Coalbed methane boom brings opportunity and some fear

WESTON, Colo. _ Wooded gulches, rocky outcrops and views of the snowy tops of southern Colorado´s Sangre de Cristo mountains provide what looks like the perfect escape for retirees and telecommuters.

But people who bought lots on the 16-square-kilometre North Fork Ranch about 320 kilometres south of Denver, hoping to leave behind big-city hassles, worry when they flip on a switch or take a drink of water.

They´re afraid that methane gas from drilling in the area´s coal seams could seep into their water wells or migrate inside their homes.

That´s no idle fear. A house under construction near the subdivision exploded last April when methane leaked from an abandoned well into the building. Two water wells in the subdivision were damaged in 2006 during gas drilling.

Pioneer Natural Resources, a Dallas-based energy company, drilled new water wells, provided a filtration system and settled for an undisclosed amount with one family. The company, which contends it´s unclear whether it caused the problems, hasn´t settled with the other family.

"You don´t know day to day when you turn on your faucet whether you´re going to have good clean water or whether there´s going to be chemicals in there that you´re unaware of," said Tracy Dahl, a design engineer who built a home atop a mountain on North Fork in 1995.

The push for domestic energy development has helped make the Rockies´ unconventional sources of gas more economical. That´s d conflicts with the region´s growing population, most of which lives on a split estate: one party owns the land and another owns the minerals underneath.

The split occurred across the West as the federal government granted homesteads but retained mineral rights, or when people sold the land but kept the minerals. Federal and state laws give mineral owners or leaseholders the right to reasonable use of the surface to extract the resources.

Most of the gas drilled in the Raton Basin, which includes the ranch, is from coalbed methane _ natural gas trapped in coal seams that once provided a thriving coal-mining industry. Roughly 2,600 coalbed methane wells have been drilled.

Methane was a liability in coal mining because of its explosive character, but then companies started tapping it as a fuel source. Pumping groundwater relieves the pressure that traps the gas, raising concerns among landowners about the effects on the water table and drinking water wells.

The Raton Basin is one of the hot spots of an energy boom rippling throughout the Rockies. There are roughly 34,000 active wells across Colorado and tens of thousands more are expected over the next 20 years.

Warren McDonald, who ranches west of North Fork, has a good relationship with Pioneer Natural Resources.

"Typically, the people having the problems moved from cities and towns. They think they´re going to go up to the wilderness and live in harmony with nature, but those days are kind of gone," said McDonald, whose family has ranched in the area since 1890.

McDonald said energy development is a big boost for ranchers and farmers like him who own some minerals because they get royalty payments. Jobs, business and tax revenue are all up.

"It´s night and day from when the coal mines shut down in the ?s," McDonald said.

"I saw the downside when the coal mines closed," said Glenn Moltrer, a businessman who heads the local chamber of commerce. "People actually put dummies in the windows of stores to make it look like something was there besides vacant storefronts."

On River Ridge Ranch, a rural subdivision, the state has halted gas production so the operator, Petroglyph Energy of Boise, Idaho, can figure out how methane is getting into water wells and how to stop it.

A small fire erupted when a spark from an electrical switch ignited built-up methane at a water well on the ranch last summer. Around the same time, an explosion raised the roof on a shed over a water well near the subdivision.

Petroglyph Energy provided homeowners devices to monitor whether their wellheads are venting methane. Petroglyph chief operating officer Ken Smith said the company is monitoring groundwater and has seen nothing to indicate that people are in danger.

Interest in the area by another gas company prompted Huerfano County to consider a drilling moratorium so it can study its rights and responsibilities, said John Galusha, county administrator.

Dahl and Marcia Dasko, both members of the North Fork Ranch landowners´ association, acknowledged there is strong support for the industry because of jobs. They said a local hearing on strengthening state oil and gas regulations drew hundreds of energy workers and officials, many of whom criticized the proposals.

"It doesn´t have to be done with a gold-rush mentality," Dahl said. "Everybody knows about energy boom and bust cycles and yet everybody here seems to be turning a blind eye to it."

Dahl and Dasko noted that a recent state study estimated that drilling in the Raton Basin depletes area water by about 2,500 acre-feet a year.

That amounts to roughly 3.1 billion litres of water not returned to streams and rivers, a volume called "significant" by Matt Sares, deputy director of the Colorado Geological Survey.

Besides concerns about water, Dahl and Dasko wonder what happens to the land after wells are drilled, waste pits are dug and roads are carved out of hillsides.

A March 11 report on the website of the Colorado Oil and Gas Conservation Commission, the main regulatory agency, said an inspection found "numerous sediment and erosion problems." It said Pioneer agreed to make repairs and improvements.

At home, Dasko displayed two big binders packed with photos of alleged violations, correspondence with Pioneer and other documents.

"We went into this whole thing very proactive, fairly organized," Dahl said of the landowners´ agreement with Pioneer over use of the surface.

"Most folks are not doing these kinds of things _ and it´s ridiculous to expect a citizen to have to."


Published on Oilweek – Canada’s Oil and Gas Authority

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