Montana, Wyoming Battle Over Natural Gas

Jerry Geer saw a lot of his neighbors in the Powder River Basin buying shiny new cars, paid for with money they got from natural gas production on their ranches.

Geer and his father decided to do the same. But as the first wells were drilled nearly a year ago and Geer’s family grew eager for royalty checks, production was delayed as a dispute over environmental worries deepened.

Geer, a third-generation rancher whose grandfather homesteaded this land in the basin, still hasn’t seen a check.

“We’d love production out here, especially now with natural gas prices so high,” he said from his ranch set back in the dry, rolling country south of Gillette. “We heard that some checks to mineral owners are just tremendous, and that makes it all the harder.”

The Powder River Basin along the Montana-Wyoming border already produces enough natural gas each year to heat 1 million homes. Experts say the potential is more than twice that. Production in the basin has doubled every year since 1994, with an estimated 4,700 wells now pumping some 475 million to 500 million cubic feet of gas each day.

But new production has dramatically slowed, the result of environmental lawsuits and bickering between the two states and between landowners who own mineral rights and those who don’t.

At the core of the dispute is concern about the quality of the ground water released during the “coal bed methane” drilling process. The water often is discharged into rivers that flow from Wyoming into Montana.

Environmentalists and some farmers and ranchers contend the ground water, which must be pumped out first to get to the natural gas along the coal beds, can contain high levels of salt, alkali or metals that harm land and crops. They also fear drilling will inadvertently deplete area aquifers and wells of clean, usable water.

To settle a lawsuit by environmentalists, Montana temporarily suspended all new drilling last summer. The state agreed to develop a long-range plan for future development and prepare a comprehensive environmental study. The Legislature is considering bills to change regulation of coal bed methane.

In Wyoming, where most of the drilling has occurred, the state delayed issuing some new water discharge permits after getting swamped with complaints from Montana state officials, ranchers and environmentalists.

“Wyoming producers sort of overlooked, in their first flush of enthusiasm, that Montana’s downstream and that there may be effects in Montana,” said Abe Horpestad, a water quality manager for the Montana Department of Environmental Quality.

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Some companies drilling in Wyoming have permits to discharge water into three rivers--the Powder, the Little Powder and the Tongue--all of which flow into Montana.

Mark Fix, a Miles City-area rancher who draws water from the Tongue River to irrigate his alfalfa, worries about his water.

“My primary concern is the water coming down the Tongue that I’m forced to deal with,” he said. “The discharges are high in sodium, and they’re going to force us to use that.”

Montana would like to capitalize on its natural gas and share in some of the wealth Wyoming has seen come out of the basin. But officials also worry about the discharged water flowing into its state.

Soil scientists say the water from the natural gas wells is unsuitable for irrigation, a vital part of agriculture in the dry, rugged country that makes up the basin--from Gillette to the Big Horn mountain range, south near Douglas and north into Montana.

Industry officials say the dispute has been a costly delay.

“We invest tens, if not hundreds, of millions of dollars and then have to wait for development,” said Duane Zavadil, health safety and environmental manager with Barrett Resources Corp., a Denver-based exploration and production company with nearly 1,100 producing wells in the basin. “You have to put that money to work.”

“About 99% of the time, the people complaining are the ones who don’t have mineral rights,” Geer said.

Gary Beach, director of the Wyoming Department of Environmental Quality’s Water Quality Division believes fears of environmentalists and Montana farmers and ranchers may be overblown.

“I think some reactions in Montana come from a fear that Wyoming will just progress at a rate where Wyoming reaps all the financial benefits and Montana will get dirty water,” Beach said.

But Beach said drilling operators try to filter the discharged water of pollutants before it reaches rivers.

Rancher Ed Swartz contends development upstream already has ruined some of his pastureland. He’s complained but said officials have been less than helpful.

It comes down to money, Swartz said.

“Wyoming has been boom and bust forever and ever,” he added. “When they get short on money, they don’t [care] how they get it.”

The money generated from natural gas production in Wyoming is welcome and needed in a state with no personal or corporate income tax from which to draw revenue.

Studies suggest the basin could support tens of thousands of wells. Industry officials remain hopeful of the basin’s potential, but admit they are tired of waiting.

“I think there is a very vocal minority out there that is hard at work to try to prevent development of coal bed methane,” said Mike Caskey, a vice president with Redstone Gas Partners, one of the first companies to do exploration and start a producing field in Montana.

“I think they have their own agenda that is anti-development of any natural resource,” he said.

While disagreement continues, Montana and Wyoming are trying to figure out how to work together to regulate a resource in two states that often have conflicting environmental rules.

In Montana, the environmental effects of coal bed methane operations are supposed to be studied before the state will issue permits. Wyoming doesn’t apply the same standard.