Gas-Drilling Permits in Rockies Outstrip Ability to Tap Resource

By Blaine Harden
Washington Post Staff Writer
Thursday, April 28, 2005

PINEDALE, Wyo. -- As energy companies and Bush administration officials have long told the story, lack of access to federal land is the primary roadblock for increased production of natural gas in the United States.

The Independent Petroleum Association of America made this familiar claim in February at a congressional hearing. Similarly, Vice President Cheney said last year that because of unjustified federal limits on drilling, "large parts of the Rocky Mountain West are off-limits."

The lack-of-access story, however, does not square with what is happening on the ground here at the epicenter of what is widely being called the largest boom in gas drilling on federal land ever in the Rocky Mountain West.

In response to White House orders to expedite gas extraction on federal lands, the Bureau of Land Management has issued more gas-drilling permits in the West than the industry has rigs to drill with or workers to operate the rigs, according to government records, industry experts and local officials.

The BLM issued a record number of drilling permits last year, but the gas industry is struggling to keep up, with the number of completed wells flat or declining over the past three years.

"Around here, I don't even hear that argument about access anymore," said Prill Mecham, field manager for the BLM in the Pinedale area, which she said contains more gas in a smaller footprint than anywhere in the West. "The companies are clear where they need to drill, and they have access to all these areas."

Several of the energy companies operating in the Pinedale area -- where there is an estimated 35 trillion cubic feet of natural gas, about 11 times the total amount produced annually on all public land in the United States -- are unreservedly bullish in their reports to shareholders about prospects for high-profit, long-term access to gas. "Ultra's well economics are robust," says a company profile by Ultra Petroleum Corp. of Houston, one of the major operators here.

With a record number of gas-drilling rigs now operating in the West, industry analysts say, energy companies have all but exhausted available drilling equipment in North America. Because delivery on new rigs can take a year or more, the industry is not expected to catch up in the near future to the drilling permits that have already been issued by the federal government.

"Large drilling contractors are operating at full utilization," said Byron Pope, an analyst for Pickering Energy Partners Inc., a Houston-based energy research firm. "Don't expect to see a massive wave of more drilling."

There is also an acute shortage of gas-field workers. Here in Wyoming, which leads the West in gas drilling on public land, an industry-sponsored school was opened last month in Casper to train needed roughnecks. Its director, Charlie Ware, said energy companies have "told us that they need 1,000 new workers a year for the next five years to drill the leases that are out there right now."

In New Mexico, where gas drilling on public lands is also booming, Bob Gallagher, president of the state oil and gas association, agreed that the industry has temporarily run out of capacity: "If we had the availability of equipment and labor as we speak, you would see more crews working, more wells being drilled."

Gallagher and other industry experts say that the federal government must continue to lease more land for drilling because older gas fields are drying up, dependence on foreign supply is increasing and consumer appetite for gas continues to surge.

As industry scrambles to catch up with existing drilling permits, state and local governments across the Rocky Mountain West, as well as a number of local and national environmental groups, are becoming increasingly concerned -- and in some cases, outraged -- about the environmental and social consequences of increased gas production on federal land.

"When you have a huge portfolio of unused leases, why does the Bush administration continue to issue more, especially in environmentally fragile areas?" asked Dave Alberswerth, who analyzes energy exploration on public lands for the Wilderness Society.

Responding to these concerns, John Wright, a spokesman for the Interior Department, said: "We only lease in areas on public land where there is gas and where we can do it in an environmentally sensitive manner. More important, these decisions are based on land management planning, which is a public process."

Much of the recent grumbling about gas drilling in the West, however, comes from ranchers who say their rights as owners have been trumped by federal mining law.

They complain about the "split-estate." Many ranchers in the region own only surface rights to their land, while the BLM owns sub-surface mineral rights. Oil and gas companies can lease those mineral rights from the BLM and operate on a rancher's land, building roads and drilling wells, even without the rancher's permission.

In an unprecedented response to constituent anger over the split-estate, five state legislatures -- in Wyoming, Montana, Colorado, North Dakota and New Mexico -- this year considered laws to protect and enhance the rights of surface owners in disputes with energy companies. Wyoming was the one state to enact such a law (in Montana and Colorado, bills were narrowly turned back).

The Wyoming law calls for negotiations on damage payments, requires land reclamation when drilling is done and spells out rules for mediating disputes. In the other four states, similar or tougher laws are likely to be considered again next year, said Kevin Williams, a field organizer for the Western Organization of Resource Councils, which coordinates local land-use groups.

"It's about polluted water, it's about noise, it's about dust," Williams said. "A lot of people are angry, and this is not going to die down."

Here in the Pinedale area, a report by the Wilderness Society says that the rapid pace of drilling is damaging "a wildlife resource of national significance." The report says that road building associated with drilling has fragmented winter habitat for some of the West's largest and longest-migrating herds of pronghorn antelope and mule deer, while reducing breeding and nesting areas for the sage grouse, a bird many experts regard as threatened.

Local BLM chief Mecham concedes that intensive gas drilling and road construction in the Jonah Field near Pinedale in the past four years has caused some environmental damage, especially to habitat for the sage grouse.

According to Wyoming Gov. Dave Freudenthal (D), that is an understatement. In a recent letter to Mecham, he said the Jonah Field is an "example of what not to do in the future." Surface disturbance from roads, wells and pipelines is so great, he wrote, that any measure to mitigate the damage would now be a "futile attempt to 'perfume the pig.' " In an interview at her office here, Mecham said that "there are lessons to be learned from Jonah" and that the BLM is now in a better position to control the drilling that has begun in a nearby gas field, called the Pinedale anticline, where there are winter herds of pronghorn and mule deer.

Many local residents, having witnessed the frantic pace of drilling in the past four years, are less sanguine.

"The country needs this energy, but it is insane what happened at the Jonah Field, and there is still no development plan for the Pinedale anticline," said Gordon Johnston, a Bush supporter and former Marine who until January was a Republican county commissioner in Sublette County, which includes Pinedale.

Asked whether he believes the BLM will now ride herd on the gas companies and protect wildlife in the Pinedale anticline, Johnston smiled sadly.

"There is not a doubt in my military mind," he said. "That will not happen."

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