Wyoming's powder keg

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A more mundane, but widespread, problem is salt. The state of Montana is worried about elevated salt levels from coalbed methane water in the Powder, Little Powder and Belle Fourche rivers, which flow north from Wyoming.

Then there's the way coalbed methane fields look. Each well pad may contain up to five wells, one for each distinct coal seam. Structures the size of garden sheds shelter the wellheads. A road leads to each pad, along with a gas-collection pipeline, a water-disposal pipeline and a power line. Every few hundred acres, larger buildings house truck-sized compressors to pressurize the gas for transport. At wells without electrical power, a refrigerator-sized portable power generator is required.

To understand what this sort of infrastructure does to the landscape, "visualize it as 80-acre ranchettes," says Mickey Steward. She is coordinator for the CoalBed Methane Coordination Coalition, which is composed of five county commissioners, two conservation districts, the state of Wyoming, and a representative of the industry. The group describes its goal as "effective information transfer for rational development of coalbed methane."

The simplest solution

The prospect of energy ranchettes blanketing the Powder River Basin horrifies many who live here. "This will turn into an industrial site," says Dale Ackels. A 60-year-old retired Army officer, Ackels raises hay on 100 acres along Lower Prairie Dog Creek, north of Sheridan. A New Jersey company owns the mineral rights beneath his land.

Although he has not experienced coalbed methane drilling on his property, he is surrounded by wells, and expects it will only be a matter of time. "I'd be more comfortable with this," he says, "if the state of Wyoming had said, 'We have this wonderful opportunity and we're going to slow down and look at our options.' The approach Governor (Jim) Geringer took was basically to try to slicky it by us. We're hunting for the easiest, simplest solutions the gas companies will approve."

The state of Wyoming, which has no income tax, earns 40 percent of its revenues from energy production. Because the Powder River Basin has been an energy source for decades - and a major source of state funds - there has been almost no public debate in Wyoming about whether coalbed methane development is a good idea or how it should proceed.

If state officials had any doubts, the numbers have convinced them: In 2000, the state was $183 million in the red. In 2001, Wyoming ran an estimated $695 million surplus, thanks to greatly increased energy production and prices. Coalbed methane now accounts for 12 percent of natural gas production in Wyoming - worth about $26 million in state revenue this year - and that number is likely to grow.

Gov. Geringer, R, has insisted that state agencies not stand in the way of development, saying the state would speak with a "unified voice" to move development along. In November 1999, assistant Wyoming state-land director Harold Kemp sent out a letter encouraging drilling companies to "Go Blue!" - to drill on the state sections, marked in blue on most land-use maps, rather than wade through the cumbersome permitting process for federally owned gas.

Dennis Hemmer of the Department of Environmental Quality insists that "Wyoming has done coalbed methane development right." He cites Wyoming's Aug. 1 agreement with Montana to monitor salt levels in the Powder and Little Powder Rivers. If levels rise, he says, Wyoming will take action to get them back down. The agreement doesn't specify what that action would be.

But the state's boosterism hasn't just increased the number of wells in the basin. It's also created an enormous regulatory rift, one that the gas industry is exploiting to full advantage.

The state of Wyoming typically owns two square miles-worth of surface and mineral rights in each 36 square-mile township, while the Bureau of Land Management owns over half of the basin's mineral rights and 10 percent of the surface area. Private owners control the balance.

Though the federal government controls the lion's share of the resource, it has been slow to join the coalbed methane game. BLM officials have suspended drilling while they conduct an environmental impact statement on the 50,000 coalbed methane wells expected to be drilled on federal gas holdings in the Powder River Basin in coming years. That study isn't due until July 2002.

So the coalbed methane frenzy in the Powder River Basin has a patchwork quality: Coalbed methane developers have drilled on state and private (known as "fee") mineral holdings, but not on federally owned coal deposits. This has created a problem known as drainage, where gas on federal mineral holdings drains toward and eventually up the wells on adjacent state or fee mineral holdings.

"In some places, we'd lost over 60 percent or more of our minerals over about two years," says Richard Zander, assistant field manager at the BLM office in Buffalo, which collects a 12.5 percent severance tax on coalbed methane production. "We were losing about $45,000 a day in (federal) royalties."

BLM officials completed a stopgap environmental assessment in March 2000 that permitted 2,500 wells to recover BLM-owned gas in the eastern part of the Powder River Basin, where the drainage is worst. The idea was to get those wells in the ground before surrounding state and fee wells took all the federal gas.

"You have to drill to protect yourself," Zander explains.

That argument makes environmentalists apoplectic. "I think that what went on up there was openly dishonest and deceitful," says Travis Stills, research director and staff attorney for the Oil & Gas Accountability Project in Durango, Colo. The BLM, he says, could have charged adjacent drillers for any federal gas they withdrew. "This was an end run around the need for an environmental impact statement."

The net effect of this mixed ownership and uneven regulation is that the boom feeds the boom: Once drilling starts, adjacent mineral owners are under pressure to drill on their own property or risk losing their gas to their neighbors. Even those who want to go slowly may not be able to afford to do so.

"We can do the federal review, but if we don't have the same constraints on state and private land, I don't think we're doing the Powder River Basin any favors," says Willy Frank, who supervises the dozen BLM staffers who monitor coalbed methane drilling and reclamation.

Frank is careful to make notes when he visits a well site, filling out complaint forms about a poorly built water bar or an improperly located water discharge point. But his concerns seem oddly small in a radically changing region. Landscape-level issues do not seem to be on the BLM's radar screen.

"Never before have I dealt with an environmental issue where the big picture was so obfuscated," says Mark Gordon, manager of the 22,000-acre Ucross Ranch north of Buffalo, a veteran of Wyoming environmental battles and a member of HCN's board of directors.

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