Oil and gas lobby overstates job potential

Once again, the oil and gas industry’s bulldog lobbying group, Western Energy Alliance (formerly IPAMS, or Independent Petroleum Association of Mountain States), is grossly misleading the public and elected officials about the supposed suppression of jobs and revenue from proposed energy development in the West.

Dustin Bleizeffer

Western Energy Alliance (WEA) — whose supposedly mom-and-pop-sized members include Anadarko Petroleum Corp., EnCana Oil & Gas, Halliburton, Chesapeake Energy and Schlumberger — hired consulting firm SWCA Environmental Consultants to look at 22 proposed oil and gas projects in Wyoming and Utah that were subject to review under the National Environmental Policy Act.

WEA insists there are rigid timelines that federal regulators must abide by in any NEPA analysis, but remains silent on the industry’s tendency to oversize projects and change plans midway through analysis. Nonetheless, some projects were delayed by three years, which is “preventing the creation of 64,805 jobs, $4.3 billion in wages, and $14.9 billion in economic impact every year,” according to WEA and SWCA.

WEA would have you believe that if these 22 projects were stamped approved today, we’d soon add 64,805 jobs and set the stage for millions in wages and economic revenue over the life of the projects — all done with minimal negative impact to our public lands, water and wildlife, of course.

Nevermind that onshore oil and gas drilling has flourished under the Obama administration more than under any of the four previous administrations. This administration is determined to shackle the oil and gas industry. Nevermind that it was an all-hands-on-deck drilling pace that flooded the national market and killed the price of natural gas. Nevermind there is nary a spare drilling rig to sic on WEA’s estimated 1,720 delayed wells per year scenario in Wyoming. Nevermind all of that for a moment, and lets talk about jobs.

Most of these good jobs that WEA promises are hard to fill and even more difficult to keep filled. When it comes to these drilling locations, “it’s a revolving door,” testified Don Burkhart, adding that there’s a lot of inexperienced workers in the field.

Burkhart is a safety manager for BP America’s Wyoming operations, and he serves as chairman for the Petroleum Association of Wyoming’s safety committee. Last week Burkhart and several other industry officials testified at a hearing of the Wyoming Occupational Safety and Health Administration commission in Casper. At issue was whether to institute a new rule that would require all personnel on a drilling location to wear flame-resistant clothing (FRC), a question that appears to divide the industry down the middle.

In arguing against the proposed rule, several industry representatives said that to keep every worker in a $1,000 pair of FRCs would create an unnecessary cost, especially considering the high turnover rate in the industry. One industry person estimated that within a year, there’s 100 percent turnover on every rig. A well-service representative estimated that a core group of about 60 percent of workers stay with the job for several years, while the other 40 percent “is like a revolving door.”

Sounds like that would be an argument for FRCs. But back to jobs. At an industry job fair in Casper in March, oil and gas company recruiters said hiring is a constant challenge.

“I’m finding a lot of hands who have no idea what the oilfield is that are coming looking for work,” Unit Corp. recruitment manager Scott Evans told WyoFile.

There are literally hundreds, if not thousands, of jobs in the energy industry right now. However, “It’s quite the challenge to find the right people for the job,” said Evans. “I’m looking for energized people, people that are hungry looking for work, people wanting new challenges, dependable. Those are the things I’m looking for.”

Rather than blocking the creation of jobs, it would be more accurate to describe the 22 proposed drilling projects in Wyoming and Utah as a continuation of jobs. But that’s not fiery enough for WEA. Instead, regulatory officials and citizens who insist on careful environmental analysis must be regarded as enemies our nation’s energy interests.

“Federal policies discourage domestic oil and  natural gas production, and put the West at a disadvantage compared to other regions of the country without a preponderance of public lands. This study provides hard evidence of how bureaucratic delays are adversely affecting small businesses and working families,” said Kathleen Sgamma, WEA’s vice president of government and public affairs.

Sgamma fails to mention that the industry is running away from natural gas and toward shale oil which, for the most part, isn’t locked under federal lands and NEPA analysis. Most of the proposed drilling projects under NEPA analysis in Wyoming and Utah target natural gas. I hope that by the time those projects move forward, the price of natural gas will have recovered from what some consider to be an un-commercial level today.

