Montana Gets a Crash Course in Methane
by Hal Clifford
High Country News
Vol. 33 - No. 21 - November 5, 2001
The Powder River Basin doesn't end at the state line;
about one-third of the sprawling basin lies in Montana.
Though the coal seams are thinner here than in Wyoming,
coalbed methane development is expected to explode in
the northern third of the basin and in several other
parts of Montana.
So far, private companies have drilled only 250 coalbed
methane wells in the Treasure State. Almost all of them
have been drilled by Fidelity Exploration and Development
on 10,000 acres of federal, state and fee minerals in
the Powder River Basin near Decker, Montana.
In early October, only one coalbed methane drill rig
was operating in the entire state. Montana has all but
prohibited additional coalbed methane drilling, probably
until next summer. The moratorium on drilling is part
of a June 2000 legal settlement between the Billings-based
Northern Plains Resource Council and the Montana Board
of Oil & Gas Conservation (HCN, 9/25/00: Colliding
forces: Has Colorado's oil and gas industry met its
match?).
In its lawsuit, Northern Plains said the state board
was issuing coalbed methane drilling permits near Decker
without conducting the environmental impact studies
required by the Montana Environmental Protection Act.
To settle the suit, the state established the moratorium
on new wells and agreed to conduct a statewide environmental
impact statement on coalbed methane. The settlement
allows private companies to drill 200 exploratory wells,
and permits Fidelity to drill a total of 325 wells on
its lease near Decker.
The moratorium is giving Montana some breathing room.
Activists around the state are using the hiatus to gear
up for a projected boom in coalbed methane development,
and at least one county is drafting new legislation
to regulate coalbed methane drilling.
"It's been a crash course in coalbed methane
for all of us," says Jennifer Madgic, a planner
for western Montana's Gallatin County. In early July,
the New Jersey firm J.M. Huber Corp. filed a permit
application to drill an exploratory well on leased minerals
in Gallatin County, among a cluster of residential ranchettes
near Bozeman Pass. The state approved that application,
but Huber bowed to local pressure and withdrew it prior
to a review by the local zoning district.
"This issue probably has received more attention
than anything in recent years," says Madgic. "This
just brought people out of the woodwork."
Susan McGrath, an organizer with the newly formed
Park (County) and Gallatin Citizens' Alliance, says
150 people showed up at a Montana Board of Oil and Gas
Conservation hearing to oppose the Huber application.
"I don't think the oil and gas board was used to
that," she says. "They were floored."
Huber has leased mineral rights, mostly from private
owners, on about 18,000 acres around Bozeman, and other
companies have picked up leases on an additional 60,000
acres, although much of that may be for more traditional
oil and gas drilling. The county is considering a variety
of regulations, including restrictions on well placement,
to protect health and safety and to control the impacts
of coalbed methane development.
"We understand the mineral right is a property
right," says Melissa Frost, a program staffer for
the Greater Yellowstone Coalition in Bozeman and a Park
and Gallatin Citizens' Alliance founder. "However,
we would like to see surface owners have at least equal
rights."
At the moment, about a half-dozen companies are working
in Montana on coalbed methane, says Board of Oil and
Gas Commission administrator Tom Richmond. They've spoken
for all 200 exploratory wells, and half of those have
been permitted.
One big unknown is how closely wells will be spaced
in Montana. On Fidelity's lease near Decker, permits
allow up to four wells per coal seam per 160 acres,
or a de facto spacing of one well per seam per 40 acres.
But well spacing in the rest of the state is typically
set at one per section, or 640 acres. "I don't
know if anybody thinks coalbed methane could be economically
developed here for that," Richmond says.
Once the state completes its environmental impact
statement, tentatively in July 2002, Richmond expects
drilling to commence, but not so rapidly as in Wyoming.
"There are some constraints, not the least being
availability of pipelines to move the gas," he
says. "I don't think we're going to see thousands
of wells drilled every year. Maybe several hundred."
Copyright © 2001 HCN and Hal Clifford
Copyright © 2002 High Country News
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