Prosperity’s Brutal Price

Wildcat Creek is a tiny ribbon of water that meanders through 10 miles of Ed Swartz’s sprawling cattle ranch. Flowing just a month or so out of the year, it seems an unlikely lifeline for 15,000 acres of dry high-plains prairie. But four generations of Swartzes have adapted to the creek’s ephemeral flow. When runoff fills the creek in the spring, Swartz floods patches of sepia valley bottom and turns them into emerald green hayfields that get his “girls”--a herd of charcoal-black cows--through the long Wyoming winters. But the fields that make his operation viable are in trouble now. He has been unable to irrigate for four years because high salt levels in the creek water will kill his hay.

“Whiskey’s for drinking and water’s for fighting,” they say out here. But Swartz and many other ranchers around Wyoming and throughout the West are now engaged in a fight that has turned that adage on its head. It’s not about too little water but too much--too much of the wrong kind. Water is being pumped out of the ground at a neighbor’s ranch upstream because the water contains methane gas. After the gas is stripped out, the water, with high levels of sodium, is considered waste and is dumped into the creek that runs through Swartz’s property. “I want things back like they were,” says Swartz. “The state is so greedy for money they will let anything happen. They will ignore their own rules, laws and regulations to kiss [up to] the methane industry. And it really, really bothers me.”

The American cowboy is, by reputation, a man of few words. But this rancher is talking rapid fire, spitting out words like bitter coffee grounds. His fields are fallow, his legal bills are mounting and his way of life is under siege--all because, he says, common sense has been suspended in a mad dash for coal-bed methane, a colorless, odorless, tasteless gas that, among other things, is used to heat millions of American homes. Many ranchers and environmentalists in Wyoming, a very conservative, pro-industry state, say they feel like ghosts. They have trouble getting their story told in Wyoming’s pro-business daily newspapers, and their political leaders don’t seem to be listening, though a new governor has promised to change that. Swartz has been a Republican precinct committee member for 35 years, but he says his party compatriots ignore him when he takes photographs and stories of tainted water to Republican meetings around the state. And that burns him up. Things have gotten so bad, he says, “I am ashamed to say that I am a lifelong working Republican.”

It’s boom time again in Wyoming’s Powder River Basin, 20,000 square miles of north-central Wyoming and parts of Montana--what most Americans would think of as the middle of nowhere. It was part of a great swampy area where, over the course of millions of years, plants were transformed into coal. It is home to one of the world’s largest coal deposits, with beds on top of beds up to 300 feet thick. The methane is trapped in the crevices of the coal, which is held in place by the ground water.

Today the Powder River Basin is a sparsely settled blanket of grass over rolling, seemingly endless, nearly treeless hills. Creeks named Crazy Woman, Spotted Horse and Bitter drain the hills and the indigo saw-toothed Bighorn Mountains, and flow through valley bottoms lined with towering, centuries-old cottonwoods before they empty into the Powder River, named after the abundant silt that renders it the color of chocolate milk. The emptiness of the basin is broken by the high plains towns of Gillette, Sheridan, Buffalo and a few others with just a handful of trailers and a bar.

Though the new-energy rush already is controversial, especially the effects on the arid region’s water, it appears to be just ramping up. The Bush administration, led by Wyoming’s own son, Vice President Dick Cheney, has underscored the importance of coal-bed methane to the nation’s energy strategy. Estimates vary, but as it turns out, the Powder River Basin may have between 15 and 40 trillion cubic feet of potentially recoverable coal-bed methane (the country uses 23 trillion cubic feet of natural gas in a year), and the Green River Basin, near Rock Springs, has significantly more than that. Together with the rest of the West, including Montana, Colorado, Utah and New Mexico, those fields could contain the largest gas deposits in history. When the U.S. government releases 8 million acres for coal gas development this year, it will be the largest drilling project ever on federal lands.

