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Gas Output Rises Along with Wyoming BLM Workload

August 18, 2008
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The workload for the Bureau of Land Management's (BLM) Wyoming offices is growing by the day -- as are its coffers -- with natural gas producers requesting environmental assessments to ramp up drilling projects across the state.

The oil and gas is definitely there: in fiscal 2007 oil and gas operations on BLM-administered public lands and federal mineral estate in Wyoming produced 1.39 Tcf of natural gas and 29.84 million bbl of oil, which in turn generated $1.05 billion in federal oil and gas royalties, BLM noted. Half the royalty payments were disbursed to the state of Wyoming.

BLM has begun an extensive revision to the resource management plan (RMP) for the Powder River Basin, one of the state's most prolific gas producers (see related story). And while permitting may be down in that area until the RMP is completed, the rest of the state is expected to see no downturn, said officials.

Earlier this month a BLM-administered lease sale in Wyoming generated $14.27 million for leasing rights and rental fees on a total of 155,122 acres in 163 parcels.

"Energy development drives the Wyoming economy, and our state provides critical energy resources for the entire nation," said BLM Wyoming Acting State Director Don Simpson.

Bids totaling $14.02 million ranged from the federally mandated minimum of $2/acre to a high bid of $1,220/acre, BLM noted. Successful bidders also pay a $140/parcel administrative one-time fee and yearly rental of $1.50/acre for the first five years of the lease and $2/acre in years six through 10. The next oil and gas lease sale will be held on Oct. 7 in Cheyenne.

Currently under way is an environmental review of Devon Energy Corp.'s proposed plan to drill 228 natural gas wells in central Wyoming and an environmental assessment being conducted of a proposed gas project by EnCana Corp.

The Beaver Creek Coal Bed Natural Gas (CBNG) Development Project, submitted by subsidiary Devon Energy Production Co. LP, proposes to drill the wells on 40-acre spacing on 16,500 acres in an area southeast of Riverton, WY, according to BLM's Lander Field Office. The drilling would be done over five to 10 years, and the entire project would span 20-40 years. Most of the proposed wells would drill for coalbed methane (CBM); about 20 would be conventional gas wells.

"After reclamation and for the life of the proposed project, Devon estimates that the long-term surface disturbance would be about 550 acres," BLM stated in its notice to prepare an environmental impact statement. "The Beaver Creek Unit has experienced extensive gas development over the last 50 years," and Devon plans to use existing infrastructure as much as possible.

Under Devon's proposal, 24 miles of new roads and 66 miles of new pipelines and power lines would be constructed. Water produced as a byproduct from the CBM drilling would be discharged in two evaporation ponds and reinjected into four wells. About 82% of the project area would be on public lands and federal mineral estate administered by the BLM, with some interspersed state and private lands and other mineral estate.

The proposed wells would be drilled vertically in the Mesa Verde formation; the proposed conventional gas wells would be completed in the Madison and Phosphoria formations. Because the targets are located in different geologic formations, conventional gas wells may overlap with the CBNG well density, BLM noted.

A 45-day scoping period on the Beaver Creek project is being conducted to gather input from the public and interested parties to assist in addressing issues associated with the various action alternatives for development. Comments will be accepted by BLM through Sept. 12.

Devon also is working on a 3-D geophysical mapping of its proposed Rubicon project in Wyoming, part of the company's Baxter Natural Gas Proposal, which has taken some heat from environmental officials and Gov. Dave Freudenthal (see NGI, May 19; Feb. 18). The mapping survey includes part of BLM's Sugarloaf Special Management Area and the Currant Creek Area of Critical Environmental Concern. Devon has split the work on the project, which is estimated to take 70-90 days, over a two-year period to accommodate wildlife and hunting restrictions in the region.

In addition, BLM's Lander office this month issued an environmental assessment of EnCana's proposed Pappy Draw exploratory CBNG pilot project in Fremont and Sweetwater counties. The pilot project would encompass about 76 square miles, or 48,350 acres.

EnCana wants to drill 16 pilot CBM wells and three injection wells to dispose of produced water. Based on the exploratory pilot, EnCana would determine the interaction of the wells, gas production volumes and the potential economics of development, BLM stated.

More information on the Devon and EnCana projects is available from www.blm.gov/wy or via e-mail sent to Lander_WYMail@blm.gov, or by mailing a request to the BLM Lander Field Office, 1335 Main St., Lander, WY 82520.

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