So how can an industry with more work than it can keep up with — an industry that’s drilled so many wells that it killed the national natural gas market with a glut of production — possibly claim that, by not ripping the spigot clean off the valve, it is being squeezed into a miniature weak parody of its potential glory?

Andrew Schenkel, formerly of the Checks And Balances Project, has a theory about why WEA and others in the industry have chosen this narrative of job-killing regulation.

“They smell blood,” said Schenkel. “There’s this idea that all regulation can effectively be labeled as job-killing. If they can keep down renewable energy and eliminate what little competition they have, they see that as their holy grail of what they can accomplish.”

That would be a very cynical aim. I believe there is some genuine concern in the industry right now about future access to public lands, not because of blind prejudice against the industry or a blundering failure to understand how energy is developed on public land. It’s because at this point, we have more evidence in hand than we’ve ever had, and we understand now, better than ever before, about the real cost to land, water, air and wildlife.

When the Pinedale Anticline was originally approved, federal regulators only guessed that emissions would not be a problem. Now, we have hard evidence in hand that proves emissions from natural gas activity has led to dangerous ozone spikes — an impact that has rendered Sublette County in non-attainment of the Clean Air Act. When the coal-bed methane gas industry first charged across the Powder River Basin, the sage grouse wasn’t even on the radar for federal and state regulators. Now, the Powder River Basin sage grouse population teeters on the edge of functional extinction with no hope of recovery.

This time, we’re armed with more knowledge, better modeling and a much more clear understanding that there is a net impact on our natural resources — resources that drive other areas of our economy in the West. And this new information must, by law, be considered in NEPA analysis. If there have been delays in these projects it’s not because of punitive policy changes. It’s not because anybody wants to see American energy producers fail. It’s because we’re smarter this time, and the stakes have never been higher.

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

If you enjoyed this column and would like to see more quality Wyoming journalism, please consider supporting WyoFile: a non-partisan, non-profit news organization dedicated to in-depth reporting on Wyoming’s people, places and policy.

REPUBLISH THIS COLUMN: For details on how you can republish this column or other WyoFile content for free, click here.

Wyoming ranks among worst, again, in workplace fatalities

Wyoming’s workplace fatality rate in 2010 again was among the worst in the nation with an average 12.9 workplace fatalities per 100,000 workers, according to the most recent data available at the U.S. Bureau of Labor Statistics, which was released this week.

Only West Virginia’s fatality rate was worse, with 13.7 fatalities per 100,000 workers. Alaska reported a fatality rate of 11.5, North Dakota 8.5, and Montana 8.2, according the agency.

This most recent analysis confirms that Wyoming’s decade-long run as one of those dangerous places to work held firm in 2010. West Virginia’s “worst” ranking can be attributed to the Upper Big Branch mine disaster of April 5, 2010, when 29 miners were killed in an underground mine explosion.

Group lists Hoback among ‘most endangered’ rivers

The Hoback River in northwest Wyoming is one of the most endangered rivers in America due to proposed natural gas development, according to American Rivers. The group issued its annual list of America’s Most Endangered Rivers on Tuesday.

“The America’s Most Endangered Rivers report is a call to action to save rivers that are facing a critical tipping point,” Scott Bosse of American Rivers said in a prepared statement. “We all need healthy rivers for our drinking water, health, economy, and quality of life. We hope citizens will join us to ensure a clean, healthy Hoback River for generations to come.”

Plains Exploration & Production Co. plans to drill 136 natural gas wells from 17 pads near the headwaters of the Hoback in the Bridger Teton National Forest. The project has been under analysis for several years as state and federal agencies weigh the potential impacts of the project, which includes critical wildlife habitat and migration corridors.

— Click here to read a WyoFile feature on wildlife and natural gas development in the region.

Reprinted with permission from Environment & Energy Publishing, LLC. Not for republication by Wyoming media.

A day after Interior Secretary Ken Salazar approved a major new natural gas drilling project in Utah to the cheers of elected leaders, a new study prepared for an industry trade group concludes that federal regulations have delayed 22 major drilling projects representing thousands of jobs and billions of dollars in economic impact.