In the mid-1990s, two unemployed oilfield workers came up with a fast and cheap way to siphon this trapped gas out of the unfathomably vast underground coal deposits. Since then, more than 80 national and local companies have scoured county land records and scrambled over the hills, drilling hasty holes to capture the valuable methane that lies beneath private ranches and government-owned land, both state and federal.

For those making the big bucks, especially in the state’s energy capital, Gillette, the vacuum-cleaner whine of the compressor units that gather the gas and then send it on to markets around the country are the overdue symphony of prosperity. “It’s the gas equivalent of Prudhoe Bay,” says Ruth Reile, who handles land issues for Kennedy Oil, one of the largest independent oil companies in the Powder River Basin. Few states and counties have said no to methane development and the money it brings. In 1999, for example, Wyoming had a projected shortfall of $183 million. By 2001 the surplus was about $700 million. Last month, while most states were headed toward serious financial trouble, Wyoming was carrying a $169-million surplus.

Ranchers have struggled for the last few years with a drought and cellar-dwelling beef prices. And the gas boom, its opponents say, could be the final straw for a tenuous way of life. Some ranchers don’t own the gas beneath their ranch. But companies who lease that gas have every right, despite the surface owners’ wishes, to do whatever it takes to develop it. The water may become contaminated or dry up, or the companies with rights to the minerals beneath their land may exercise eminent domain and tear up things, go out of business and walk away. The energy companies pay impact fees, but the fees don’t begin to cover the cost of repairing the damage done to the land while extracting the gas. Moreover, critics say, state regulators have largely rolled over for the companies and have hung some citizens out to dry.

The issue is bigger than a matter of economics. The American cowboy sits astride America’s most cherished myths of freedom, romance and democracy. At a time when so much of the country has been smothered under a blanket of urbanization and monoculture, the disappearance of this storied way of life would be another chunk out of the collective American identity. And this range land would be added to the list of untamed corners of the world that are irrevocably changed.

“Five years ago there were lots of places in the Powder River Basin that were ‘away,’ ” says Mickey Steward, who studies the effects of the boom for a coalition of five methane-producing county governments. “There’s no ‘away’ anymore. There are cell phone towers, well heads and power lines. There’s compressor noise. It’s like you fell asleep nowhere and woke up in a light industrial park.”

To some, the boom also has brought home an all-too-familiar sense of powerlessness, a feeling that the state does not control its destiny. Wyoming is known as the Cowboy State, with a bucking bronco on its license plates, but many of its estimated 500,000 residents don’t buy that image. “We are a colony of the energy companies,” says Jill Morrison, a staffer at the Powder River Basin Resource Council, a coalition of environmentalists and ranchers in Sheridan who are fighting methane development. “And they run this state.”

It wasn’t always so. At the end of the 19th century, a group of rich British gentry arrived and started ranches to take advantage of the free grass on the open range. One of the cowboys who worked as a foreman for these landed gentry was Harve Swartz, Ed Swartz’s grandfather, who bought a homestead along Wildcat Creek in 1904 and came there to live around 1912. Ranchers who survive are like a wildlife species that adapts to an extreme environment. It can take as many as 60 acres to raise each cow in this de facto desert, which gets an average of 13 inches of rain a year. A thunderstorm at the right time is a cause for celebration, a shot of adrenaline that will wash out of the hills, down the creek and through an irrigation system designed to flood the meadows.

The first big boom came to Gillette in the late 1950s, when oil and gas were developed. The next rush came in the ‘70s, when the energy crisis erupted and thick veins of low-sulfur coal were uncovered, gobbled up and sent off to be turned into electricity. That boom did more than tear up the prairie. It tore up the culture in and around Gillette as well, and the downside of the boom was immortalized as the “Gillette Syndrome” by a sociologist who found it a perfect example of a dislocated society: People flocked to Gillette for the promise of work. They ended up paying exorbitant rents for trailers and garages, lived in tents in below-zero weather and strained the social services.

