Who Owns The West? Oil & Gas Leases in America's West

"What happened here is ready, fire, aim."

— Raymond Plank, Wyoming ranch owner and chairman of the board of Apache Corporation, one of the nation's largest independent natural gas and oil companies, on the reckless exploration and development of coal bed methane gas in the Powder River Basin (Harden 2002)

Quick Facts: Federal Land in the Powder River Basin

Acres leased: 3,497,851
Acres leased (01/2003-05/2004): 78,503
Oil in Powder River Basin (WY and MT) could supply U.S. for: 50 days (Energy Inventory 2003, EIA Petroleum Products 2002)
Gas in Powder River Basin (WY and MT) could supply U.S. for: 129 days (Energy Inventory 2003, USDOE Natural Gas 2004)

Home, Home on the Gas Range

EWG's analysis of government leasing records shows that 10 percent of all lands leased by the oil and gas industry in 12 western states lie within the Powder River Basin.

BLM recently approved a plan that will greatly increase drilling. For less than 129 days of natural gas, the BLM approved a plan that will place an estimated 12,000 coal bed methane wells (a form of natural gas development) on eight million acres of Wyoming's Powder River Basin. The Basin is owned in part by ranchers who are already seeing their way of life threatened by intensive coal bed methane development.

The Powder River Basin is an area of 14 million acres in northeastern Wyoming and southeastern Montana that is roughly bounded by the Bighorn Mountains in the West, the Black Hills in the east, Montana's Cedar Ridge in the north, and Wyoming's Laramie Mountains, Casper arch, and Hartville Uplift in the South. The area is marked by grass-covered plains, rolling hills, wide, flat streambeds, and broad floodplains. The Powder River Basin is home to oil and conventional natural gas production. Since 1997, it has also been the site of intensive coal bed methane production and has recently become the most active area in the country for such gas development (USGS 2002, Klinkenborg 2003).

In 2003, the BLM approved an industry-proposed plan for new coal bed methane wells on an eight million-acre portion of the PRB. Under the plan, the number of coal bed methane wells is estimated to grow from 39,000 in 2003 to about 51,000 by 2013 (BLM PRB ROD 2003, BLM PRB FEIS 2003).

Powder River Basin Interactive Map

Map Note: The Powder River Basin (PRB) depicted in red is a 14 million-acre area in northeastern Wyoming and southeastern Montana that is home to ranchers and wildlife -- both threatened by intensive natural gas development. The Resource Management Plan Area is 8 million acres of the PRB in Wyoming on which BLM recently approved the drilling of 12,000 coal bed methane wells which will bring the total number of wells in the area to 51,000 by 2013 (National Atlas 2003, Energy Inventory 2003).

An Environmental Working Group analysis of government leasing and drilling records shows that gas drilling is already highly concentrated on Powder River Basin lands. A summary of current leasing activity in the Basin is shown below.

Oil and Gas Lease Holders of Powder River Basin land

In Powder River Basin, 1,585 companies and individuals hold 6,282 active leases on 3,497,851 acres of land. The table below shows who holds active leases, and provides links to comprehensive information on leases held across the west by individual companies, and political contributions made by companies over the past three election cycles.

Rank	Name	City/State
1	Yates Petroleum Corp	Artesia, NM 88210	539	384,719
2	Western Gas Resources Inc	Denver, CO 80202	418	306,849
3	The Williams Companies	Tulsa, OK 74172	423	256,907
4	Maurice W Brown	Cheyenne, WY 82007	537	239,662
5	Devon Energy Corporation	Oklahoma City, OK 73102	358	217,901
6	Pennaco Energy Inc	Denver, CO 80202	159	137,770
7	Cimarex Energy Co	Denver, CO 80203	234	120,540
8	Prima Oil & Gas Co	Denver, CO 80202	178	114,283
9	Marathon Oil Co	Houston,	124	110,331
10	Encana Oil & Gas Inc	Calgary, Alberta, Canada	205	109,609
See all lease holders in Powder River Basin

Source: EWG analysis of leasing and drilling records in 12 western states, contained in the Bureau of Land Management's Land and Mineral Records 2000 database, acquired by EWG May 15 2004.

Coal Bed Methane

Coal bed methane is methane gas (natural gas) trapped within coal deposits. Such deposits can contain much more natural gas than conventional natural gas reservoirs of equal rock volume because of the large fraction of tiny voids in coal that hold the gas in place (a property that gives coal what is called a high porosity). Coal bed methane is also cheaper to extract than other natural gas because coal beds are often shallow and easy to drill (USGS 2000).

Such drilling has caused environmental problems, however, particularly because of the large amount of water involved. In conventional oil or gas deposits, gas lies on top of oil, and oil, in turn, lies on top of water. By extracting oil or gas, operators extract relatively little water because they do not have to drill through water to reach the desired fossil fuel. Water permeates coal beds, however, trapping the methane gas. To extract the methane, operators must pump out the water, lowering pressure and allowing the methane to escape (USGS 2000). This water has caused soil erosion in the Powder River Basin and, because of its high sodium content, it has rendered some land permanently barren (PRBRC CBM Background 2004). Reinjecting the water is possible but adds to the cost of extracting methane (USGS 2000).

