Open for business: Wyoming throws away its water to getout the gas

  • Drillers lift sections of rod for well outside Sheridan, Wyo.

    Kevin Moloney photo
  • Sheridan, Wyo., stockman Forest Dunning checks well

    Kevin Moloney photo
 

Note: multiple sidebar articles accompany this story, and are available online in the "Related stories" section of this online issue. Also, another feature story, "Colliding forces: has Colorado's oil and gas industry met its match?" accompanies this feature story.

GILLETTE, Wyo. - Wyoming's colorful late Democratic Gov. Ed Herschler was much quoted, even though he often used language unprintable in newspapers. But one thing he was never caught saying was that he lacked the power to protect Wyoming's land, air, water - or people. "Growth on our terms' was his watchword, and he repeated it often during the late "70s and early "80s energy-development boom in the state.

Now, as energy companies scramble across the state to develop some of the continent's richest coalbed methane reserves, Republican Gov. Jim Geringer, whose slogan is the state is "open for business," says he has no power to bring order to Wyoming's latest boom.

Unlike Colorado, where even conservative state officials are advocating some controls on methane development (see story page 8), Wyoming officials have been reluctant to put any brakes on the industry. Gas revenues for the current fiscal year are running ahead of coal and oil revenues combined. And in the nation's least-populated state, those numbers can't be ignored: As primary schools close and college graduates seek better opportunities elsewhere, methane development looks like a way to create jobs and stave off chronic budget deficits.

Yet some Wyoming residents are becoming concerned about the impacts of methane development. In order to release methane gas from coal seams, producers pump massive amounts of groundwater to the surface. Fifty-five billion gallons were pumped out of the ground in Wyoming last year - more than twice the amount discharged in 1998. In Colorado, developers must reinject the water into the ground. No such requirement exists in Wyoming, where the groundwater is relatively pure, and only about 10 percent of the water seeps back into the aquifer. The rest erodes gullies, floods ranchlands and turns back yards into bogs.

"I hear I'm the most hated man in Campbell County," says geologist Walter Merschat of Casper, Wyo., an outspoken critic of the methane boom. He's lost plenty of friends, but he hasn't been silenced. "There's a shortage of freshwater around the world," he says, "but here we are in drought-ridden Wyoming, throwing billions of gallons of water away - just so the governor doesn't have to think of another way to make money."

"A disastrous kind of thing"

Ten years ago, fewer than 50 coalbed methane wells operated in northeast Wyoming's Powder River Basin, a rolling prairie flanked by the Bighorn Mountains and the Black Hills. Gillette, the basin's urban center, was called the Energy Capital of the World, but most of that energy came from coal and oil. Though the area is still home to the nation's largest open-pit coal mines, demand for cleaner energy sources is changing the face of the basin.

There are 7,000 new methane gas wells in the basin - 80 percent of them on private land - and land managers foresee as many as 45,000 wells on the basin's private, state and federal land within the next 10 years. Energy giant Phillips Petroleum, which left Wyoming in 1991, announced in mid-August that it will reopen its doors in Casper. Ninety-four coalbed methane companies are now active in Wyoming, compared with only about 20 in Colorado, according to Greg Schnacke of the Colorado Oil and Gas Association. The pace of development is so fast in Wyoming that most companies are short on equipment and experienced labor.

As in Colorado, property ownership is split between surface rights and mineral rights, and some landowners with both have profited from methane. Joy Voiles, a rancher who leased her mineral rights to a methane company, says the income she stands to receive has provided her with the first chance in 30 years to keep her ranch in the family.

"Like most ranchers, I have nothing put away," she says. "I've sat here and watched three or four places sold because the kids couldn't hang on. Thanks to (methane), my kids can keep what their great-great-grandparents came here and gave their lives for."

Voiles is lucky. Many landowners own only the surface rights to their land; since mineral rights have legal precedence over surface rights, they're now at the mercy of the gas industry. Flooding from discharged water is only one of the concerns. Other hazards include underground coal fires, venting of gas into soils at the surface, and depletion of the aquifers that supply drinking water to most Wyoming residents. Several residents have been left with both flooded land and dry water wells.

The state requires gas companies to negotiate damage agreements with surface owners, but if the parties reach an impasse, a judge will approve the project - as long as a satisfactory bond is posted by the company. "The state is saying, you need to sit down with operators and work things out," says Dan Heilig of the Wyoming Outdoor Council, an environmental group based in Lander. "That's an option for landowners who can afford legal counsel. But others are ignorant about the whole process; they don't know their rights. They're being overrun."

