sun Dog and Catalina areas threatens the wildlife and wild character of the Atlantic Rim area and will increase the risk of catastrophic methane seems, the court finds...that the risk of these harms materializing is quite limited.

Perhaps most important, he said, "the development at issue is largely complete. As of early October, Double Eagle had already drilled 15 wells in the Catalina area, constructed connecting roads and completed pads for the central delivery point and two water transfer stations. Overall, Double Eagle estimates that 95% of the surface disturbance anticipated for the project has already occurred. Likewise, Anadarko has already drilled three wells, completed all roads and well pads and was in the process of installing connecting pipelines.

"Given these developments, it is clear that development of the Catalina and Sun Dog areas is already well advanced and that much of the expected damage to the local environment has already occurred. Accordingly, the court cannot agree that plaintiffs face imminent irreparable harm, nor that the grant of a preliminary injunction would have any appreciable effect."

An injunction also "would impose a significant hardship" on the defendants, Leon wrote. "For example, Anadarko claims that it has entered into a $5 million fixed-bid contract for the installation of gathering lines...and that $4 million...will be lost if the preliminary injunction is imposed...Additionally, both Anadarko and Double Eagle have already contracted rigs to drill the wells and that ordering these rigs (which are already on-site) to sit idle will cost the companies $63,000 per rig, per day..."

A preliminary injunction also would not benefit the public, said the judge.

"The development of domestic energy resources is of paramount public interest and will be harmed (at least to some extent) if that development is delayed. Additionally...the Atlantic Rim project will generate millions of dollars in revenue for the United States, Wyoming and Carbon County, a result clearly in the public interest."

Jim Murkin, associate state director for BLM's Wyoming office, said he was pleased with the decision. "It shows we did a thorough job during our land use planning process."

Double Eagle CEO Stephen Hollis said that it was "nice to have the Memorandum Opinion from the court stating that the plaintiffs have failed to demonstrate that they are likely to succeed on the merits of their claims. Now we can center in on getting this play developed and bring on production just as the [Rockies] Express Pipeline gives us more capacity to get natural gas out of the Rockies to the markets in the eastern United States."

Warren Resources CEO Norman Swanton said his company and joint venture partner Anadarko expect to complete 75 CBM development wells in their Sun Dog unit "before winter stipulations take effect on March 1, 2008. Additionally, we will be participating in drilling 33 additional CBM development wells in the adjacent Cow Creek (Catalina) unit. We believe that this development program should go a long way to substantiate that the Atlantic Rim project contains a vast natural gas reservoir..."

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