The 30-page study released yesterday and prepared by a consulting firm for Denver-based Western Energy Alliance is the latest development in the ongoing — and sometimes fierce — debate over the Obama administration’s public land use policies and their impact on domestic energy production.

Prepared for the trade group by Las Vegas-based SWCA Environmental Consultants, the study examined 3,164 wells proposed on 22 projects in Utah and Wyoming that were under the environmental review process required by the National Environmental Policy Act as of Jan. 1. The NEPA process resulted in project delays that have prevented adding more than 120,000 jobs and resulted in the annual loss of $27.5 billion in economic activity and $139 million in government revenue over the life of the projects, according to the study.

“Our members, especially the small independent businesses who are the backbone of the Western economy, know firsthand how difficult it is to operate on public lands,” said Kathleen Sgamma, Western Energy Alliance’s vice president of government and public affairs. “This study provides hard evidence of how bureaucratic delays are adversely affecting small businesses and working families.”

Sgamma’s comments echo those of Republican leaders in the West after Salazar this week signed a record of decision approving Houston-based Anadarko Petroleum Corp.’s Greater Natural Buttes Area Gas Development Project in northeast Utah’s Uinta Basin. The project calls for drilling up to 3,675 new natural gas wells over a 10-year period inside a nearly 163,000-acre section of the Uinta Basin that is managed by the Bureau of Land Management.

Sen. Orrin Hatch (R-Utah) and Rep. Rob Bishop (R-Utah), chairman of the House Natural Resources Subcommittee on National Parks, Forests and Public Lands, this week praised Interior’s approval of the project, but they also ripped Obama administration policies that they say have severely restricted energy development on federal land.

Rep. Doc Hastings (R-Wash.), chairman of the House Natural Resources Committee, this week accused Interior and U.S. EPA of holding up the Greater Natural Buttes project for years.

“If the Obama administration had simply done its job instead of playing politics, this project would already be well on its way to creating nearly 3,000 jobs and generating $5 billion in revenue,” Hastings said in a statement. “It is sad that what should be a minor record of decision for one project in Utah instead becomes a signature achievement of this administration — especially given their long record of blocking energy development.”

A complex issue

But the latest industry-funded study comes at a time of record oil production on public lands. Critics charge that industry has yet to develop most of the millions of acres of leases it already owns and that companies are sitting on several thousand unused drilling permits.

BLM Director Bob Abbey said last month that a slew of GOP bills designed to speed energy development on public lands are not “necessary or appropriate” and noted that the agency has taken aggressive steps to streamline the permitting process.

That includes launching a new automated system that could slash permitting times for onshore wells by two-thirds, down from an average wait time of 298 days.

“There are over 7,000 unused permits approved on public land, and those are just sitting there waiting to be developed. They’re ready to go,” said Brad Powell, energy director for Trout Unlimited’s Sportsmen’s Conservation Project in Payson, Ariz.

“I would acknowledge that there are going to be projects, particularly those that are controversial or in sensitive areas, that are going to be slow. And the BLM’s own processes have not always worked as efficiently as liked,” Powell said. “But ultimately, industry is not constrained by those few projects not moving forward, because they have lots of land already under lease and projects approved for development.”

Indeed, two of the 11 major projects in Utah cited in the study as delayed by the NEPA process include the Greater Natural Buttes project approved this week and the 400-unit South Unit Oil and Gas Development Project in the Ashley National Forest in northeast Utah approved in February.

“The sky is not falling,” said Steve Bloch, energy program director and attorney with the Southern Utah Wilderness Alliance. “These industry trade groups should stop their whining and acknowledge that Secretary Salazar’s oil and gas reforms are working.”

Click here to read the study.

Streater writes from Colorado Springs, Colo.

(Banner photo by T. Larson/Flickr)

Reprinted with permission from Environment & Energy Publishing, LLC. Not for republication by Wyoming media.

U.S. EPA has determined that southwest Wyoming’s Upper Green River Basin no longer meets federal ground-level ozone pollution standards, a conclusion that could significantly affect two of the nation’s largest oil and natural gas fields.

