Warren Resources Inc. and Double Eagle Petroleum are moving ahead with drilling plans in the Atlantic Rim play in Carbon County, WY after the Bureau of Land Management’s (BLM) appeals board rejected pleas to stay the agency’s approval of a drilling plan for the area.
The BLM in May had issued a Record of Decision and a Final Environmental Impact Study allowing drilling of up to 2,000 wells, most of them coalbed methane (CBM), in the Atlantic Rim area, which holds the potential for 1-2 Tcfe of reserves (see Daily GPI, May 22).
Two groups, including the Theodore Roosevelt Conservation Partnership (TRCP), a coalition of organizations working to preserve hunting and fishing areas, appealed the decision and asked that activities be stayed during litigation. The Atlantic Rim is a popular mule deer and sage grouse hunting area of the state. The other group seeking to obstruct drilling is the Biodiversity Conservation Alliance.
BLM’s Interior Board of Land Appeals issued an order Sept. 5 denying those petitions for stay, and held that the two environmental groups failed to show that they were likely to succeed on the merits of their arguments and claims.
BLM approval of Atlantic Rim drilling was based on a petition from Warren Resources and its joint venture partner Anadarko Petroleum Corp. to explore and potentially develop 270,080 acres in an area that runs nearly 40 miles north to south from Rawlins to Baggs, WY. BLM approved drilling for about 1,800 CBM and 200 deeper conventional wells.
“We are very pleased with this decision as it is another important step in clearing the way to full-scale development of our property,” said Warren CEO Norman F. Swanton. “Warren is therefore proceeding with its previously announced drilling plans in the Atlantic Rim.”
The appeals for a stay initially led independent producer Double Eagle Petroleum Co. to delay plans to begin drilling in the Atlantic Rim area (see Daily GPI, June 26), although the company continued with prep work. Through agreements with Warren and Anadarko, Double Eagle plans to drill and operate up to 268 wells on 80-are spacing on the Catalina Unit, gaining about 110 net wells. Including both operated and nonoperated properties, the Casper, WY-based independent expects to participate in up to 1,800 wells (gross) and 259 wells (net) over the next five years. Drilling was to have begun in July.
Double Eagle this week reported progress at its Atlantic Rim project, where the company expects to spend approximately $40 million this year, including both its operated drilling in the Catalina Project, which includes the Cow Creek Field, and drilling operated by Anadarko Petroleum at the Sun Dog Unit. Double Eagle began construction Aug. 6 in preparation for drilling in the Catalina Unit and commenced drilling on Aug. 15. All of the 36 drill sites (33 CBM wells and three water injection wells) scheduled for 2007 have been constructed and surface casing has been set. Five wells have been drilled and cased to total depth. Two rigs are currently drilling. Perforating and fracture stimulation is scheduled to proceed after approximately five more wells have been cased.
Double Eagle, which is showing no sign of slowing its activities, says it has fixed-price contracts in place for 85% of its production, which net the company an average of $6.12/Mcf. “That’s higher than the Henry Hub today,” a spokesman said.
Also within the Atlantic Rim, Anadarko expects to drill 69 CBM wells and six water injection wells, in which Double Eagle will have approximately 8.4% working interest, within the Sun Dog Unit. Drilling at Sun Dog is expected to begin on Oct. 1.
The Atlantic Rim is a popular mule deer hunting area of the state and boasts one of the two largest sage grouse breeding concentrations in Wyoming. Efforts by both hunters and ecologists to preserve sage grouse habitat also have been at the center of debate at Powder River Basin in northeast Wyoming (see Daily GPI, Aug. 22).
In July the Wyoming BLM office said studies by bioscientists at the University of Montana’s College of Forestry and Conservation indicated that efforts to mitigate the impact of CBM development on habitat in the basin were not working (see Daily GPI, July 11). Wyoming Gov. Dave Freudenthal has said achieving a compromise with energy companies is preferable to having the federal government list the sage grouse on the threatened or endangered species list (see Daily GPI, July 5), an action which would restrict both drilling and hunting.
A third appeal of the BLM decision, filed by the Wyoming Wildlife Federation and the National Wildlife Federation, is still pending. Double Eagle CEO Stephen H. Hollis said his company is “optimistic” that the remaining appeal will not be successful.
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