A pipeline proposed by the Wyoming Pipeline Authority (WPA) to carry off some of the billions of gallons of water produced annually from coalbed methane (CBM) operations in the Powder River Basin is close to becoming more than a pipe dream. If successful, it could defuse some complaints about the excess water byproduct of CBM development.

“We’re close and it just needs a nudge,” WPA Chairman Mark Doelger told NGI. WPA just completed a nonbinding open season for transportation capacity on the proposed line. Potential shippers were asked for their interest in shipping CBM water at a rate of 20 cents/bbl and 30 cents/bbl and two companies expressed interest. Doelger is hoping to hear from “two significant producers, which could put it [the project] in the viable range.”

Doelger said WPA is investigating whether it makes economic sense to construct a pipeline originating in Gillette, WY, that would carry CBM water southward to the North Platte River Basin or to Teapot Dome, a depleted oilfield about 25 miles north of Casper in Natrona County, WY. Teapot Dome serves as a U.S. naval petroleum reserve.

WPA prefers the Teapot Dome alternative where the water could be injected into the Madison and Tensleep formations, which could “easily handle” whatever quantities of CBM water the pipeline could deliver. Once injected, the water would be banked for potential future uses, including supplying municipalities and providing a firm and uninterruptible supply of water that is necessary for advanced coal technologies and enhanced oil recovery.

While waiting to hear from more potential shippers, the WPA is looking at ways “to obtain capital and generate additional revenue streams” to improve the project’s economics, Doelger said. Based upon preliminary engineering estimates, the 42-inch diameter, 70-mile pipeline to Teapot Dome would cost less than $200 million, he said.

The proposed pipeline would be owned and operated by WPA and would be funded by shippers signing 10-year contracts, Doelger said. “It is anticipated that revenues derived from future beneficial uses of the water would be returned to shippers by annual reductions to the tariff and other means,” he said. Although the pipeline would initially flow southward to Teapot Dome, at some point in the future its direction of flow could be reversed to transport water northward to meet potential demand.

The idea for a CBM pipeline project has been around for some time. Gov. Dave Freudenthal in 2006 said that he supported a feasibility study to determine the logistics and cost of constructing such a line. If a pipeline plan were to be successful, it could eliminate some of the tussling between Wyoming and Montana over the disposal of produced CBM water. Montana has been fighting CBM producers’ discharge of water into northeastern Wyoming rivers that travel northbound to Montana. The water battle has slowed CBM development in Wyoming since some energy developers have limited options for disposal of their CBM water.

©Copyright 2007Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.