Industry and state leaders were not surprised when EPA Administrator Lisa Jackson submitted a letter to Gov. Matt Mead (R) last week notifying him that the region does not meet the ozone standard.

The Upper Green River Basin, which is home to the Jonah Infill and Pinedale Anticline oil and natural gas fields, has struggled the past four years with a wintertime ozone problem that is marked by stagnant air that allows pollution emitted mostly by drilling operations to collect in the lower atmosphere and then be converted into ozone by sunlight and heat reflecting off snowpack on the ground.

Last year, EPA monitors registered 13 days from January to March when ozone levels in the basin exceeded the health-based standard of 75 parts per billion averaged over an eight-hour period. That included a March 2 ozone reading of 124 ppb — higher than the worst ozone levels recorded last year in Los Angeles.

EPA’s “nonattainment” determination is based on three years of ozone readings in the basin from 2008 to 2011. The average fourth-highest annual reading over the three-year period was 78 ppb.

“Encana is going to continue to do whatever we can to reduce emission in all forms, and our goal is to continue down the path of trying to attain a near-zero-emissions operation,” said Randy Teeuwen, a community relations adviser for Calgary, Alberta-based Encana Oil and Gas USA — the largest operator in the Jonah Infill with 1,300 natural gas wells. “We don’t want any emissions, so we’ll continue on as we have. And I think we’ve been a leader in that regard as far as working with the state and other operators, the EPA and the community in order to accomplish that goal.”

But the nonattainment notice could affect future development in the Pinedale Anticline and Jonah Infill.

Thousands of new natural gas wells have been proposed for the region, including a proposal by Encana to drill as many as 3,500 natural gas wells on nearly 141,000 acres of land managed by the Bureau of Land Management in Sublette County.

If approved, the Encana proposal, called the Normally Pressurized Lance (NPL) project, would be among the nation’s largest natural gas fields, producing trillions of cubic feet of gas over 50 years and essentially quadrupling the size of the Jonah Infill and more than doubling the 1,300 wells in place there today.

BLM is evaluating the proposal, and a draft environmental impact statement could be issued by the end of the year, Teeuwen said.

Teeuwen said Encana is committed to a number of steps to ensure the NPL project does not degrade air quality in the region. Among them, the company would install a closed-loop piping system that would allow all its gas production to be piped directly to a processing plant where the gas is separated from the water and oil. And all the equipment would run on electricity, so there would be few if any direct emissions, he said.

In addition, Encana officials say that by the time the company begins installing the estimated 350 wells a year called for in the NPL project, drilling in the broader Jonah field will be winding down, leading to overall lower emissions.

“Our expected emissions footprint will be far below our current emissions in Jonah,” he said.

Ongoing concern

The Upper Green River Basin designation was one of more than 40 ozone nonattainment designations nationwide announced last week under ozone standards established under the George W. Bush administration in 2008 and finalized late last year, said Rich Mylott, an EPA spokesman in the agency’s Region 8 office in Denver.

Because EPA determined the region to be only marginally out of compliance, the state has three years to correct the problem and bring emissions below the federal threshold. EPA is expected by July to issue rules outlining steps to bring the region and others like it into compliance within three years, Mylott said.

Jackson, the EPA administrator, wrote in her April 30 nonattainment letter to Mead that the agency is trying to implement the ozone standards “using a common sense approach that protects air quality, maximizes flexibility and minimizes burden on state, tribal and local governments.”

But she also noted in her letter that nonattainment areas such as the Upper Green River Basin “need to take actions to improve ozone air quality expeditiously.”

At high concentrations, ozone can trigger asthma attacks and inflame the conditions of those with emphysema, bronchitis and other respiratory diseases.

EPA’s notice affects all of Sublette County, Wyo., and parts of two neighboring counties, Lincoln and Sweetwater, said Keith Guille, a spokesman for the Wyoming Department of Environmental Quality.

Then-Wyoming Gov. Dave Freudenthal in 2009 formally asked EPA to designate Sublette County and parts of the two neighboring counties as violating ozone health standards.

