Western States See Natural Gas Drilling Boom

More drilling is necessary because existing U.S. supplies of natural gas are leveling off as power companies are generating more electricity with natural gas, which emits fewer pollutants than coal-generated power, said Peggy Laramie, a spokeswoman for the American Gas Association. Greater demand also has caused the price of natural gas to nearly triple in the past decade, she said.

But states, which benefit from taxes on the gas pumped out of the earth, are caught in the middle as they struggle to manage the environmental risks and economic rewards of opening up federal-, state- and privately-owned lands to energy producers.

Some state agencies that regulate gas drilling are having a hard time keeping up with their growing workload. Brian Macke, a Colorado regulator, said his department has to inspect twice as many wells these days as it did a decade ago, and has to do it with the same size staff it had 10 years ago.

A recent survey of natural gas operations in Colorado, Montana, New Mexico, Wyoming and North Dakota showed a 44 percent increase in state-issued drilling permits between 1999 and 2003. The survey, which was conducted by the nonprofit Western Organization of Resource Councils, an umbrella group of western environmentalists, showed that the federal Bureau of Land Management also doubled the number of drilling permits it issued over the same period.

Legislation has been introduced in the Colorado, Montana, New Mexico and Wyoming legislatures that would protect natural resources and landowners' rights from the increased drilling. And New Mexico is fighting federal efforts to open up two environmentally sensitive areas to natural gas exploration.

Wyoming, one of the nation's top five natural gas producing states, is a prime example of the promise and perils of increased drilling. The state issued 8,981 permits for drilling on state or private lands in 2004, 22 percent more than the previous year, according to WORC. In return, the state expects to receive $820 million from the taxes on natural gas for the current fiscal year, said Don Likwartz, supervisor of the Wyoming Oil and Gas Conservation Commission.

Most of the new drilling is for methane trapped in underground coal beds, a source that has helped renew domestic natural gas supplies since they bottomed-out in the mid-1980s. But to recover coal-bed methane, companies must first pump out large amounts of water, which is considered a pollutant under the federal Clean Water Act.

And the state recently discovered 150 containment ponds, used to hold water pumped out from coal-bed methane wells, for which gas companies had not gotten the required state permits, prompting Gov. Dave Freudenthal (D) to ask the Legislature for more money and staff to monitor potential hazards.

The water is sometimes very high in mineral content and can harm the soil, streams and livestock if it is not treated before being released, said Jim Magagnal, executive director of the Wyoming Stock Growers Association.

Proposed legislation in Wyoming and Colorado is meant to protect ranchers and encourage gas companies to negotiate contracts with ranchers for the use of their land and any damages. Currently, companies do not need permission from most landowners to drill for gas because the mineral rights often belong to the state or federal government.

Ranchers concerns are also behind a bill introduced by state Sen. Lane Larson (D) of Billings. It would require drilling companies to post a bond large enough to repay landowners for any damage they cause. Currently, a company must post just a $50,000 bond to cover potential damage from all their wells in the state far less than it might cost to restore even a few acres of land after drilling is finished, Larson said.

The New Mexico Legislature is considering increasing fines for gas companies that violate the state's environmental laws. It is also weighing legislation that would allow the water from coal-bed methane wells to be used for cooling power-plants, rather than pumping it back underground.

Gov. Bill Richardson (D) , who is spearheading efforts to encourage renewable energy in his state, is locked in a battle to prevent drilling for coal-bed methane in the 100,000 acre Valle Vidal, in the heart of northern New Mexico's Sangre de Cristo Mountains and in the 1.2 million acres of grassland called the Otero Mesa.

Related Stories