Final Coal Bed Methane Order for Powder River Basin Controlled Groundwater Area

BEFORE THE BOARD OF OIL AND GAS CONSERVATION OF THE STATE OF MONTANA

IN THE MATTER OF THE BOARD’S OWN MOTION FOR AN ORDER ESTABLISHING COAL BED METHANE OPERATING PRACTICES WITHIN THE POWDER RIVER BASIN CONTROLLED GROUNDWATER AREA IN BIG HORN, POWDER RIVER, ROSEBUD, TREASURE AND CUSTER COUNTIES, MONTANA.

ORDER NO 99-99

Docket 130-99

Report of the Board  

The above entitled cause came on regularly for hearing on the 9th day of December, 1999, in the Billings Petroleum Club, Billings, Montana, pursuant to the order of the Board of Oil and Gas Conservation of the State of Montana, hereinafter referred to as the Board.   At this time and place testimony was presented, statements and exhibits were received, and the Board then took the cause under advisement; and, the Board having fully considered the testimony, statements and exhibits and all things and matters presented to it for its consideration by all parties in the Docket, and being well and fully advised in the premises, finds and concludes as follows:

Findings of Fact

1.  Due, proper and sufficient notice was published and given of this matter, the hearing hereon, and of the time and place of said hearing, as well as the purpose of said hearing; all parties were afforded opportunity to present evidence, oral and documentary.

  2. Current interest in developing coal bed methane reserves in the Powder River Basin has raised concerns about the effects of such development on groundwater in the area because production of such reserves will require dewatering the coal beds      

Order

IT IS THEREFORE ORDERED by the Board of Oil and Gas Conservation of the State of Montana that this general order applies to coal bed methane wells drilled on private and state land in the Powder River Basin Controlled Groundwater Area as established by the Department of Natural Resources and Conservation.  It does not apply to lands owned by Indian Tribes or held in trust by the United States for Indian Tribes or individual Indians.

     1.  Applications for permit to drill exploratory wells to determine the potential for coal bed methane (CBM) production will be approved as wildcat gas wells under existing rules.  Well density is limited to one well per section, setback at least 990 feet from the section lines.  Locations must be advertised and the ten day waiting period prior to approval applies.     

2.  Wells drilled for the purpose of exploring for or producing CBM must meet the drilling, completion and plugging requirements of any other well under the Board’s general rules and regulations.  However, wells that are drilled to the top of the target coal and have casing set and cemented back to surface need not be equipped with a separate string of production casing.     

3.  Requests for temporary spacing units of less than 640 acres or for increased well density for a test pod of wells or for a “pilot” project of limited scope may be authorized by the Board after notice and public hearing.  Notice of public hearing will be published by the Board in the manner customarily used by it; the applicant must provide actual notice of proposed hearing to the record owners as required under Section 82-11-141(4)(b), MCA, and to water right holders in the temporary spacing unit proposed for the pilot project.     

4.  An application for public hearing to establish permanent spacing and field rules for a CBM development project must include such information as is customarily required for establishment of well spacing and field rules for conventional gas production.  Applicants must also present at the hearing a field development plan including maps, cross-sections and a description of the existing hydrologic resources, including water wells or springs that may be affected by the project, and a copy of the water mitigation agreement being used or proposed for use in the project area.  The applicant must provide an estimated time frame for development activities, a monitoring/evaluation plan for water resources in the project area, the proposed number and location of key wells which will be used to determine water levels and aquifer recovery data, and water quality information for target coal aquifers available at the time of hearing.  The Board will publish its customary notice of public hearing; the applicant must provide actual notice as required in Section 82-11-141(4)(b), MCA, and must notify all record water rights holders within one-half mile of the exterior boundary of the proposed field area.     

5.  Notice to water rights holders must be given by mailing the written notice, postage prepaid, to the address shown by the records of the Department of Natural Resources and Conservation at the time notice is given.  The notice must briefly summarize the application and provide the time and place of the public hearing.     

6.  Coal bed methane operators must offer water mitigation agreements to owners of water wells or natural springs within one-half mile of a CBM field proposed for approval by the Board or within the area that the operator reasonably believes may be impacted by a CBM production operation, whichever is greater.  This area will be automatically extended one-half mile beyond any water well or natural spring adversely affected.  The mitigation agreement must provide for prompt supplementation or replacement of water from any natural spring or water well adversely affected by the CBM project and shall be under such conditions as the parties mutually agree upon.  Mitigation agreements are intended to address the reduction or loss of water resources and may exclude mechanical, electrical, or similar loss of productivity not resulting from a reduction in the amount of available water due to production from CBM wells.  The Board will review areas covered by mitigation agreements as part of its review of field development proposals.     

7.  Coal bed methane production will be reported on Board Form No. 6 and will include produced volumes of both gas and water.  Form No. 6 will be filed for all unplugged CBM wells even if the only production reported is water.  An initial pre-production static water level will be reported for each newly completed CBM well at the time Form No. 4 is filed.  For those wells designated as key wells, the operator will report an annual shut-in static fluid level following a shut-in period of at least 48 hours or such lesser time as is adequate to determine a stabilized level.  For those wells designated as dedicated monitoring wells, a quarterly fluid level will be reported.     

8.  The requirement to run electric or radioactive wells logs will be met if the operator logs one well in each quarter section to the deepest target CBM horizon.  The minimum log required is a gamma-ray log, which may be run through pipe; however, a gamma ray-density log in open hole is recommended.     

9.  Approval of development plans and establishment of field rules and spacing requirements will be under such conditions and time frames as the Board may deem adequate.  Done and performed by the Board of Oil and Gas Conservation of the State of Montana at Billings, Montana, this 9th day of December, 1999.

BOARD OF OIL AND GAS CONSERVATION
 OF THE STATE OF MONTANA  

_____________________________

Dave Ballard, Chairman

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Denzil Young, Vice-Chairman

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George Galuska, Board Member

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Jack King, Board Member

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Allen Kolstad, Board Member

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Stanley Lund, Board Member

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Elaine Mitchell, Board Member

ATTEST:                                                                                                    

Terri Perrigo, Executive Secretary