Gas company offers millions for permission to maximize drilling

 

Last year, natural gas companies extracted a lot of gas from the sagebrush country around Pinedale, Wyo. — about $3 billion worth. 

The drilling continues at a fast pace. But energy companies, government agencies and environmentalists are struggling over a key issue: how to extract the gas while protecting a spectacular wildlife community that includes sage grouse and tens of thousands of pronghorn (HCN, 8/18/03: Where the Antelope (and the Oil Companies) Play).

Now, one energy company has made an unusual proposal. EnCana Oil and Gas USA Inc., which pulled about $600 million worth of natural gas from local fields last year, says it is willing to pay to improve wildlife habitat in areas around Pinedale where it isn’t drilling. The company would spend up to $21.85 million over the next decade, for measures such as habitat studies and the restoration or preservation of up to 70,000 acres of land.

There’s a catch, however: In return for its money, EnCana wants permission to carry out one of the most intensive drilling proposals in the West, damaging much of the remaining habitat in the 30,500-acre Jonah Field.

The proposal shows that "EnCana is committed to developing the Jonah Field at a net positive impact to the environment," says Jeff Johnson, a project leader for the company.

But critics say the company just wants to buy its way out of regulations that call for preserving habitat in gas fields. Peter Aengst, in the Northern Rockies office of The Wilderness Society in Bozeman, Mont., says the offer is "almost extortion." 

Better than perfume on a pig

The Jonah Field, which lies about 30 miles south of Pinedale, contains an estimated 13.7 trillion cubic feet of gas, worth more than $5 billion at today’s prices. EnCana and a few other companies have already drilled about 600 wells in the field. EnCana has proposed another 3,100 wells to be drilled over the next 12 years, two-thirds of them by the company itself. To extract as much gas as possible, wells would be spaced an average of 10 acres apart; some would be as close as every five acres. The drilling would result in "surface disturbance" on at least 16,200 acres.

The company developed its proposal in more than a year of talks with state officials and the federal Bureau of Land Management, which controls most of the land and mineral rights in the Jonah Field. The Bush administration has encouraged the BLM to consider such "offsite mitigation" proposals, says Don Simpson, a deputy state director of the BLM.

The BLM released a draft environmental impact statement in February, listing nine alternatives for public comment. While some of them call for hundreds fewer wells than EnCana proposes, the BLM’s "preferred alternative" would allow the 3,100 new wells.

The preferred alternative doesn’t give EnCana everything it wants, though. To protect grouse nests, the agency effectively recommends 40-acre well spacing in half of the field. That would require the use of "directional drilling" — diagonal wells — from existing well pads, a process EnCana says would cost more, while extracting less gas. EnCana says that if it has to use directional drilling, it will pay only $1.4 million for habitat mitigation, enough to preserve up to 4,000 acres.

The preferred alternative would allow up to 11,000 acres of surface disturbance. Simpson says habitat would be improved near the Jonah Field to provide a "safe harbor" for wildlife. Once the drilling tapers off, he says, some of the damaged habitat within the field would be rehabilitated, and wildlife would eventually return.

But Gov. Dave Freudenthal, D, says the habitat in the Jonah Field has already been "debilitated," and that more drilling will consume what’s left. The BLM’s preferred alternative, he says, amounts to "a futile attempt to ‘perfume the pig.’ " Instead, he supports EnCana’s proposal for maximum development in the field, combined with the highest amount of offsite mitigation.

And the Wyoming Department of Game and Fish wants to combine the best aspects of both the BLM’s and EnCana’s proposals — the maximum amount of offsite mitigation, together with an attempt to preserve some habitat in the field.

No quid pro quo

Environmentalists are "conflicted" about EnCana’s offer, according to Aengst. The Jonah Field "is already pretty trashed," but it’s difficult to evaluate EnCana’s offer because it lacks specifics, he says. He would like to see EnCana commit to preserving land in key migration corridors for pronghorn and deer.

Offsite mitigation is worth considering, says Gwen Lachelt, director of the Oil and Gas Accountability Project, an industry watchdog based in Durango, Colo. But, she adds, "It should never be used as an excuse for not utilizing best practices and preventing and reducing impact at the well site."

Erik Molvar, a biologist who heads the Laramie-based Biodiversity Conservation Alliance, says his group may sue the BLM if it allows any new well pads in the Jonah Field. "EnCana is basically trying to produce as much gas as it can, as cheaply as it can," he says, while other companies in the area do expensive directional drilling, disturbing less land per well.

Environmentalists are also worried that the "extortion component" will set a precedent for other companies, Aengst says. The offsite mitigation money, he says, "should be mandatory, and completely divorced from some sort of quid pro quo of ‘We get what we want.’ You don’t get to buy what you want in an (environmental impact statement)." 

The public comment period on the project ended in April; the BLM says it will analyze the comments and reach a final decision later this year.


The author is the environmental reporter for the Casper Star-Tribune, based in Jackson, Wyoming. Ray Ring, HCN’s editor in the field, contributed to this story.

Photo: Pronghorn antelope and a drill rig in Jonah Field, where EnCana wants to increase its natural gas operations. Mark Gocke