Water: Pumping Around the Clock

The amount of water extracted is vast. According to the Powder River Basin Resource Council (PRBRC), a Wyoming-based non-profit organization founded by ranchers, coal bed methane wells pump water "24 hours a day, 365 days a year at an average of 12 [gallons per minute] per well." The wells can produce as much as 70 gallons per minute, the Council reports (PRBRC Help for Surface Owners 2004). Wells for people and livestock have dried up as a result of coal bed methane operations and other wells have become contaminated with methane gas (PRBRC CBM Background 2004).

The PRBRC notes that holding areas are often inadequate because the water will freeze during the winter, expanding in volume and thus overflowing the reservoir or tank in which it was contained (PRBRC Help for Surface Owners 2004). In addition, the PRBRC reports that holding the water in large "waste pitsÉcan lead to salt and sediment buildup, potential contamination of shallow aquifers and acreage out of production" (PRBRC CBM Background 2004).

Impacts Beyond Drilling

The amount of land used for drilling can also be significant. A coal bed may extend beneath a large area of surface land. Because a single well extracts methane from only a small portion of the coal bed, an operator may have to drill hundreds or thousands of wells to recover the gas (USGS 2000).

Moreover, the well is only one part of the operation. The oil and gas companies that won BLM approval of their coal bed methane plan in the PRB estimate that their operations will include "access roads, pipelines to gather gas and produced water, electrical utilities, facilities to treat and compress gas and dispose of produced water, and pipelines to deliver gas under high pressure to transmission pipelines" (BLM PRB ROD 2003).

Each of these land uses can have environmental impacts. The PRBRC reports that "huge compressor stations are required to move the gas through the pipelines, and are being built on open rangelands all over the Powder River Basin. The once quiet prairie now roars like the engine of a 747 revving up for takeoff. People living near compressor stations can no longer sit peacefully outdoors or leave their windows open at night without the constant reminder that their quiet lifestyle has been destroyed for the foreseeable future" (PRBRC CBM Main Page 2004). The PRBRC also notes that 400 miles of power lines were built last year with 400 more miles expected to be constructed in each of the next five or six years. Dust from hundreds of semi-trucks and pickups driving to and from methane wells creates respiratory hazards for humans and livestock (PRBRC CBM Background 2004). Wildlife habitat is destroyed and disrupted, including habitat for pronghorn antelope, mule deer, and sage grouse (PRBRC CBM Main Page 2004).

Sage grouse is one of several threatened or sensitive species in the PRB that may be harmed by coal bed methane exploration. Other at-risk species include bald eagles, mountain plovers, and black-tailed prairie dogs (BLM FEIS 2003, 4-251 to 4-257).

Split Land Ownership

Compounding the problem is that much of the land in the Powder River Basin is "split estate" or "private surface" land, meaning that different parties own the surface and minerals. On split estate land, for example, a rancher may own the surface rights while the federal government holds the mineral rights. The BLM estimates that in the eight-million-acre area where new coal bed methane development will occur, approximately 76 percent of the surface land is privately-owned while most of the oil and gas rights — as much as 63 percent in some areas — are federally-owned (BLM PRB FEIS 3-229, 3-230).

What this means for ranchers and others who own the surface above federal oil and gas estates is that there is little they can do to prevent a coal bed methane well from operating on their land. Under federal rules, an oil and gas operator has a right to enter the land by receiving consent of the surface owner, by negotiating an agreement with the surface owner that includes payment for damages caused by the operator, or by posting a bond of at least $1,000 with the federal government, payable to the surface owner, for any damages. The surface owner has a right to receive notice of the bond, to object to approval of the bond and to appeal approval of the bond. The operator has a right to use as much of the surface as may be required for all purposes reasonably incident to the removal of coal bed methane (CFR SRHA Entry 2004) State laws may also apply. But oil and gas operators generally do not have to gain permission to explore or drill on surface land owned by someone else (OGAP 2004, II-12).

The federal split estates in the Powder River Basin are a legacy of a federal law known as the Stock Raising Homestead Act (SRHA). Passed by Congress in 1916, the SRHA granted surface rights to settlers but reserved the mineral rights for the federal government. (FR SHRA 2003).

Coal bed methane can also provide environmental benefits, if extracted properly. The burning of methane produces much less carbon dioxide than the burning of coal, giving methane the potential to slow global warming if used in place of coal. In addition, if methane is not extracted prior to coal mining, it can escape into the atmosphere where it acts as a greenhouse gas, itself. Thus, if coal is going to be mined, it may be beneficial to remove the coal bed methane first (USGS 2000).

Small Amounts of Energy

However, there is relatively little methane in the Powder River Basin. According to a 2003 estimate from three government agencies, federal land open to leasing in the Powder River Basin in Wyoming and Montana contains 944 million barrels of technically recoverable (though not necessarily economically recoverable) oil and 7.39 trillion cubic feet (TCF) of technically recoverable natural gas. The agencies found that federal land not open to leasing — 14 percent of federal land in the PRB — contains 36 million barrels of technically recoverable oil and 0.76 trillion cubic feet of technically recoverable natural gas (Energy Inventory 2003). The agencies estimate that, for the entire Basin (including federal and non-federal land) there is an average of 1.642 billion barrels of oil and 16 TCF of natural gas (Energy Inventory 2003).