Freudenthal’s letter included an analysis from the state DEQ that concluded the region’s ozone problems were “primarily due to local emissions from oil and gas” drilling operations.

Guille said the state has been working closely with industry for years in the Upper Green River Basin. “I would say the largest source [of ozone precursors] in that area is the oil and gas industry. So we’ve worked very hard on efforts to try and reduce those emissions.”

But environmentalists who have complained for years about air quality problems in the region say it’s about time EPA stepped in and put the hammer down.

“We are happy and very glad that they’ve finally gone through with it even though they’ve done a lot of foot-dragging,” said Elaine Crumpley, a Pinedale, Wyo., resident and chairwoman of Citizens United for Responsible Energy Development. “This is a start, and at least we’re finally going in the right direction now.”

Click here to read the EPA nonattainment letter.

Streater writes from Colorado Springs, Colo.

(Banner photo by John Amos/Flickr)

What is all this frackin’ nonsense?

My introduction to hydraulic fracturing was relatively benign. As the floor hand on Chuck Eivtt’s workover rig in an old oil field south of LaBarge,Wyoming, I neither knew anything nor needed to. My dirty job, wearing several layers of insulated clothing and cheap snowmobile boots, was to stand on the rig floor, work the tongs, unscrew the sucker rods and tubing, and get everything out of the hole on schedule. After we pulled the rods and tubing, bolted some valves on the well head, tested the blowout preventer and pulled tricks which would make Mitt Romney’s college hazing look like beginner’s practice, we would retire to the dog house to eat and smoke. Everyone smoked, but not on the rig.

One of our favorite tricks was to whipsaw the drill pipe to try to knock the derrick hand off his feet. As he was wearing a safety harness, we didn’t have to worry about him falling 50 feet onto my head, and besides, he started it. We pulled 2-and-7/8 tubing out of the hole in 2-joint, 60-foot stands. I would unscrew every other 30 foot joint with power tongs and the driller would lift the two joints a few feet and I would hold the pipe and push it over to the side to stack it on huge wooden pads. As I was doing that, the derrick hand, 22 years old and father of two, would shake the top of the sixty-foot stand of pipe. The whiplash effect would sometimes knock my 19 year old self off my feet. However, the same process worked in reverse, so we had contests to see who could put the other one on his ass.  The driller (the crew supervisor) looked the other way. The toolpusher (the boss for the rig company) looked the other way. The “company man,” who worked for Texaco, which owned the lease, did not look the other way. Butts got chewed and the whiplash game stopped. I wonder how much of this still happens.

The lease owners were converting wells from oil to gas producers. This process required removal of pump rods and tubing, plugging off the deep oil zone, perforating the casing in the gas zone, hydraulic fracturing, swabbing out the bore, replacing the tubing and putting the well on production. When we had everything pulled out of the well, the toolpusher would call Halliburton, which would send a huge fleet of trucks to the well. Some trucks were platforms for several-thousand-horsepower pumps. Others carried tanks for mixing frack fluids. Others carried tons of supplies and still others carried enough pipe to connect China toTaiwan.

When they arrived we had to exit the propane-heated dog house and help the Halliburton hands (we didn’t see Dick Cheney) hook up all of the pipes to connect several pump trucks and several tank trucks together to send everything into the well. Then we went back to the dog house while the Halliburton guys did their thing. When they were done, out we came to disassemble everything and put it back on the trucks.

The next day we came out, opened the valves AFTER testing the blowout preventer, and swabbed all of the leftover water/fluid out of the well into a temporary pit, then piped the gas to a flare and lit the flare to burn off the gas until we had all of the fluid out and were ready to put the gas into a pipeline.

Mule deer were on the locations every morning. Wild horses were just down the road. None of them cared that we were there. As long as you don’t hit them on the roads they will be okay.

We were doing these frac jobs in 1971. Fracking has been a commonly accepted oil and gas procedure for many decades. Not any more. France has banned the practice. Eastern European countries, desperately dependent upon Russian gas derived from hydraulically-fractured gas fields, are nonetheless about to perpetuate their servitude by following the French example. There is a pot of gold at the end of the rainbow but if you leave it buried, the pot does no one any good.

