Powder River Basin methane drilling halts

CASPER – Coalbed methane drilling has dropped off so dramatically in the Powder River Basin that officials are not even bothering to count rigs this summer.

Instead, officials counted one well drilled in May. No wells were drilled in June, and so far one well has been drilled in July, according to Wyoming Oil and Gas Conservation Commission supervisor Tom Doll.

It’s a dramatic shift from an average of 300 new wells per month in 2008.

…The sudden paralysis is a combination of poor pricing and the fact that the industry has drilled out most available private and state leases.

The industry sapped shallow state and private reserves from 1998 until mid-2003, when federal minerals were reopened to the industry. Since then, the industry has drilled up about all the state and private minerals it can reach in its westward progression, Doll said.

“State and fee wells are usually drilled first. Then as plans are finalized they drill federal wells last,” he said

Spencer said the current strategy in the industry seems to be adding only “bolt-on” facilities, which means drilling wells within reach of existing infrastructure. New field developments that require new pipelines and power lines are too capital intensive under current pricing.

Coalbed methane made up 22 percent of all natural-gas production in Wyoming in 2008, according to the state. But it’s doubtful the industry will maintain that level of production this year.

About 25 percent of U.S. natural-gas production comes from wells drilled during the previous year, according to industry sources.

Billings Gazette