Reprinted from LandLetter with permission from Environment & Energy Publishing, LLC. www.eenews.net. 202/628-6500
By Scott Streater, E&E reporter

Federal regulators are nearing approval of a natural gas development project in southwest Wyoming that would serve as a testing ground for new mineral extraction technology while becoming one of the largest carbon sequestration pilot projects in the world.

Denver-based Cimarex Energy Co. has asked the Bureau of Land Management for permission to drill three new natural gas wells and a large acid gas injection well where more than 3 million tons of carbon dioxide (CO2) and hydrogen sulfide (H2S) a year would be injected thousands of feet underground.

[editor’s note:  while the Cimarex effort is the largest pilot project of its size, it is not yet of a scale to deal with massive C02 storage challenges faced by the state.  For example,  the Exxon Shute Creek  facility near Opal discharges twice the amount of C02 that will be injected by Cimarex.  The Jim Bridger Power Plant east of Rock Springs discharges six times the Cimarex amount]

The $350 million Rands Butte project would involve nearly 38,000 acres of BLM and Forest Service land west of Big Piney, Wyo.

Cimarex said the operation could produce 365  million cubic feet a year of helium — an increasingly rare gas that is critical in the aerospace and research industries. In addition, the project would extract as much as 39 million cubic feet a day of natural gas from the rich Madison Formation, according to federal records.

The problem is that the project would also produce large volumes of waste gases, including CO2 and toxic hydrogen sulfide, which can be fatal at high concentrations.

While federal approvals are pending, Cimarex has already begun construction of a facility on nearby state land that will employ groundbreaking technology to separate helium and methane from CO2, hydrogen sulfide and other unwanted byproducts.

If the technology succeeds, it could aid in the extraction of billions of cubic feet of gas worldwide that remains untapped because it is mixed with CO2 deposits, said Scott Stinson, a Cimarex Energy project manager.

That is why the Rands Butte carbon sequestration portion of the project “would absolutely help development sequestration on a commercial scale,” said John Talbott, deputy director of the Big Sky Carbon Sequestration Partnership, a federally funded program that wants to partner with Cimarex on its research.

“We will be handling a large volume of CO2 and putting it back into the ground,” Stinson said. “We’re hoping this effort will help demonstrate how to sequester a large volume as safely as you can.”

Wildlife, geologic impacts

But a number of difficult questions remain, including possible impacts to air quality in a region that already violates federal ozone standards, as well as the threat of hydrogen sulfide leaks triggered by seismic activity in the geologically unstable region. Such seismic activity could be caused by natural events, such as earthquakes, or by the pumping of CO2 into underground pore spaces, according to a BLM draft environmental assessment (EA) released this month.

Cimarex has agreed to take extensive mitigation steps to minimize these risks over the 40-year life of the project, Stinson said.

Cimarex Energy Co., which seeks BLM permission to drill three natural gas wells and an acid gas injection well on BLM land in southwest Wyoming, already has production wells in place on adjacent state land. Photo courtesy of Cimarex Energy.

But even with precautions, some impacts may be unavoidable.

For example, Cimarex’s plan calls for a 230-kilovolt electric transmission line to power the helium and methane recovery plant. But such a line would have to pass within a half-mile of a sage grouse breeding ground, or “lek,” where “significant adverse impacts” to the rare bird would be expected, according to the EA.

“That has been identified as a potentially significant impact to that lek,” said Bill Lanning, the BLM’s lead manager on the Cimarex project.

Sage grouse have become a huge impediment for all forms of development in Wyoming because the birds have become so rare that they may warrant special protection under the federal Endangered Species Act. The Fish and Wildlife Service is set to decide next month whether to list the bird as a federally threatened species.

With FWS’s decision looming, Wyoming state officials have taken extraordinary steps to try to steer development away from state-designated sage grouse “core areas,” but it remains unclear whether such measures are enough to prevent an ESA listing.

Lanning said BLM has proposed an alternate route that would move the transmission line an additional half-mile away from the lek. But Stinson said moving the line — which crosses a patchwork of federal, state and private lands — could be difficult. One private landowner who agreed to allow the line to cross his property, for example, may be resistant to a redesigned right-of-way.

“We will do the best we can to honor what the BLM wants and what the landowners want,” Stinson said.

Another potential problem involves the injection of large volumes of CO2 and H2S underground because the pumping of the gases could create a shift in underground pressures, leading to a seismic event. The proposed project area “is in a tectonically active area with complex faulting,” according to BLM’s draft EA, “and earthquakes of moderate magnitude are possible.”

U.S. Geological Survey models indicate the general project area has a 10 percent chance of experiencing an earthquake strong enough to produce “perceived shaking and light damage” over the next 50 years. However, the draft EA notes the project location “is very near” a more susceptible seismic zone where a much stronger earthquake is possible.

Wyoming regulators last year granted Cimarex Energy permission to begin construction of a gas recovery plant that will employ new technologies to separate the valuable helium and methane gas from unwanted carbon dioxide and hydrogen sulfide. Photo courtesy of Cimarex Energy.

“These statistical probabilities indicate that the chance of an earthquake of magnitude 6.5 or greater occurring at some point during the life of the project is possible at any time,” according to the EA.

While BLM concedes such an earthquake is unlikely to “alter the current geological conditions of safe containment” in the project area, the EA was careful to caution that a quake of that magnitude “could cause failure of well casings, sour gas pipelines, injection well pressure controls, or [create] rupture or leaks” at the project site.

Regulators noted that the Cimarex project must be engineered to account for such risks, but Lanning noted that other nearby facilities that have done just that.

He pointed to a Exxon Mobil Corp. gas plant 42 miles south of the Cimarex site that has been injecting H2S into the Madison Formation for years. According to the EA, ExxonMobil had by September 2008 “successfully and safely injected” 23.6 billion cubic feet of gas into underground formations.

As an added precaution, Cimarex has said it will place air-monitoring sensors in several locations that would signal leaks and prompt plant managers to begin emergency shutdown operations.

Ozone concerns

A secondary concern involves potential impacts to air quality in southwest Wyoming.

The Rands Butte project would be located in Sublette County and a portion of neighboring Lincoln County, neither of which meets current federal health standards for ground-level ozone. A formal “nonattainment” designation from U.S. EPA could be forthcoming (Land Letter, March 19, 2009), and Wyoming’s oil and gas industry could find itself in the regulatory crosshairs if EPA tightens its ozone health standard even more, as the agency proposed last month (Land Letter, Jan 14).

A 2009 technical analysis of air quality in the region by the Wyoming Division of Air Quality found that a significant portion of ozone-forming pollution in the area came from oil and gas fields. And ozone’s two primary ingredients, nitrogen oxides (NOx) and volatile organic compounds (VOCs), would be emitted from the Rands Butte project.

According to BLM’s analysis, the facility would release an estimated 8.3 tons of NOx and 13.7 tons of VOCs annually.

But Stinson said Cimarex is working with regulators to address the air quality concerns, taking measures such as upgrading pneumatic equipment at another natural gas operation in Sublette County and donating $1.5 million to help fund habitat improvement projects in the region.

“We worked with the state air-quality people very early in the process, and we think we’ve come up with a good plan,” Stinson said.

The EA is open for public review and comment through Feb. 25, and BLM expects to render a final decision on the project by mid-April.

Streater writes from Colorado Springs, Colo.

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Published on February 7, 2010

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