Hydraulic fracturing is the best antidote to OPEC anyone has invented. It creates jobs, tax revenues, royalties for private and government owners and a stimulus to American manufacturing. Economists note that a persistent problem with economic recovery in this country is a shortage of revenue for state and local governments, which are forced to lay off public employees. Domestic oil and gas production can generate huge revenues for local governments, revenues that are now going to overseas producers.

Yeah, yeah, blah, say my friends, we see this stuff on TV when the America’s Natural Gas Alliance, Conoco, BP and Exxon buy ads. Yeah, well, say I, it’s still true.

So the question is, does injecting water, gum, solvents, sand and potassium chloride into generally impermeable shales 6,000 to 10,000 feet below the surface do something really bad?

Much is made of the disclosure of the chemicals in frack fluids. I do not know why Halliburton is so worried about the disclosure and I don’t know why the environmental groups are so obsessed with this issue. It appears that if someone wants to hide the pea, that means the pea is radioactive, and therefore the watchdogs must find it. The pea is nothing, folks. Fracturing formations requires a lot of water, some thickening agents like gum, sand to prop open the cracks, occasionally solvents like benzene and toluene (commonly used in shops and garages, but of course one should not drink it), and sometimes diesel fuel.  Diesel is an excellent solvent for cleaning and other uses. It is commonplace. Don’t drink it. But the fact that diesel is used for fracturing should not be alarming.

These chemicals can be toxic if they show up in your drinking water, of course. If companies are sloppy when they dispose of recovered frack fluids, public water supplies can be contaminated. Sloppy disposal of frack fluids which are swabbed out of wells would be negligent, stupid and in my view felonious. Frack fluids do contain things which are not good for you, and reckless disposal of such fluids should be punished, severely.

But the big controversy about fracking does not revolve around negligent practices once the fluid is sucked out of the well and sent to disposal; the controversy which worries so many people is manufactured: people who understand nothing about geology and engineering perpetuate the myth that fracking shales at 8,000 to 10,000 feet down will contaminate public water supplies which are usually found at depths of less than 1,000 feet.

Thick steel pipe is used to case wells before any hydraulic fracturing begins. Tons and tons of cement are used to seal the gaps around the pipe. Layers and layers of dense impervious rock separate the Marcellus Shale or the Niobrara or the Bakken from the sandstone and limestone layers from which people pump drinking water. Neither a Vesuvius eruption nor a Japanese tsunami would change scientific fact. But the EPA can wave its regulatory trump-card wand and turn science into a political kaleidoscope.

Many environmental groups want the EPA to regulate fracking. Time will tell.

Just about all of my clients hate the EPA. Many of my friends do not understand why I too have strong negative feelings about the EPA, but I have seen too much disproportionate harsh enforcement actions first hand. I guess if one wants the EPA to shut down drilling, or coal plants, then the EPA’s stance, from their perspective, is “based on good science.” Unfortunately, basing policy on good science is often more politicized than it is scientific.

The Interior Department is beefing up its regulations of fracking on federal lands. My editor wants me to participate in a discussion of the  proposed new rules, so that will be Part II of this commentary. The review of the new rules in the Federal Register is filled with reassurances that the new rules will not hamper or slow industry activity, but this much is clear already: that is hype. More details to follow.

REPUBLISH THIS STORY: For details on how you can republish this story or other WyoFile content for free, click here.

— If you enjoyed this article and would like to see more quality Wyoming journalism, please consider supporting WyoFile: a non-partisan, non-profit news organization dedicated to in-depth reporting on Wyoming’s people, places and policy.

Dark Day Over Good Medicine

Clouds roll over the hills adjacent to the Medicine Wheel in Bighorn National Forest. (Mary Gordon/WyoFile — click to enlarge)

(Click to enlarge)

— Editorial cartoons are the signed opinion of the artist, and do not necessarily reflect the opinion of WyoFile’s staff, board of directors or its supporters. Although WyoFile encourages Wyoming media outlets to run original WyoFile content for free, we ask that editors who wish to republish “Draw!” seek permission from author Greg Kearney via editor@wyofile.com. To visit the “Draw!” archives, click here.

