Powder River Energy Boom Crowds Ranchers

[Nemont]

Kind of long but an interesting read. The cattlemen are suing the BLM for not looking at the proper development. Also the issue of split estate is a touchy one.

Energy boom is crowding ranchers

More ranchers rail against federal 'split estate' laws that control mineral rights beneath their land.

By Todd Wilkinson

BIRNEY, MONT. – Irv Alderson's clan of cowboys has ranched near the banks of the Tongue River since the 1880s, when Montana was still a territory.
Rawhide tough and well-read, generations of Aldersons helped expand their land holdings to 8,500 acres. Along the way, they cemented an attachment to these stark weathered plains despite droughts, personal tragedies, and downturns in cattle prices.

Now the onetime professional steer roper and other ranchers here face a new test - energy companies intensifying their search for natural gas beneath the same lands used by grazing herds.

The trend, causing tension across the American West, stems from the policy of "split estates" - where the owners of at least 50 million acres of private land have surface rights, while energy developers can own the mineral rights beneath or lease them from the federal government.

That means scores of ranchers here in the Powder River basin may have little say over thousands wellheads that could soon proliferate. While some landowners will reap benefits, anything from monetary compensation to ranch improvements, most feel helpless against an industry that they see threatening to mar the landscape and contaminate precious groundwater. A growing number of ranchers are fighting back against the federal government with lawsuits aimed to strengthen landowners' influence over energy development practices within their acres.

At their Bones Brothers Cattle Ranch outside Birney, the Aldersons say their worries started at the end of the Clinton administration when the Bureau of Land Management (BLM), the federal agency in charge of leasing minerals in the West, awarded a handful of companies the right to extract coalbed methane gas from beneath their property.

"Mineral rights were sold by the BLM, literally right out from under their ranch home," says environmental-law attorney Jack Tuholske, who is representing the Aldersons and a few dozen other ranchers in a case now before the Ninth Circuit Court of Appeals. "Not only did the BLM do this without even contacting the Aldersons, it sold the rights at rock bottom prices and at an auction that few people but the energy companies knew about."

Greg Albright, a BLM spokesman in Billings, says the process may seem controversial, but it is perfectly legal. Further, not all property owners are hostile to split-estate rules. Indeed, several ranchers in Wyoming, who own all or some of their subsurface mineral rights, have become millionaires overnight and publicly praise the gas companies for their contribution to the economy.

A wellhead out back
Yet even benefits bestowed by well-intentioned energy companies may do little to soothe ranchers who feel their livelihoods are threatened.

Mike Helvey and his wife, Rebecca, are ambivalent over what split estate has brought to their doorstep. Shortly after they bought their 760-acre spread on the Wyoming-Montana state line, they were notified by Fidelity Energy that drilling would begin.

By law, all property owners know when they purchase land if it has a split estate, though most never believe it will be a factor. "It was like a shotgun wedding," Mr. Helvey says, pointing to 50 wellheads now on his land, many within sight from his living room.

As a trade-off for its invasion, the company voluntarily offered the Helveys money that enabled them to build a new house, not a common proposal. They've received new fencing, an improved driveway, and a water tank for the cows that brims with salt-laden water drawn out of the gas wells. "The company has helped us do things with our land we otherwise couldn't have afforded to do," he says.

The BLM office in Buffalo, Wyo., which administers 3.2 million acres of mineral rights across the Powder River basin, is caught in a tornado of requests - more than any other office in the country. There are currently 13,000 active methane wells in Wyoming and another 450 in Montana.

It's the pace of development that has ranchers concerned. As plaintiffs in a lawsuit brought by the Northern Plains Resource Council, agrarians like the Aldersons say the BLM did not adequately consider the merits of "phased energy development" - an incremental development process that studies industrial impacts on the environment before pushing ahead - as an alternative to ramped up production.

One major point of contention in this notoriously dry landscape is how the heightened drilling is affecting groundwater. Water released during coalbed methane extraction is heavily laden with sodium and can contaminate drinking water and taint flows in streams used to irrigate pasturelands.

"If drilling moves forward and our water sources are damaged beyond repair, there's little that can be done after the fact to make them right," says Alderson. "Clean water has been the key to our survival all these years."

For their part, energy companies claim that halting drilling plans, even temporarily, to study impacts could cost tens of millions of dollars in lost revenue.

Cautious industry steps

The BLM's Albright says the majority of energy companies pursue civil dialogue up front.

"A company has to walk the talk, because landowners have to live with our operations 24/7," Fidelity spokesman Joe Icenogle says. "Negative perceptions of industry are generally a reflection of its weakest performer and it spills over into the attitudes of landowners, regulators, and investors on Wall Street."

