Powder River Basin producers breathed a collective sigh of relief after the Bureau of Land Management (BLM) issued its long awaited final decision on the environmental impact of a massive increase in coalbed methane drilling in the basin in Wyoming and Montana.

About 14,300 wells already have been drilled on the Wyoming side of the basin, but producers needed BLM authorization to move forward with a 10-year plan to drill another 39,400 gas wells. In Montana, the BLM looked at the potential of more than 26,000 wells across the entire state.

The Powder River Basin, which straddles the border between both states, is estimated to contain about 25 Tcf of natural gas, and the project area in the EIS covers about eight million acres of public and privately owned lands in Wyoming, encompassing all or parts of Cambell, Converse, Johnson and Sheridan counties. It also covers all of Montana.

“The BLM’s tireless efforts over the last three years have now completed the most thorough and comprehensive analysis of this basin and the single largest EIS ever conducted in the United States,” said Western Gas Resources CEO Peter Dea.

Western’s Lance Oil and Gas is among the six production companies that notified the BLM of their plans to develop additional coalbed methane resources in basin. The other producers are Barrett Resources (Williams), Devon Energy, Yates Petroleum, Pennaco Energy (Marathon) and CMS Oil and Gas (Perenco SA).

“With this decision, we move one step closer toward fulfilling our plan to tap resources in a basin…,” said Ralph Hill, Williams’ senior vice president of exploration and production. “We have an attractive development drilling inventory in the Powder River Basin and look forward to implementing our drilling programs.”

Williams plans to drill or participate in 750 new Powder River wells in 2003, consistent with its current capital spending plan. It has already requested 459 drainage permits, which are a prerequisite to drilling, from the Buffalo Field Office of the BLM in Wyoming. The company expects to request an additional 275 permits in the next 90 days.

The BLM’s records of decision on the Powder River environmental impact statements (EIS) in the two states establish environmental and other guidelines to be used mainly by the production companies. The decisions to allow increased drilling under strict guidelines was made after nearly three years of discussions and analysis. The FEIS’ were given preliminary approval in February (see Daily GPI, Jan. 13).

“Coal bed natural gas is a valuable source of natural gas serving the nation’s critical energy needs,” said BLM State Director Bob Bennett. “We will continue to deal with this important resource in a responsible manner, ensuring a balance in land use.”

BLM’s recommendations also would better protect rivers and creeks from salty waste water from the wells that the region’s farmers and ranchers have said is not fit for drinking or irrigation. Because CBM drilling requires groundwater to be pumped to the surface, the BLM proposal would require the salty water to be captured in holding ponds to allow it to filter back into the ground and keep it from flowing downstream. The agency also would require natural gas-fired compressors at drilling sites, a less polluting alternative.

The BLM said another key element of the decisions is the establishment of a federal working group, including representatives from the Environmental Protection Agency (EPA), National Park Service and the Forest Service. The working group will assist the BLM and the Wyoming Department of Environmental Quality (DEQ) in addressing natural gas and oil development issues in the basin and ensuring coordination with Montana BLM and the State of Montana on natural gas and oil development issues common to both states.

The use of a working group stems from the partnership approach used by BLM, EPA and the state DEQ’s to address EPAs concerns with the Draft EISs. The purpose of the group will be to ensure air and water quality standards are met. The working group will be responsible for guiding and designing the monitoring necessary to validate the accepted mitigation measures from the EIS.

The complete EIS’s can be view at BLM’s web site: https://www.blm.gov/nhp/spotlight/powder_river/.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.