Chesapeake blowout; State issues preliminary investigation results

A preliminary investigation of the April 24 blowout of a Chesapeake Energy oil well suggests the cause was a mechanical failure, or “improper engagement of wellhead lockdown pins,” according to the Wyoming Oil and Gas Conservation Commission.

There were no injuries reported in the incident, but dozens of nearby residents were asked to voluntarily evacuate their homes during the 66 hour event.

Commission supervisor Tom Doll issued this report Thursday morning:

Summary of the OGCC Incident Investigation Report (Chesapeake Combs Ranch Unit Well 29-33-70 1H, Converse County, WY API 49-009-28568):

OGCC investigators conclude that a mechanical failure of the B section wellhead resulted in the loss of well control.  The B section wellhead and the lockdown pin recovered onsite have been transported by Chesapeake to a metallurgical laboratory in Baton Rouge, Louisiana.  Identification of the mechanical failure of the lockdown pin or the B section wellhead itself awaits the metallurgical laboratory analysis.  The B section wellhead is located below the blowout preventer stack, choke spool and blind ram.

The OGCC investigation also identifies contributing factors to the incident:  1) delay in observation of and response to a gain in drilling mud in the pits during the running of the production casing prior to the incident; and 2) improper engagement of wellhead lockdown pins.

The OGCC estimates that the total volume of natural gas released to the atmosphere was less than 2,000 MCF total throughout the entire 66 hour incident.  The OGCC estimates that the total volume of oil based drilling mud displaced from the well as liquid and atomized as mist did not exceed the amount of drilling mud in the well at the time of the incident which is estimated at 750 barrels.  OGCC personnel continue monitoring, sampling and inspection of the ongoing area clean-up.  The affected area is estimated at 4 acres (drill pad site) and the impacted area is estimated at 52.2 acres.

No OGCC regulatory action is planned pending final drill pad and impacted area cleanup, sampling results and site inspection confirmation of proper handling of materials.  Chesapeake continues to cooperate fully with the OGCC investigation.

The full OGCC Incident Investigation Report can be found on the Wyoming Oil and Gas Conservation Commission web page http://wogcc.state.wy.us by clicking on the Bucking Horse Icon “Notices, Memos and Details” on the upper right side of the page.

— See related WyoFile story from April 25.

Seismic crews working in the Niobrara shale oil play caused serious rutting and other surface damage earlier this year on 10 different ranch properties in southeast Wyoming, resulting in several state-issued citations for the operator, Fidelity Exploration & Production Co., and the seismic contractor, GeoKinetics.

On Tuesday, the 5-member Wyoming Oil and Gas Conservation Commission (OGCC) board voted unanimously to fine Fidelity up to $500 for failure to follow the approved plan of operations. The board also voted unanimously to fine GeoKinetics $2,000 for each of the 10 ranch properties damaged for a total of $20,000. Originally, OGCC staff had recommended a $10,000 fine, but OGCC board member Gov. Matt Mead successfully added an amendment to double the fine, and suspend the additional $10,000 on the condition that the landowners are satisfied with remediation work.

“I want to make sure the landowners are compensated,” said Mead, whose family owns ranching operations in southeast Wyoming.

For now, there’s no order to compensate the landowners beyond whatever each might have worked out in their individual “surface use” agreements with Fidelity. The state holds a $75,000 bond posted by Fidelity for the project, and GeoKinetics has a $50,000 blanket bond posted with the state, both of which could be used to cover repairs if the companies do not meet their current obligations. However, there’s no compensation for taking significant portions of the ranches out of production as repairs and reclamation take place.

“We haven’t been compensated for it. … I sell my grass to other cattlemen and that’s how I make my living,” Goshen County rancher Darrel Hamilton told WyoFile.

Hamilton and several other ranchers attended the OGCC’s hearing on Tuesday, voicing their concern that the damages to their property may never be fully repaired.

In several areas GeoKinetics used the wrong type of tires for its vibroseis fleet, leaving ruts deeper than six inches, and tearing up hillsides and channels.

