The governor of Wyoming sent a letter to the Bureau of Land Management’s (BLM) Pinedale, WY, office last week conditionally supporting Questar’s proposed year-round Pinedale Anticline drilling program.

“If everything goes smoothly as this proposal makes its way forward, it could prove to be a model for cooperation between the state and a company resulting in benefits for both,” said Gov. Dave Freudenthal. “With the state’s recommendations, we could end up with year-round drilling that actually improves the current conditions through the elimination of disturbances and improvements in habitat.”

The BLM is currently reviewing Questar’s plan to conduct a limited year-round drilling program on a portion of its contiguous block of existing leases within a crucial winter range for big game in the Pinedale Anticline Project Area. Questar also plans to construct a 110-mile pipeline condensate pipeline that will significantly reduce the need to remove produced condensate by truck.

Current seasonal restrictions to protect big game, sage grouse, and other sensitive species’ habitats give Questar a narrow drilling window (May through November). The company believes that year-round drilling would cut 10 years from development time. More gas production is good for the state and good for the company. Analysts say it would lead to a substantial boost in Questar’s earnings and would further support its stock price.

“We estimate that year-round drilling would add at least $0.10-0.15 to 2005 earnings per share (based on gross production of 1.2 Bcfe per well and 45 wells per year),” UBS analyst Phillip Salles said in a recent research note.

However, Freudenthal said in his letter to Prill Mecham, Pinedale field manager at BLM, that his support for the project is contingent upon strong measures to reduce the impact of the development to the area’s residents, air, wildlife and water. Only with these safeguards would the proposal serve as a “model” for future oil and gas development, the governor said.

Questar’s proposal includes a move to directional drilling, which would reduce impacts on soil, wildlife, water and air resources. The company would limit its drilling footprint to 9% of the total authorized under the Pinedale Anticline environmental impact statement (EIS) record of decision. The new condensate pipeline is expected to save more than 25,000 truck trips each year.

However, the governor would like to see the company commit to even more mitigation measures. Among the governor’s “caveats” are that Questar commit to flareless completions, or completions without the raw flame that burns off methane and helps get natural gas flowing; habitat improvement to 1,650 acres; and accommodations for the permittees that would be affected by the habitat mitigation.

“With the caveats noted in this letter, I believe the proposal is a good model,” the governor wrote. “It significantly reduces impacts to air, water, wildlife, cultural interests, vegetation and communities, while still meeting the economic needs of the project proponent.”

Freudenthal said crucial winter range, sage grouse habitat and air quality are three of the primary unresolved conflicts in Questar’s scoping notice proposal. State agencies have developed additional mitigation and monitoring requirements that would likely eliminate unresolved conflicts, as well as provide monitoring to see how well the implemented actions work. The BLM is expected to release a new environmental assessment on the drilling plan by November.

Questar CEO Keith O. Rattie said the governor is among several other project supporters, including the Wyoming Game and Fish Department, the Sublette County Commissioners, the Sage Grouse Partners — a national organization whose mission is to protect sage grouse habitat — and local business and community leaders.

“Governor Freudenthal has called upon the energy industry to engage in responsible energy development,” Rattie said. “We support that objective — and we think our Pinedale plan is a good example of what he means by ‘responsible development.’ Most of the conditions cited by the governor are addressed in our current proposal. We’ll work with state and federal agencies to resolve his remaining concerns.”

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