Montana Gov. Brian Schweitzer, himself a rancher, told the Monitor he supports methane development but is sympathetic to the ranchers' plight.

Mr. Schweitzer says the BLM exacerbated tensions by "failing to have the common courtesy of contacting ranchers to let them know the minerals beneath them were being sold."

The BLM says it was only following the rules set out for it by Congress. "I don't know anybody I work with who wants to pillage and plunder the landscape," Albright says. "How fast they move to develop the resources is a function of market."

Contrary to how the gas boom is being portrayed by environmentalists, Mr. Icenogle says the industry faces many regulatory obstacles. If given its way, Fidelity would be drilling far more wells to take advantage of high gas prices, he adds.

Legislative response

With conflicts deepening, US Rep. Mark Udall (D) of Colorado is pushing a bill in Congress to regulate the huge volumes of wastewater associated with coalbed methane extraction and give ranchers greater say.

Four state legislatures - Montana, Wyoming, Colorado, and New Mexico - tried to expand the input of landowners on how development will occur, but most became deadlocked - made wary in part by the benefits, in jobs and tax revenues, that development brings. Only Wyoming passed a new law instructing companies to consult with landowners before drilling.

But what disturbs Alderson most is that the mineral rights beneath his land sold for the small sums of between $2.50 and $5 an acre. All he wants to do, he says, is raise cattle.

"It's hard for me to find the right adjectives to describe the irony," attorney Tuholske says. "The blame cuts across both political parties, but especially Republicans, who have been the bastion of trumpeting the sacredness of private property rights; but they've turned their backs on these ranchers."

 

[BigHornRam]

"Montana Gov. Brian Schweitzer, himself a rancher, told the Monitor he supports methane development but is sympathetic to the ranchers' plight."

I see Brian did a good job staking out both sides of the issue. Maybe he can address the contaminated water issues, how much is fact and how much is hype?

It's too bad the ranchers and land owners didn't get notice to bid on the mineral rights on their own land.

 

[MarvB]

Interesting read, thanks Nemont.

This

The BLM says it was only following the rules set out for it by Congress. "I don't know anybody I work with who wants to pillage and plunder the landscape," Albright says. "How fast they move to develop the resources is a function of market."

Contrary to how the gas boom is being portrayed by environmentalists, Mr. Icenogle says the industry faces many regulatory obstacles. If given its way, Fidelity would be drilling far more wells to take advantage of high gas prices, he adds.

kind of segways right into this article......

Well-Spacing Battle in the Pinedale Anticline Continues

Despite a recent industry victory by another company in Wyoming's rich oil and natural gas region, the Wyoming Oil and Gas Conservation Commission (WOGCC) on Tuesday denied Ultra Petroleum Corp.'s application for increased density drilling in the Pinedale Field.

However, in the WOGCC denial, the commission said it is awaiting "additional data" from other commission approved producer pilot wells elsewhere in the field. Further, they asked their staff to contact the other producers and seek a status report on when the producers would have their data available.

Ultra had been seeking approval to drill one well for every 10 acres within the 70-square-mile Pinedale Anticline, which the company said would help it recover significantly more natural gas than under the current 40-acre spacing between wells regulation (see Daily GPI, April 20).

"The WOGCC noted no disagreements with our findings and, in fact, was quite complimentary, but prefers to await a more complete data sampling from the other pilot programs" said Michael D. Watford, Ultra's CEO. "This doesn't change the answer from our perspective, but does move the timeline back.

"Ultra's presentation before the WOGCC clearly indicated the benefits of 10 acre spacing with an estimated incremental recovery from the Pinedale Field of 15 Tcf of natural gas," Watford added. "Nothing today impacts our ten year inventory of undrilled locations and we just enjoyed the largest revenue month in our history in April. Our normal increased summer activity in Wyoming is underway and drilling on the Pinedale deep test starts again shortly."

Watford has said in the past that with Ultra's 1,160 locations on 10-acre spacing, his company could put 619 wells in the Pinedale. With 20-acre spacing, Ultra could install 511 wells.

The density requirements in Wyoming have been at 40-acre spacing since 1986, but earlier last month, EnCana Corp., the largest coalbed methane producer in Wyoming, won approval to reduce well spacing in the Jonah field to 10 acres from 40 acres. At that time, the WOGCC also granted approval to add three pilot wells on five-acre spacing.

 

[BuzzH]

BHR,

If you're serious about the question of how much is hype about the water problems...call and talk to the district Hydrologist in the Rawlins BLM office.

Have him tell you about the in-stream CBM water release they did...pay attention to the mortality rates of fish, aquatics, etc.

You'll find out real fast how much "hype" there is....