BLM takes new steps to encourage Powder River CBM drilling

May 6, 2003
Producers moved one step closer toward expanding coalbed methane drilling in the Powder River basin under a recent decision by the US Department of the Interior's Bureau of Land Management.

Maureen Lorenzetti
Washington Editor

WASHINGTON, DC, May 6 -- Producers moved one step closer toward expanding coalbed methane drilling in the Powder River basin under a recent decision by the US Department of the Interior's Bureau of Land Management.

BLM Apr. 30 released a final "record of decision" (ROD) regarding oil and gas development on Montana and Wyoming public lands. After more than 2 years of consideration, the agency, in cooperation with the Department of Agriculture's US Forest Service, and the US Environmental Protection Agency, released a draft environmental impact statement in January subject to public comment (OGJ, Jan. 20, 2003, p. 32). The ROD follows the end of the public comment period.

Up to 66,000 new CBM wells could be drilled in the region by 2011.

US officials then and now support a leasing plan in both states that allows for more drilling using environmental safeguards largely supported by industry. Those mitigation procedures include a variety of measures regulators say will ensure compliance with clean air and clean water rules. Earlier EIS drafts projected federal water rules would be broken due to surface discharge of produced water in certain watersheds.

BLM officials now say they no longer have those concerns and are confident industry can maintain federal and state clean water standards.

In Wyoming, BLM regional officials want producers to consider a water management plan that uses infiltration of produced water. Wyoming BLM officials say using infiltration " would maximize local beneficial use of the produced water rather than discharging the water downstream, where the state and surface owners get no benefit from this resource." BLM added that infiltration also would help with deeper aquifer recharge in the Powder River basin; its environment analysis "encourages" treatment of produced water, "where feasible and practicable."

Federal regulators said that infiltration is also an attractive option because it is consistent with local permit requirements that involve separate water management strategies for each subsidary watershed.

The Montana BLM report says an operator can use a variety of water management and mitigation options "so there is no degradation" as defined by local environmental statutes.

Regulators said that in Montana produced water management options include but are not limited to injection, treatment, impoundment, and discharge.

Producers still are facing legal issues over state water rules. Environmental pressure groups contend that Montana faces the most damaging environmental impacts because a lot of the state is downstream of most proposed development.

Last month the Ninth US Circuit Court of Appeals ruled that water from CBM wells is a pollutant and that Montana cannot exempt CMB water from the federal Clean Water Act. The state also cannot bypass state permitting requirements for discharging pollutants into rivers and other surface water, the court ruled. The appeals court reversed a US District Court ruling from 2002 that found CBM is not a pollutant under federal clean water rules, meaning producers were not required to secure a water management permit under state law.

More steps
BLM regional officials stressed that this latest approval is only one step in the regulatory process.

The ROD does not approve a specific exploration or development plan. Additionally, BLM still must conduct an "appropriate" level of environmental review prior to approving various development activities, such as construction, drilling, and reclamation. A variety of other federal and local permits will also be necessary in most actions.

To help move the process forward, BLM said it will establish a working group, consisting of tribes and state and federal agencies, including representatives from EPA, the National Park Service, and the Forest Service to assist it on oil and gas development issues.

"Coalbed natural gas is a valuable source of natural gas serving the nation's critical energy needs," said BLM Wyoming State Director Bob Bennett. "We will continue to deal with this important resource in a responsible manner, ensuring a balance in land use."

Producers praised BLM's action.

"The BLM's tireless efforts over the last 3 years have now completed the most thorough and comprehensive analysis of this basin and the single largest EIS ever conducted in the United States," said Western Gas Resources Inc. Pres. Peter Dea.

"We extend to the BLM, the state of Wyoming, other contributing agencies, and the public our appreciation for participating in this process and look forward to working with all of them to deliver clean-burning, domestically produced natural gas to fuel America's future".

BLM officials anticipate a total of 77,000 CBM wells by 2011, up from 12,000 existing or permitted wells today.

Legal challenges
But environmental groups and some ranchers who have land that sits atop federal minerals were unhappy.

Several environmental groups immediately filed lawsuits in federal court to block possible development. Earthjustice filed suit (joined by the Natural Resources Defense Council, the Wyoming Outdoor Council, and the Western Organization of Resource Councils) in Montana. The coalition says BLM ignored evidence that expanding CBM drilling will hurt groundwater.

Stated Tom Darin, representing the Wyoming Outdoor Council, "We knew we'd get increased energy production on public lands in this administration. The Powder River basin project, however, was the perfect opportunity for BLM to live up to the other half of its promise: to utilize the latest and best technologies to reduce impacts. By failing to include alternatives that addressed aggressive water treatment and phased development to reduce overall impacts, BLM has let the public down once again."

The groups also criticized BLM's decision to conduct separate studies in the two states instead of assessing the whole basin.

BLM said regional offices in Wyoming and Montana released separate RODs because the EIS's involved independent jurisdictions and legal responsibilities.

Separately, the Northern Plains Resource Council filed a lawsuit in Montana concerning rancher property rights and water quality concerns. The American Lands Alliance, meanwhile, is pursuing legal action in both Wyoming and Montana. They maintain development will have a dangerous impact on endangered species.