Strip mining also destroyed range land, disrupted water supplies and forced people off their ranches. That’s why the Powder River Basin Resource Council was founded in the early 1970s. Ed Swartz was one of the founders of the council, and the result of its efforts was the 1977 Surface Mining Control and Reclamation Act, which required surface owner consent before coal could be dug up. Swartz was on hand when Jimmy Carter signed the bill in the Rose Garden. The battle was over until they were blindsided by coal-bed methane, which is governed under a less-restrictive set of rules.

The methane boom began when two unemployed oil engineers, Bruce Martens and Chuck Peck, began searching for a way to extract it. As tiny bubbles of gas seep out of the coal, they are trapped on the coal seam by the pressure from ground water. Coal-bed methane had been tapped in other parts of the country, particularly in New Mexico and Alabama. But that’s a harder coal. Wyoming coal is softer. The methane is in cracks, or cleats, in the coal. Every time drillers tried to tap into it they clogged the cleats with drilling mud, which kept the gas trapped. The trick, Martens and Peck figured out, was in the water. If they just kissed the top of the coal seam with the drill and released the water, the gas would bubble to the top of the pipeline with it. When it hit the surface, they could trap the methane and discard the water, some 800 gallons per well per day.

The two men quietly started buying up leases and producing methane. No one caught on until 1997, when Western Gas Resources, the pipeline company that was buying and shipping the gas that Martens and Peck were producing, started buying up leases of its own. The boom was underway. “I really didn’t believe it at first,” says M. John Kennedy, president of Gillette-based Kennedy Oil. Reile recalls, “We would stand around every day and talk about it until finally we said, ‘You know, there might be something to this.’ ”

In 1998, Gillette “really went crazy,” she says. More than 80 companies arrived, ranging from the Texas majors, such as Marathon and J.M. Huber, to small independents, such as Kennedy. Energy company representatives drove from ranch to ranch, negotiating rights to the gas with the landowners. Some ranchers made more money in a year of methane royalties than they had in a decade of cattle ranching--in many cases, says Kennedy, more than $1 million a year. “A lot of these guys could have lost their ranches if it weren’t for the money from methane,” he says.

Martens and Peck cashed out for a reported $40 million.

On a snowy, wind-whipped October day, Kennedy tilts a clear plastic bottle of water toward the sky and takes a long pull. “There’s nothing wrong with this water, it tastes good,” he says, and he takes another drink. The water has come out of a coal-bed methane well, and Kennedy has been bottling it and giving it away to show it poses no harm. “Go ahead, have some,” he offers. It tastes like any bottled water. But some say Kennedy’s demonstration obscures a host of subtler and more serious problems than how the water tastes.

After he downs the last of the water, the white-haired Kennedy, who resembles Arizona Sen. John McCain, both physically and temperamentally, climbs into an SUV and drives past dun-colored antelope and wary mule deer on undulating drought-seared fields on the outskirts of Gillette. He’s dressed casually in hiking boots, jeans and a forest-green Kennedy Oil jacket with “CH4”--the chemical symbol for methane--stitched on it.

There’s a for-us or against-us mentality here. People who question the way gas producers do business or advocate more regulation may feel Kennedy’s wrath. People such as Swartz, who lives 20 miles out of town, are in the minority. The term “wackoenvironmentalists” is all one word in Gillette, and comes from deep within the people who use the term. Those in the methane industry are living large, and nobody is getting in the way if Kennedy can help it.

“We haven’t even started,” he says. The industry has “10,000 wells, and we’re gonna have 10 times that. It’s hard to imagine what it’s going to be like 10 years from now.” Coal-bed methane makes up about 7% of the national gas supply, a figure that is expected to grow substantially in the next few years. Kennedy Oil owns 500 or so wells, and each one costs $100,000 to develop (as opposed to several million for a conventional natural gas well). They each bring in about $300 a day, he says, before operating expenses that include salaries for the company’s 35 to 40 employees, electric power and odds and ends.

