The rapid pace of development in the Powder River Basin ofWyoming and Montana has surprised everyone, and regulators arehaving a little trouble keeping up with the demands of productiongrowth. A period of regulatory catch-up could hinder short-termdevelopment and production growth, but observers believe thelong-term outlook on this prolific basin is extremely positive.

The Wyoming Department of Environmental Quality (DEQ) has put ahold on water discharge permits for new wells probably until theend of January to assess the situation, which involves the releaseof billions of gallons of water on to the surface and an unknownimpact on the regional aquifer. In addition, producers and theBureau of Land Management (BLM) have been scrambling since April tocome up with a quick short-term extension to the federal welllimits that producers reached in August.

Gas production in the basin has grown faster than in any otherbasin in the United States over the past couple years. “One of theproblems is that nobody really did foresee how extensive adevelopment and a play this was going to turn out to be,” said BLMProject Manager Paul Beels. “When we started into [the WyoDakcoal-bed play] back in the spring of 1998, we were working closelywith industry and were anticipating 3,000 wells initially. We toldindustry ‘let’s go to 5,000 wells’ and they said, ‘geez no, that’sway too much'” to cover in the first five to seven years. “Well, ithappened in eight months.”

The BLM and industry currently are looking at a more realistic10-year projection of 45,000 wells. “We just have a lot better ideanow of what we’re looking at. We’re looking at somewhere in theneighborhood of 25 and 28 Tcf of recoverable reserves.” A year agothe projection was 9 to 13 Tcf. “I wouldn’t doubt that [this basin]is now the fastest growing gas production area in the world,” saidBeels.

The industry had reached the federal limit of 5,890 wells onAug. 11, and BLM started work on the WyoDak Drainage EnvironmentalAssessment in April to add up to 2,500 additional wells over thenext 15 months. “We’re looking at probably sometime in January atthe earliest” for the release of the EA.

In the meantime, producers are drilling as many state andprivate wells as possible to make up for the slow down on thefederal environmental review. However, other things have occurredthat have put a crimp on drilling and production. “Wyoming has comeout very vociferously about the effects on water quality in Montanaas a result of CBM discharge in Wyoming,” said Beels. “The twostate DEQs have been back and forth, sharing information, and therehave been some decisions made here in Wyoming that they need tocollect some additional information before they are willing toproceed.

“I don’t look for the DEQ hold-up to last much beyond January,”he added. “They’ve basically said that after the end of Januarythey probably will be issuing discharge permits again. I don’t lookfor that to be a long-term situation.”

BLM and industry now are planning far ahead with an EIS thatcovers nine million acres or the entire Wyoming portion of thePowder River Basin. “We’re waiting on the final proposed actionfrom industry. We’re looking at a draft release for the EISsometime next summer in June or July and a final EIS sometimearound December 2001.

“There is plenty of fee acreage out there to drill,” Beelsnoted. “The industry has modeled the situation and stated that theyprobably have three to four years of state fee land to operate on,and after that point the federal lands minerals will be driving theplate.” The DEQ, however, will be involved all the way through theprocess having to do with water issues, and could put the brakes ondevelopment in the short-term.

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