Powder River Producers Say Hearings May Delay Drilling
If any of the growing number of producers delay coal bed methane
gas drilling programs in the Powder River Basin, it won't be
because production has dried up. Most likely, it will be delayed
while the Wyoming Department of Environmental Quality wrangles with
requested water pollution permits required for the projects, and
debates between business and environmentalists over jobs and clean
Denver's Barrett Resources Inc., which has set up a substantial
drilling program in the prolific Powder River Basin, said last week
it is facing long delays in ramping up its coal bed methane gas
program because the Wyoming DEQ may decide to hold public hearings
about the water discharges. Up to now, the water discharge permits
required for the coal bed methane projects have sailed through
regulatory processes with few problems.
During a conference call with analysts last week, Barrett CEO
Peter Dea said he was unsure whether the company's plans to drill
between 800 and 1,000 wells in the basin next year would be
affected by proposed public hearings. Drilling slated to begin in
the fourth quarter is on schedule, but year 2001 plans may be
"I do think it's likely we'll start slowly next year drilling,"
COO Joe Jaggers said, but he added that it was too soon to know how
expected public hearings would affect the overall drilling program.
Wyoming DEQ's Leah Krafft said that the state has not yet
scheduled public hearings about water discharges from Barrett's or
any other company's proposed drilling programs, but she admitted
this was the direction DEQ was headed.
"There have been a lot of permits that have been objected to,"
she said, mostly related to the concern that high sodium
concentrations in discharged water from coal bed methane production
would lower crop production in the agricultural state. The DEQ is
directed to hold public hearings by the state's independent
Environmental Quality Council, and Krafft said she expected that
would happen. The EQC, appointed by the governor, oversees DEQ
This year, several state legislative proposals have called for
more stringent regulations on coal bed methane drilling, and more
environmental groups have publicly challenged the regulation of the
state's water quality.
The 1972 federal Clean Water Act requires that pollutant
discharges from a point source into surface waters be regulated.
Depending on the process, companies are issued National Pollutant
Discharge Elimination System permits, and in Wyoming, the DEQ
regulates the discharges from produced water from coal bed methane
wells under a general NPDES permit. A general permit is an
administrative tool that may be used to issue many permits for one
Typically, a company does not have to develop a special
treatment system for a general permit. However, in Wyoming,
environmental groups say that the coal bed methane drilling is
destroying the state's water. They want the state to crack down on
the NPDES permitting, and begin scrutinizing processes more
Wyoming Gov. Jim Geringer has long supported the oil and gas
industry in the state, and in August, he accepted a petition with
nearly 4,000 signatures that also supported coal bed methane
The Petroleum Association of Wyoming and the Wyoming Independent
Producers Association distributed the petition to measure support
for coal bed methane projects-mostly in response to what they said
were "unnecessary demands to impose a moratorium," and to
demonstrate support for the "positive economic and community
benefits" because of the projects.
"With the recent announcement of reserves equaling 25 Tcf,
Wyoming's Powder River Basin is secure in its position as a
world-class resource for energy production," said Bob Ugland,
director of the Minerals, Energy and Transportation division of the
Wyoming Business Council. "Wyoming will receive substantial income
from the production and sale of coal bed methane, which could bring
the state $7.5 billion over a 35-year period."
Wyoming has 130 coal bed methane drilling rigs, and on average,
87 are actively working at any one time. The 87 working rigs
support 348 direct jobs and 957 indirect jobs, paying well above
Wyoming's average salary, according to the governor's office.
Carolyn Davis, Houston