In fact, there aren’t many naysayers in Wyoming, including state officials. While Montana has been going through both a state and national environmental review before it leases, Wyoming threw the doors open with hardly any review and has promoted it relentlessly. In 1999, the assistant state lands commissioner, for example, issued a letter to the industry urging energy officials to “Go Blue!” and focus exploration on state land--colored blue on geologic maps--to fatten state coffers.

Coal-bed methane is different from other booms in several ways, primarily because it has happened so fast. A natural gas well takes three months to develop, while drilling a methane well takes just three days. Because the gas is down only a few hundred feet, it can be reached with water-drilling equipment, which is less expensive, simpler and cheaper to operate than oil-drilling equipment.

For every 10 wells, there is a compressor, and a pipeline must be run from each well. The gas is piped from the compressor to larger and larger compressor units until it reaches the main pipeline, where it is sent to markets around the country. Each well head seems fairly unobtrusive, but in some areas they are, quite literally, everywhere. From the air, the scale is more obvious. Rolling stretches of prairie have been sliced up into tiny fragments by roads and pipelines, like a vast subdivision.

But the most immediate problem is water. What do you do with it after the methane is captured?

It’s stored in reservoirs, or pumped through towering atomizers that spray over a larger area, or sprayed from sprinklers. Some is used for cattle, but they drink only a fraction of what is released. All of a sudden there’s a surfeit of water in the Wyoming desert, and to many ranchers who have grown up thinking that water is as precious as gold and the difference between making it or not, it’s just plain bizarre to see so much of it wasted, especially in the fourth year of a drought. Flying over intensively developed coal-bed methane fields with reservoir after reservoir “looks like Southern California from above with all of the swimming pools,” says Gillian Malone, a staffer with the Powder River Basin Resource Council.

Part of the problem is that much of the water is loaded with salt. John Kennedy can drink all he wants, says Swartz, but if it’s used to irrigate, alkalies build up in the soil and can kill alfalfa. There’s also concern about the unknown effects of such large-scale pumping. There’s simply no way to know what removing such huge volumes of water from the ground--more than 3 million acre-feet--will do to the aquifer. Some ranchers have had artesian wells on their property stop producing the cold, clear water that once rose so easily to the surface.

If Wyoming’s precious water supplies are destroyed, no one will forgive those responsible, says Walter Merschat, a geochemist in Casper, Wyo., and the president of Scientific Geochemical Services. An oil company consultant, he has studied methane since 1976. He says no one has a clue about the long-term effects. “This is not a smart industry,” he says. “They don’t know what they’re doing.” Critics worry that the state is throwing away ground water that could take 150 or 200 years to replenish, if it ever does come back. Water pumping also causes the ground to collapse--up to 20 or 30 feet or more in places such as the San Joaquin Valley north of Los Angeles, where pumping for agriculture has been extensive. And as water levels drop, the coal dries out and becomes susceptible to underground coal seam fires, several of which are burning now in Montana and elsewhere. They can burn for years, destroying coal and gas, sterilizing the surface and causing the ground to collapse.

Drilling for methane, Merschat says, doesn’t mean the gas will always come up the pipe--it sometimes migrates out of the coal and into water supplies that people tap into for home use. That can be dangerous because it’s odorless--and explosive. In the 1970s, a subdivision near Gillette had to be evacuated because mining was causing methane to seep into area homes.

The sound of methane production also can be a nuisance. Swartz doesn’t have a compressor unit near him, but many residents do. The compressors are large, windowless metal buildings with a stack that vents a 1,200-horsepower diesel engine. Hundreds of them dot the landscape, sometimes in groups of five or more, and they sound like a jet readying for takeoff. The around-the-clock noise, says Gillette resident Dave Bullach, is like torture. Bullach has several of them less than a quarter mile from his home. “It’s like turning your wife’s hair dryer on in the bathroom and closing the door,” he says. “It’s a constant sound, and you can’t get away from it.” He has complained to every level of government, he says, to no avail. He was even arrested for shooting at one, but not prosecuted. “I didn’t really shoot at it,” he says. “Just toward it. From this range with a .270, if I wanted to I could have hit it.”

