Industry sees possible boom in eastern Wyo.; others worry about resource impacts

by Scott Streater, Environment & Energy reporter
November 27, 2012

REPRINTED WITH PERMISSION FROM ENVIRONMENT & ENERGY PUBLISHING, LLC. NOT FOR REPUBLICATION BY WYOMING MEDIA.

— The Bureau of Land Management is opening up potentially hundreds of thousands of acres in eastern Wyoming for oil and natural gas development, a move some say could spark a drilling boom in the region and others fear could dry up already scarce water resources.

At issue is BLM’s approval for exploratory oil and gas development in three areas that collectively cover more than 750,000 acres of mostly private ranchland in the southern Powder River Basin, predominantly in Converse County and a small section of western Niobrara County. BLM has calculated that the three areas could support as many as 444 horizontal and vertical wells, drilling from as many as 111 well pads.While the vast majority of the surface acreage is privately owned, the subsurface mineral rights mostly belong to the federal government, covering nearly 490,000 acres within BLM’s Casper Field Office.The agency last week released separate environmental assessments (EAs) of each development area, along with a corresponding finding of no significant impact (FONSI) and decision record for the Spearhead Ranch, Highland Loop Road and East Converse oil and natural gas development areas.BLM conducted the EAs in response to the recent filings of several notices of staking (NOS) and applications for permit to drill (APD) in the region. Anadarko Petroleum Corp., Chesapeake Energy Corp. and Samson Resources all have an interest in further exploring and gauging the extent of oil and gas reserves locked in shale and tight sand deposits, said Bruce Hinchey, president of the Petroleum Association of Wyoming in Casper.

Hinchey said these companies and others have already drilled wells in the region, mostly tapping into the Sussex Sandstone, Parkman and Frontier formations, as well as a small section of the Niobrara Shale formation, which is already booming in northern Colorado. So far, production in the limited number of wells in place has been good, “certainly good enough to pay for the wells and make some money,” he said.

“It’s early in the stages, and we’re not sure how much development we’ll see,” Hinchey said. “It’s a pretty interesting little play out there. It might get bigger; it might stay the same. We’ll see.”

The drilling area plan and the increased exploratory drilling should help answer that, allowing BLM to “better plan going forward,” said Joe Meyer, the field office manager in BLM’s Casper Field Office.

“I think there’s a lot of hope, but nobody has yet gotten to the point to where they’ve figured out what the full [oil] reserves are and what a full build-out would look like,” Meyer said.

But others have real concerns about the potential volume and pace of development in the region.

BLM should have conducted a much broader and extensive programmatic environmental impact statement (EIS) that included analyzing the cumulative impacts of developing the three areas on a host of natural resources, said Shannon Anderson, an organizer with the Sheridan, Wyo.-based Powder River Basin Resource Council, a group of more than 1,000 landowners who are concerned about drilling.

For example, Anderson said, the development area analyzed by BLM ties into ongoing drilling activity in the agency’s Buffalo Field Office to the north.

“We wanted the agency to look at them together because they’re all right next together and they tie into activity already under way in the Buffalo Field Office next door,” she said. “Our main concern is this [is] a new boom with new technology, including deep horizontal drilling and fracking, and there are socioeconomic impacts, truck traffic, and all that deserves an EIS.”

Anderson’s concerns are echoed somewhat by comments submitted to BLM on the three EAs from the Fish and Wildlife Service, which questioned whether the agency could say with certainty that the development would not “adversely” affect sensitive plant and animal species.

“As currently written, the three EAs do not provide enough information on the direct, indirect and cumulative effect of the project to support your effects determinations,” according to the FWS comments.

Meyer, however, said BLM compared data in each of the three EAs to determine cumulative impacts and that the relatively low natural resource values of the development area and the fact that the maximum 444 wells would be spread out over a large area ruled out the need for a programmatic EIS. In addition, he said the agency’s land-use plan in the region allows for the low-density drilling being proposed.

Water worries

One chief concern is the impact to water quantity in the region, Anderson said, noting that it takes as much as 5 million gallons of water to frack a single well.

“If you’re looking at more than 400 new wells, that’s a heck of a lot of water,” she said. “We just want BLM to think about how much water is going to be consumed, where it’s going to come from, and what will be the impact of that.”

Meyer, the BLM field office manager, said that not all 444 wells would be drilled at once. And he notes the conclusion in the EAs that the total volume of water used would amount to the equivalent of two days’ water use in Converse County.

“The drilling will occur over many different years, and so on any given year, the quantity of water will be relatively small,” he said.

Water quality is also an issue. The Lusk, Wyo.-based Niobrara Conservation District submitted comments to BLM requesting that it take steps in the plan to protect water quality in the region.

“The groundwater protection needs to be addressed from the stand point of the gas production wells as well as the water supply source for drilling and fracturing. This becomes a water quality as well as a water quantity concern,” say the conservation district’s comments.

BLM formally responded to the Niobrara Conservation District’s concerns by noting it has limited ability to require water well testing because it owns so little of the surface acreage covered by the plan.

Hinchey said the operators drilling in the region today have done a responsible job of ensuring the resources are extracted in an environmentally responsible manner.

If the region does spark a drilling boom, it would bring some much-needed revenue to the state, which has suffered with the low natural gas prices severely slowing gas drilling in the state and essentially ending coal-bed methane drilling activity, he said.

“This is a pretty good blessing for the state right now,” he said. “It’s going to bring in a lot more revenue in the state.”

Click here to read the decision records, EAs and FONSIs for the eastern Wyoming development plan.
— For more on this topic, read “‘Cloud Fracking’ and lateral drilling awakens Powder River Basin oil,” by Dustin Bleizeffer, originally published November 14, 2012.

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