Wyoming Coalbed Methane Leases Ruled Illegal

CHEYENNE, Wyoming, April 30, 2002 (ENS) - The Interior Department's board of land appeals has ruled that three coalbed methane leases located on 2,500 acres in Wyoming are illegal. The ruling calls into question a number of other methane leases in the Powder River Basin region, and threatens Bush administration plans to increase domestic methane production.

Ending a two year legal challenge by conservation groups and Wyoming ranchers, the Department of Interior Board of Land Appeals ruled Friday that current coalbed methane leases are illegal because they were issued by the Bureau of Land Management (BLM) without proper analysis of coalbed methane's unique impacts.


A coalbed methane drilling rig in the Powder River Basin. (Three photos by Jeff Blend, courtesy Montana Department of Environmental Quality)
"The judges read the same laws we read and interpreted them the same way we did," said Eric Barlow, a rancher and member of the Powder River Basin Resource Council, one of the groups that challenged the leases. "It is clear in this case that BLM, in violation of the law, leased thousands of acres for coalbed methane development without doing the environmental analysis."

The decision could have implications for millions of acres throughout the West that are now slated for coalbed methane development. Coalbed methane, which is natural gas, is a major component of the Bush administration's national energy policy, released last year.

The BLM is now studying 51,000 proposed coalbed methane wells that are scheduled to be drilled and operating in the Powder River Basin by 2010. Many of those leases are identical to those ruled illegal last week.

In 2000, the Wyoming Outdoor Council and Powder River Basin Resource Council challenged a number of oil and gas leases in the Powder River Basin, arguing that their approval by the BLM did not meet the requirements of the National Environmental Policy Act (NEPA).

The groups noted that the only NEPA document pertaining to the Basin leases was an outdated 1985 study for the BLM's resource management plan. The 1985 plan did not mention or analyze coalbed methane development, a newly developed extraction process to recover natural gas from coal seams that was first tested in the 1990s.

Ruling in favor of the two conservation groups, the Board of Land Appeals held that coalbed methane leases are invalid and illegal when the leasing is "based on existing environmental analyses which either did not contain any discussion of the unique potential impacts associated with coalbed methane extraction and development or failed to consider reasonable alternatives relevant to a pre-leasing environmental analysis."


Discharge water from a coal bed methane operation enters the Tongue River in Montana.
The Board rejected arguments by the BLM and lease purchaser Pennaco Energy, now Marathon Oil, that studies of conventional deep natural gas were sufficient to cover the potential impacts associated with coalbed methane.

Coalbed methane is natural gas trapped in underground coal deposits that also store thousands of gallons of water. Coalbed methane extraction requires that the coal seams be drained of water, emptying aquifers that may take hundreds of years to refill.

In the Powder River Basin, the average coalbed methane well discharges 15,000 to 20,000 gallons of salty water per day, impacting surface soils, vegetation and aquatic animals. The BLM predicts that exploiting some 80,000 coalbed methane wells in Wyoming and Montana will discharge at least four trillion gallons of water over the next 15 years.

Other potential impacts of coalbed methane extraction include an estimated 17,000 miles of new roads, 20,000 miles of pipelines, 200,000 acres of soil loss, and thousands of reservoirs to bleed coalbed methane wastewater into the water table.

In October 2000, the Board of Land Appeals granted a temporary injunction against developing the Powder River Basin parcels, and issued similar injunctions in early 2001. Despite these rulings, the BLM has continued to issue coalbed methane leases in Wyoming and other western states.

"It is unfortunate that during the appeal period, and despite the injunction in place, BLM continued to lease more acreage on a fast track without proper analysis that would have considered innovative ways to lessen the impacts of extensive coalbed methane development," said Barlow. "If BLM continues to disregard these laws, what kind of legacy will we leave for our children?"


A coalbed methane water discharge pond in the Powder River Basin.
The decision by the Interior Department's Board of Land Appeals deals another major blow to the Bush administration's energy policies. While Friday's ruling affects just over 2,500 federal acres in the Powder River Basin, its consequences may impact coalbed methane development throughout the entire West.

The nation now consumes 22 trillion cubic feet per year of natural gas, making coalbed methane extraction a centerpiece of the Bush national energy policy. Since Bush took office, BLM offices in western regions have sold about two million acres of federal oil and gas leases, all without any environmental analysis of coalbed methane extraction.

The BLM is now offering leases for coalbed methane development in Montana and several basins in Wyoming, Colorado, Utah and New Mexico - including Wyoming's Red Desert, along the front of Wyoming's Bridger-Teton National Forest and Utah's wild red-rock country.

None of the underlying resource management plans in these areas mentions or studies coalbed methane drilling.

Oil and gas projects can only proceed after operators lease public lands for mineral extraction. The Powder River Basin coalbed methane project - the largest ever contemplated or studied by the Interior Department - presumes that the underlying leases were legally issued.

"The potential ramifications of this decision are enormous," said Tom Darin, director of public lands for the Wyoming Outdoor Council. "BLM has known for years that leasing for coalbed methane was illegal - they admitted this to Congress in early 2000 and received an injunction from judges within Interior later that year. Yet, the Bush administration continued to lease for coalbed methane at a frantic pace, while admitting once again in 2001 that its antiquated land use plans needed to be revised to account for coalbed methane leasing and development."


A welder works on a pipeline that will carry increasing amounts of Powder River Basin coalbed methane gas to market. (Photo courtesy Western Gas)
"It will be interesting to see the effect on the investing community when coalbed methane companies report this ruling and its threat to ongoing operations to their shareholders, as required by Securities Exchange Commission regulations," Darin added.

Other federal agencies have also challenged the environmental and public health impacts of coalbed methane drilling.

In April, U.S. the Environmental Protection Agency reviewed the draft environmental study for 51,000 coalbed methane wells in the Powder River Basin, and handed down its two worst rankings: Environmentally Unsatisfactory and a numeric ranking of 3, which requires BLM to start over with a new environmental study.

"The tide is finally turning," said Jill Morrison of the Powder River Basin Resource Council. "It's about time that BLM steps up to the plate and follows the laws we have instead of trying to steamroll this development over people's land and lives."