Western Gas Resources said the coal bed methane legislationpassed last week by Congress and forwarded to the White House forsignature should put its drilling operation in the Powder RiverBasin back on track. The company, along with partner BarrettResources, planned a massive drilling program in the basin thisyear that included drilling 400 wells and 500 more next year, butan appellate court decision forced the companies to put their planson hold.
The coal bed methane legislation if enacted will grandfatherexisting coal bed methane leases at the time of enactment. It wouldsoften the impact of a decision by the 10th U.S. Circuit Court ofAppeals that changed 90 years of federal policy by concluding thegas within coal is part of the coal itself and is owned by the coalowner rather than the landowner. In the case in question, theSouthern Ute Indian Tribe vs. Amoco Production Co., the coal ownerwas the Southern Utes, but most of the coal in the Rocky Mountainregion is owned by the federal government. Of particular concern,were leases with private landowners in the Powder River where gasproduction was expected to more than triple its current 210 MMcf/dlevel over the next five years with the potential to reach 1.4Bcf/d eventually if all the existing leases were fully developed.
“We’re waiting to make sure the White House signs the bill butwe’ve already started to sign up additional drilling rigs again andit would certainly be our intention to ratchet back up to where wewere before [the court decision] as quick as possible.” He said itstill is possible that Barrett and WGR could meet a prior forecastof 80 MMcf/d coming out of their Powder River leases by the end ofthe year, but next year’s production forecast is still up in theair. The companies had expected 120 MMcf/d out of the Powder Riverby next spring. But that may have to be pushed back.
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