To put these figures in perspective, U.S. oil consumption in 2000 was 19.7 million barrels per day, meaning that the federal lands in the Powder River Basin — lands both open and closed to leasing — would provide the nation at most about 50 days of oil. The U.S. used about 23 TCF of natural gas in 2001 — a figure that is expected to rise to 35 TCF per year by 2025. Thus, at 2001 levels of consumption, the federal lands in the Powder River Basin — lands both open and closed to leasing — would provide the nation with, at most, about 129 days of natural gas. Because this figure includes gas in both Wyoming and Montana, it is likely that the 12,000 new wells approved for federal land on the Wyoming side of the Basin will produce less than 129 days of natural gas. All of the lands in the Basin would provide at most an average of 83 days of oil and 253 days of natural gas (USDOE Natural Gas 2004; USDOE Oil Consumption 2004).

References

Bureau of Land Management (BLM PRB ROD). 2003. Record of Decision and Resource Management Plan Amendments for the Powder River Basin Oil and Gas Project. Accessed online May 26, 2004 at http://www.wy.blm.gov/nepa/prb-rod/.
Bureau of Land Management (BLM PRB FEIS). Final Environmental Impact Statement and Proposed Plan Amendment for the Powder River Basin Oil and Gas Project, 3-229, 3-230. 2003. Accessed online May 25, 2004 at http://www.wy.blm.gov/nepa/prb-feis/.
Code of Federal Regulations (CFR SRHA Entry). Disposal of Reserved Minerals Under the Stockraising Homestead Act. 43 CFR 3814.1, 3814.2 (2004).
Energy Information Administration (EIA Petroleum Products). 2002. Annual Energy Review, 2002. Petroleum Products Supplied by Type, 1949-2002. Accessed online July 14, 2004 at http://www.eia.doe.gov/emeu/aer/petro.html.
Federal Register (FR SRHA). 2003. What are SRHA lands? 68 F.R. 61079-61081 (October 24, 2003).
Harden, Blaine. Ranchers Bristle as Gas Wells Loom on the Range. The New York Times. December 29, 2002, 1.
Klinkenborg, Verlyn. Turning Northeast Wyoming Upside Down in the Hunt for Coal-Bed Methane. The New York Times. December 1, 2003, 22.
National Atlas of the United States, Federal Lands and Indian Reservations, October 2003 (National Atlas). 2003. Accessed online at http://nationalatlas.gov
Oil and Gas Accountability Project (OGAP). 2004. Oil and Gas at Your Door? A Landowner's Guide to Oil and Gas Development. Accessed online August 18, 2004 at http://www.ogap.org/.
Powder River Basin Resource Council (PRBRC CBM Main Page). 2004. Welcome to Powder River Basin Resource Council's Coalbed Methane Website. Accessed online May 26, 2004 at http://www.powderriverbasin.org/cbm/index.htm.
Powder River Basin Resource Council (PRBRC Help for Surface Owners). 2004. Help for Surface Owners. Accessed online May 25, 2004 at http://www.powderriverbasin.org/cbm
/helpforsurface_owners.shtml.
Powder River Basin Resource Council (PRBRC CBM Background). 2004. Coalbed Methane Development in Wyoming's Powder River Basin is Transforming the Landscape. PRBRC and Landowners Respond to Prevent Damage. Accessed online May 26, 2004 at http://www.powderriverbasin.org/cbm
/general_background_cbm.shtml.
U.S. Geological Survey (USGS 2002). 2002. Water Quality and Environmental Isotopic Analyses of Ground-Water Samples Collected from the Wasatch and Fort Union Formations in Areas of Coalbed Methane DevelopmentÑImplications to Recharge and Ground-Water Flow, Eastern Powder River Basin, Wyoming. Accessed online May 24, 2004 at http://water.usgs.gov/pubs/wri/wri024045/.
U.S. Geological Survey (USGS 2000). Coal-Bed Methane: Potential and Concerns. 2000. Accessed online May 24, 2004 at pubs.usgs.gov/fs/fs123-00/fs123-00.pdf.
U.S. Geological Survey (USGS PRB Oil & Gas). 2002. Assessment of Undiscovered Oil and Gas Resources of the Powder River Basin Province of Wyoming and Montana, 2002. Accessed online May 24, 2004 at http://pubs.usgs.gov/fs/fs-146-02/fs-146-02.html.
U.S. Department of Energy (USDOE Natural Gas). 2004. Natural Gas Fundamentals from Resource to Market. Accessed online May 24, 2004 at http://www.energy.gov/engine
/content.do?BT_CODE=NATURALGAS.
U.S. Departments of Interior, Agriculture, Energy (Energy Inventory 2003). 2003. Scientific Inventory of Onshore Federal Lands' Oil and Gas Resources and Reserves and the Extent and Nature of Restrictions or Impediments to Their Development. Accessed online May 27, 2004 at http://www.doi.gov/epca/.