The conflict over coal-bed methane is at a constant simmer, and occasionally boils over, as when two of the players nearly came to blows. On a bus tour of the methane fields, with the governors of Montana and Wyoming along, it was Swartz’s turn to speak and he began describing in emotional detail what methane development had done to his land. Kennedy shouted that Swartz was a liar and threatened to hurt him. The shouting went on until Judy Martz, the governor of Montana, calmed them down.

While to some ranchers coal-bed methane has been an undoing, others claim it has been their salvation--because they own their minerals. “It has helped us in every way,” says Joanne Tweedy, a rancher south of Gillette with 70 wells on 5,000 acres who serves as the spokesperson for a group of methane boosters called the Wyoming Coalbed Natural Gas Alliance. “My husband and I no longer need to have jobs in town to support the ranch. It’s saved some ranches that were right on the brink.”

Those opposed to the development don’t think coal-bed methane is a bad idea--but they want it done right so they don’t get run over. So far the state has abdicated its regulatory responsibilities, says Swartz, claiming that complaints about pollution and water-rights violations go unheeded. “Water rights are supposed to be sacred,” he says, “and the state of Wyoming does not [care].” Swartz was forced to file a lawsuit under the Clean Water Act to save his ranch and says he has paid nearly $100,000 to hydrologists, soil scientists and lawyers. He won his first round in federal court against the state, but the state has appealed.

Why has Wyoming become, in Jill Morrison’s words, “a colony of the energy companies?” Part of the answer, critics say, is found in the halls of the state capitol, crowded with industry lobbyists. Every other year members of Wyoming’s citizen Legislature leave their ranches, farms, offices and classrooms and come to Cheyenne for its 40-day general session. With such a short session, legislators have little time to understand issues on their own. Mineral and energy companies, with well-paid, full-time lobbyists, have an advantage. Since they are responsible for 40% of state revenues, that gives them disproportionate clout.

The energy industry in Wyoming also has friends at the national level. Vice President Dick Cheney, of course, former head of the oil services company Halliburton, heads the nation’s energy task force and has specifically identified coal-bed methane as critical to the nation’s energy strategy. And the federal land agencies are staffed with people from the energy industry. J. Steven Griles, a former lobbyist for the coal-bed methane industry, is now deputy secretary of the Department of the Interior. He drew controversy when he pressured the EPA to withdraw its opposition to an environmental-impact statement that the Bureau of Land Management had prepared on its coal gas leasing program, and was forced to recuse himself from further involvement.

Geoff O’Gara, a columnist for the Casper Star-Tribune and a television producer in Lander, Wyo., believes the state is “addicted to the mineral revenues, no doubt.” And unless Wyoming puts some of its boom money into a kind of 12-step program--funding research and development for more sustainable, value-added industries such as solar or wind power, for example--O’Gara says the state will always suffer. “When the boom happens we take the money and run, and then hunker down and wait for the next bust.”

There’s no concern now about methane going bust. Price is always a factor, but if it stays where it is now or goes up, the boom that has played out so far is just the prologue to the main act. When the federal government opens its vast coal reserves in the heart of the Powder River Basin sometime this year--much of it under private land--the tensions will escalate far beyond what they are now. Ranchers find some comfort in the fact that the feds, unlike the state, have an environmental-impact study process. That process will not stop development, they know, but it might lead to more orderly and accountable development than already has occurred.

Until that happens, ranchers such as Ed Swartz will be locked in a newfangled range war, one fought with lawyers and public relations people rather than pistols and rifles. He will continue to fight the good fight, Swartz says, because he wants the ranch his granddaddy started to be there for his grandchildren. “I’m proud of what I’ve done on this ranch,” he says, a cigarette dangling from his lips, cows bellowing around him. “I don’t think I should sacrifice my ranch so the people upstream can get rich.”