This article below was first published at WyoFile and republished under the WyoFile terms & conditions.
Aftermath of a Drilling Boom: Wyoming stuck with abandoned gas wells
By Dustin Bleizeffer
The Powder River Basin coal-bed methane gas industry that drilled at a pace of 2,500 wells annually for a decade has been in sharp decline in recent years. Operators have mostly stopped drilling and are now idling thousands of wells, and perhaps thousands more have been abandoned — “orphaned” — by operators struggling financially.
Last week, Wyoming lawmakers heard testimony that the number of orphaned wells likely exceeds 1,200 — and more will be added to the list of liabilities to the state.
State officials say they’re having difficulty measuring the exact scope of the problem due to complex record-keeping among multiple agencies. Ryan Lance, director of the Office of State Lands and Investments, told WyoFile that his staff is working through stacks of files to try to determine which operators owe money, and how much.
The Powder River between Gillette and Buffalo runs through the center of Wyoming’s largest coal-bed methane gas field. Dustin Bleizeffer/WyoFile
In some cases, the orphaned wells devalue ranch properties, and in other cases they complicate a promise that the industry made at the onset of the play: that some wells would be transferred to ranchers for use in watering livestock on the arid high plains.
Coal strata are often aquifers in the region. In some areas, the production of coal-bed methane gas has substantially drained the coal aquifer because operators had to pump large volumes of water from the coal to get the methane gas also contained there to flow to the surface. By 2010, the industry had pumped 783,092 acre feet of water from the coals, according to the Wyoming State Geological Survey. That’s enough water to fill Lake DeSmet three times.
Only a small percentage of that water was put to beneficial use.
“There’s concern from land and mineral owners who are not getting surface use and damage payments anymore. … Money is spent on attorneys trying to recoup surface use payments,” as well as royalties, said Jill Morrison of the Powder River Basin Resource Council, a landowner advocacy group based in Sheridan.
Morrison testified before the Joint Minerals, Business and Economic Development Interim Committee last week in Gillette.
Committee member Rep. James Byrd (D-Cheyenne) said that for years he and others on the committee have heard warnings about the potential for orphaned wells and unpaid bills in the coal-bed methane gas play, “and now it is happening.”
The Powder River sometimes runs dry in this arid region of northeast Wyoming, yet only a small portion of groundwater associated with coal-bed methane gas development was put to beneficial use. Dustin Bleizeffer/WyoFile
While some operators, such as Anadarko Petroleum Corp., are financially sound enough to plug wells that are no longer commercial, a handful of smaller operators flirt with bankruptcy and fail to conduct required maintenance on the wells, creating potential hazards to human health and the environment. Some operators have simply walked away from their coal-bed methane properties in the basin.
That leaves the job of plugging wells and reclamation to the state, which will rely on an industry-funded orphan well account to cover the cost. The task of plugging and reclaiming orphaned coal-bed methane facilities, and collecting unpaid user fees and royalties, is divided among state agencies and the Wyoming Bureau of Land Management. So far, the state agencies do not have a complete picture of the scope of the problem and the resources available to address it.
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