Lucas Keeler, natural resource technician for the OGCC, testified that at first the seismic operator downplayed the extent of the damage. “I don’t think the extent of the damages was quite reported,” Keeler told the commission board.

Repairing the damaged surface may be a challenge, and it’s likely to interfere with ranching operations. Hamilton said the biggest concern is erosion from the deep rutting. One option is to haul in topsoil impregnated with seed.

“And hopefully we get the right moisture at the right time to get that to grow,” said Hamilton.

The topsoil amendments must be staked down and fenced off from cattle, which is likely to take a portion of the ranching operations out of production for 3-5 years, according to Hamilton.

In general, farmers and ranchers in the region — especially those who own mineral rights — have embraced the recent search for shale oil in hopes of sharing in the revenue. Some of the landowners who suffered damages in the Rocky Hollow seismic project said they still support the industry. In a letter to the commission, John Kessler of the Kessler Ranch wrote;

“When we were approached by Fidelity about seismography, we agreed without hesitation. Our neighbors’ ranch had been surveyed recently, and they were impressed by their efficiency and lack of impact. We have watched Fidelity build a road and drill two wells in our community. It is obvious that every consideration has been given to their maintenance and reclamation. That is what we expect. We also expect fairness and good representation from our oil and gas commission.”

However, OGCC staff had been dissatisfied with GeoKinetics’ previous work in Wyoming, including the “Little Mitchell” project in northeast Wyoming where state inspectors found “numerous violations of the commissions rules and regulations,” according to state documents. In email correspondence, OGCC’s Keeler explained to a Fidelity representative why he was recommending a higher bond ($75,000) for the Rocky Hollow project; “Truth be told, there are two Geokinetic projects where the work wasn’t satisfactory, and we are having to wait until spring for these projects to be completed correctly.”

Powder River Basin Resource Council (PRBRC), a landowner advocacy group based in Sheridan, said the Rocky Hollow case highlights a profound weakness in Wyoming’s split-estate law.

In many instances, the surface estate is separate from the underlying minerals, yet the owner of the mineral estate has the right to enter the surface to access his minerals. That’s split-estate. If the surface and mineral estate owners don’t come to an agreement and sign a legally-binding “surface use” agreement (which typically includes compensation to the surface owner), then the mineral owner must post a minimum $2,000 bond with the state.

That bond, which resides with the state and not the landowner, is supposed to cover any surface damages by the oil and gas operation. Landowner advocates such as the PRBRC have argued that the $2,000 split-estate bond doesn’t come close to covering the potential surface damage of oil and gas operations, nor does it compel operators to negotiate a surface use agreement in good faith.

The split-estate issue didn’t enter the Rocky Hollow seismic case. However, the extent of the damage is the same that a split-estate surface owner might face — with only a $2,000 bond posted with the state.

“The property damages to these landowners from the seismic operations in this case is another example of what an insult the $2,000 bond is to landowners. That low bond does not begin to address the damages, the cost of reclamation or act as an incentive for industry to act responsibly or negotiate in good faith,” said PRBRC organizer Jill Morrison.

The PRBRC published a report on the state’s split-estate act in 2010, criticizing the $2,000 bond. Industry fought against a measure in 2011 to raise the minimum split-estate bond from $2,000 to $10,000. The Legislative Judiciary Committee is taking up the topic again this summer during the interim.

“At least, the Wyoming Oil and Gas Commission was on top of the damages in this case but only because the landowners forced the issue,” said Morrison. “We need to raise the bond for oil and gas industry for seismic activity and for all oil and gas activity.”

GeoKinetics declined a request by WyoFile to comment on the case. Fidelity didn’t respond to requests for comment.

Contact WyoFile editor-in-chief Dustin Bleizeffer at (307) 577-6069 or dustin@wyofile.com

REPUBLISH THIS STORY: For details on how you can republish this story or other WyoFile content for free, click here.

If you enjoyed this article and would like to see more quality Wyoming journalism, please consider supporting WyoFile: a non-partisan, non-profit news organization dedicated to in-depth reporting on Wyoming’s people, places and policy.