Kenny Claybaugh, who ranches near Sheridan, Wyo., is several miles from the nearest methane development. Because there were no wells operating on his land, he couldn't secure a surface damage agreement. Yet in April, his ranch was flooded out by a 45-well operation owned by the Houston-based company, CMS. Afterward, the state Oil and Gas Conservation Commission quietly closed down the methane operation - the episode only became public when a state agency memo was leaked to the press - and Claybaugh refused interviews.

But Republican state Sen. John Schiffer, a rancher from farther south in Kaycee, witnessed the devastation at Claybaugh's ranch. "There were three miles of river bottom with dead critters floating on it," he says. "What happens to rangeland with continual flooding - it sours. It's a disastrous kind of thing, a mammoth problem." CMS has since pledged to create a management plan for discharged water in the area.

Ranchers aren't the only landowners feeling the impacts of methane development. In subdivisions around Gillette, Sheridan and Buffalo, landowners complain of damage to their water supply, decreased property values and increased traffic and congestion. Several gas companies are interested in drilling within Gillette city limits.

"I've lived in Wyoming for 40 years, and my husband is a native," says Rebecca Claar, almost sobbing in frustration over a methane gas drilling project in the Red Rocks subdivision outside Gillette, where she lives. "I can't believe we have such a ruthless industry in our midst that doesn't give a damn about the water.

"There's a lot the governor can do, but he won't," she adds.

A mishmash of acronyms

On paper, the state has a great deal of authority over coalbed methane development. Because the state owns all groundwater within its boundaries, methane developers must obtain permits from three state agencies - the Oil and Gas Conservation Commission, the state engineer's office and the Department of Environmental Quality - before drilling on private or public land. A half-dozen other agencies have an indirect voice in permitting.

Yet the Oil and Gas Conservation Commission and the state engineer's office require only one-page applications, and the mishmash of agency acronyms leads to confusion, even within the agencies themselves. In 1998, says Oil and Gas Conservation Commission head Don Likwartz, the commissioners considered an overhaul of state regulations to incorporate coalbed methane.

"They concluded that we had rules that covered all the oil and gas," Likwartz says. "Where the state agencies have a problem is that no one has total authority."

"We know a lot more today than we knew a year ago," says Gary Beach, the head of the Wyoming Department of Environmental Quality. "But as far as good planning tools go, we don't have them yet."

Gov. Geringer has created a Coalbed Methane Working Group, made up of representatives from each of the agencies involved. The group tries to coordinate permitting, and it has held several public forums in the Powder River Basin. But at a recent public meeting of the working group, the members focused their discussion on speeding up the permitting process.

Why the rush? State agencies have been getting a great deal of heat from methane developers, many of whom see state permitting as complex and burdensome. Though Wyoming DEQ's Beach says the pressure has recently eased somewhat, he says he has been regularly visited by company vice presidents "wanting to know where their permits were." In a controversial move last spring, the agency lowered water-quality standards for discharged groundwater in the Powder River Basin.

Many observers say the Wyoming Business Council, not the regulatory agencies, has set the pace for methane development so far. The Business Council, established by Geringer (HCN, 7/6/98: Riding the Wyoming 'brand'), is dedicated to "creating an entrepreneur image for Wyoming" - and to doubling mineral production in five years.

The Business Council point man for mineral development, Bob Ugland, says the state's coalbed methane resources are being developed at a "responsible pace." His challenge, he says, is to make sure the development creates more jobs for Wyoming residents.

Geringer wholeheartedly supports the Business Council's approach. He maintains that "open for business' doesn't mean "running roughshod over everything." But he says state agencies must speak with a "unified voice" on methane permitting, making it nearly impossible for environmental regulators to offer dissenting opinions. And under Geringer's watch last November, the Office of State Lands urged coalbed methane developers to "Go Blue!" - i.e., acquire and develop leases on state land, the blue sections on land-status maps.

"We're asking you to take another look at the blue squares on the Wyoming Land Status Map and "fill them in" with your well symbols," says the memo. "The Office of State Lands and Investments will work with you to get the biggest bang for your drilling buck."

