If the Wyoming Department of Environmental Quality slows downthe permit approval process for companies eager to begin coal bedmethane projects in the state, the largest producers already thereare expected to have no trouble meeting their drilling schedulesthrough at least the first quarter of 2001. Anticipating thehearings, many had already moved proposed drilling projects for2001 through the regulatory process.

On Jan. 3, 2001, the Wyoming DEQ’s Environmental Council willhold a water discharge hearing that could have an effect on thefuture permitting process for coal bed methane projects in theprolific Powder River Basin (see NGI, Dec. 4). The dischargepermits cover the amount of chemicals allowed into the nearestwater source, and are a requirement for coal bed methane productionbecause water is pumped out of the drilling area to allow methaneto escape from the coal in the production process.

Expected to voice their opinions at next month’s hearing areproducers, landowners and environmental groups, according to DEQ’sGary Beach, the administrator of the Water Quality Division.Following the hearings, DEQ will make a decision by February 2001on whether to change discharge limits, keep them the same, or in aworst case scenario, shut down future drilling for the long- orshort-term beyond those permits already approved.

Don’t expect the ruling to be written in stone. Following DEQ’sdecision, there could be an appeal by an opposing group, and theappeals process could take up to a year, possibly delaying pendingpermits.

However, producers already operating in the basin had beenprepared for the coming hearings. Barrett Resources, one of thelargest producers in the Powder River Basin, had announced it woulddrill 1,000 wells in 2001. But when Barrett discussed its thirdquarter results earlier this year, it warned of possible slowdownsin the Powder River Basin if its water permits were delayed.Western Gas also had warned of possible production delays.

However, of the 1,000 wells Barrett plans to drill next year, italready has obtained discharge permits for nearly 800 of them.Based on the approved permits, a Barrett spokeswoman said that thecompany would not be changing its 2001 drilling schedule “one bit.”She added that Barrett did not anticipate delays in the firstquarter.

Pennaco, which has been dewatering 37 wells in its House CreekProject for several months, also was granted water dischargepermits for four projects. The four new permits allow theDenver-based company to begin dewatering 70 additional wells, whichhave been drilled to the Big George Coal in the House CreekProject.

Pennaco estimates that the new permits will give it the waterdischarge capacity to dewater another 270 wells through 2001. Ofthe 270 new wells planned, nearly 100 will be drilled to the BigGeorge Coal. Another 170 are slated for drilling to the WyodakCoal. Pennaco owns 100% working interest in the House CreekProject.

Pennaco said that the recent slowdown would have no affect onits production profile over the next several months since most ofits wells already have permits in p lace. The company has 12additional permit applications awaiting approval by DEQ, and oneapproval is expected by next week.

What effect permit delays will have on other producers is opento question – most permit requests cover more than one well. DEQalready had approved 80% of more than 50 water discharge permitsplaced for public notice in September and October, according toBeach. All of the approved permits covered discharges into theCheyenne River and the Belle Fourche River, which are both in thePowder River Basin flowing into South Dakota.

The 11 delayed permits all were tied to water discharges intothe Powder River, but the flows would be north into Montana, wherepublic opposition to the water discharges has discouraged Wyomingofficials from approving permits for those discharges. There alsoare seven permits requested in November that now are held up.Before September, DEQ had cleared the books of all pending permits.

Carolyn Davis, Houston

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