Before Ciris Energy Inc. successfully lobbied for a new law allowing for the microbial production of coal-bed methane gas in Wyoming, it got in trouble under the state’s existing rules.

Ciris Energy Inc. allegedly injected chemicals into the Fort Union coal formation in the Powder River Basin without first obtaining a permit for the action, according to state records. Company representatives are scheduled to appear before the Wyoming Oil and Gas Conservation Commission in a “show cause” hearing Tuesday in Casper.

Ciris also faces enforcement action for the same alleged violation by the Wyoming Department of Environmental Quality which issued a “notice of violation” to Ciris on December 10, under the agency’s authority to oversee injections into “waters of the state.” The company’s defense, according an email from a Ciris representative to a Wyoming state legislator, is that the permitting responsibility was with the well owner, not Ciris.

At this point, the charges are merely accusations. The Oil and Gas Conservation Commission could dismiss its case against Ciris. DEQ could rescind its notice of violation, which happens frequently, or Ciris could face monetary penalties in one or both cases.

Ciris maintains it should only face enforcement action from DEQ. However, it appears that Ciris has admitted to breaking the rules. Ciris filed a motion to dismiss the Oil and Gas Conservation Commission’s case. In that motion, Ciris states “Ciris has agreed to pay the State of Wyoming WDEQ’s proposed settlement value of $25,920 and arrange for additional water sampling and analysis from the subject wells pursuant to its pending settlement of NOV Docket No. 4782-10 with WDEQ.”

Asked to comment on Ciris’ alleged violations, Lynne Boomgaarden, who represents Ciris in Wyoming, told WyoFile, “Ciris and I have no comment.”

Ciris Energy and Luca Technologies both plan to develop coal-bed methane gas in Wyoming by stimulating the microbial process that turns coal into natural gas. But state regulators said that the unconventional method of production didn’t quite fit within Wyoming’s existing oil and gas regulations.

DEQ and the Oil and Gas Conservation Commission joined the companies in support of Senate File 116 to enable state regulatory agencies to permit the activity, but Ciris’ alleged violations were barely mentioned in legislative debate over the bill — some claim the alleged violations were not openly discussed at all.

Environmental and landowner groups are wary of “microbial stimulation” because many rural households get their drinking water from the same coal aquifers in the Powder River Basin. They worry that the “nutrients” Luca and Ciris want to inject into the coal seam to stimulate microbial gas production could degrade water quality. As with hydraulic fracturing, there’s pressure on the agencies to to demand and disclose a thorough list of chemicals or nutrients injected into the aquifers on a well-by-well basis.

Since DEQ and the Oil and Gas Conservation Commission seemed eager to adopt rules for the unconventional process, critics of the legislation will closely scrutinize how the agencies handle Ciris’ alleged violation.

Contact Dustin Bleizeffer at 307-577-6069 or dustin@wyofile.com.

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Published on March 4, 2011

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