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 water.

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 affected.

"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 actions.

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 company's operations.

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 thoroughly.

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 development.

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

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