Hammering at the doors

"As the problems continue to grow, the issues start to be taken more seriously," says Jill Morrison, a longtime organizer for the Powder River Basin Resource Council. "Our fear is that we're going to have an environmental disaster before anything really changes, and by then, it'll be too late."

Morrison says her nonprofit group has been "hammering at the doors' of state and federal agencies since the methane boom began. "We keep trying to tell them that, look, the gas isn't going anywhere," she says. "If anything, it's gaining value in the ground; the price of gas has doubled in the past month. If the state takes a go-slow approach, the economic benefits are going to be spread out over a longer time period."

Environmental groups in Wyoming have been providing legal advice and other assistance to a growing number of landowners fighting methane development in their communities. These coalitions point to a few small victories. In mid-April, the state Department of Environmental Quality put a hold on new water discharge permits after the Powder River Basin Resource Council and the Wyoming Outdoor Council pointed out that the discharged water was too salty for irrigation. The state now requires operators to prove that they won't impact downstream water quality.

Because of the stricter standards for water-discharge permits, Beach says operators are looking more seriously at reinjection - pumping water back into the ground rather than spilling it out on the surface. "Initially, they said it was cost-prohibitive, but now we're seeing more interest," he says. The interest may continue to rise: In early September, the federal Environmental Protection Agency announced a nationwide study of the methane industry's impacts on groundwater.

But environmentalists still have plenty to do. In July, the Wyoming Oil and Gas Conservation Commission reduced the standard well density in the state from one well every 40 acres to one every 80 acres. At the last minute, however, the Commission exempted the Powder River Basin - the heart of the boom - from the new rule.

Development of federal minerals may soon rival the scale of private mineral development, and the human impacts may be even greater. The BLM owns 60 percent of the minerals in the Powder River Basin, and the majority of these are overlaid with private land. Though the agency recently completed an environmental impact statement for about 6,000 wells in the Powder River Basin, it's already had to start in on a second document. There is a moratorium on leases of federal minerals in the basin until the second analysis is complete. The Buffalo Field Office of the BLM, which handles much of the permitting, hired 10 new staffers last year and plans to hire six more to handle the job.

From top to bottom, Wyoming is still tied to the resource-extraction economy, so environmental groups and landowners in Wyoming have never had much clout in the state. In fact, Wyoming activists have gotten some of their best press in Colorado. In March, about a dozen activists from Wyoming and Colorado burst into an international oil and gas symposium in Denver, calling for industry reform.

"We have survived blizzards, drought, depression, uranium activity and oil activity," Wyoming rancher Patricia Clark said at a news conference outside the symposium. "None of these compare to the impact we are facing with the discharge of this coalbed methane water on my land. Between the potential loss of hay and the potential loss of accessibility to grazing land, I am out of business."

In the uproar surrounding Wyoming's latest boom, says Dan Heilig, concerns like Patricia Clark's are literally being drowned out. "We're open for business, that's the message," he says. "We're very different. There are a lot of people, ranchers who make their living from the land; they're being left to fend for themselves."

Katharine Collins writes from Rock Springs, Wyo. HCN associate editor Michelle Nijhuis contributed to this report.

YOU CAN CONTACT ...

  • Citizens Oil and Gas Support Center, Gwen Lachelt, P.O. Box 2461, Durango, CO 81302 (970/259-3583), www.sanjuancitizens.org;

  • IN COLORADO
  • Colorado Oil and Gas Conservation Commission, 1120 Lincoln St., Suite 801, Denver, CO 80203 (303/894-2100 ext. 100), www.dnr.state.co.us/oil-gas/;
  • Colorado Oil and Gas Association, 303/861- 0362, www.coga.org or e-mail, info@coga.org.

  • IN NEW MEXICO
  • Oil and Gas Commission, 2040 S. Pacheco, Santa Fe, NM 87505 (505/827-7131), www.emnrd.state.nm.us.

  • IN WYOMING
  • Jill Morrison, Powder River Basin Resource Council, 307/672-5089;
  • Gary Beach, Wyoming Department of Environmental Quality, 307/777-7781;
  • Dan Likwartz, Wyoming Oil and Gas Conservation Commission, 307/234-7147.

  • IN MONTANA
  • Tim Davis, Northern Plains Resource Council, 406/248-1154;
  • Montana Board of Oil and Gas Conservation, 406/656-0040.

Copyright © 2000 HCN and Katharine Collins