Hinchey: CBM drilling likely delayed again

By TOM MORTON Casper Star-Tribune staff writer

The coalbed natural gas industry has waited 34 months for the U.S. Bureau of Land Management to issue its Environmental Impact Statement (EIS) on drilling on federal land in the Powder River Basin, an industry official said Monday.

It will probably wait some more, Bruce Hinchey, president of the Petroleum Association of Wyoming, told the Casper Rotary Club. "We're at 34 months and counting," he said.

"We were expecting it on the 17th (of April), but it was delayed a week," Hinchey said. "We expect a lawsuit by environmental groups."

That would mark the latest delay in new drilling in the Powder River Basin that has slowed to a standstill now that the federal government has issued the maximum number of drilling permits, he said.

Developing a natural gas field in Wyoming takes between four and five years, Hinchey said.

He laid the blame for the delay in the basin on the federal government's environmental policies, such as allowing drilling at certain times of the year but not at other times.

Some federal policies are extreme, he said.

For example, if digging for a pipeline will expose rocks that are a different color than the ground, the excavated rocks must be painted the same color as the ground, Hinchey said.

In response to a question from Rotarian David Bishop, Hinchey said that there's no way to calculate how much Wyoming has lost in revenues because of the federal policies and the delays in new drilling.

Hinchey, former Wyoming House Speaker, became director of the PAW during his last term in the Senate in 2002.

During his talk, he gave a brief overview of the oil and gas industry's history in Wyoming, starting with the first well 118 years ago drilled southeast of Lander.

Now, 20 of Wyoming's 23 counties -- with the exceptions of Platte, Goshen and Teton counties -- have oil or gas production, Hinchey said.

"We don't have any yet in Yellowstone, but we're working on that," he joked to a lot of laughter.

More than 15,000 miles of pipeline operated by 42 companies, Hinchey later added, are in all Wyoming counties.

In other statistical matters, he said the deepest well drilled in Wyoming was more than 25,000-feet deep, and yielded a dry hole. The deepest producing well is 24,877 feet, he said.

The oil and gas industry employs about 22,000 people who earn an annual payroll of $850 million, he said.

While the industry has begun to decline in Campbell County -- in the Powder River Basin -- it is up in Carbon, Sweetwater and Sublette counties, Hinchey said.

Hinchey showed the audiences charts of production and sales that marked the downward trend of oil production and the upward trend of gas production.

Limited pipeline capacity, however, hinders the rate of gas production, he said.

Yet that production pays more than $900 million a year for much of Wyoming's state and local government operations, Hinchey said. "That equals a direct payment of $1,900 for every person in Wyoming. ... You can see without the oil and gas industry what kind of taxes you would pay."

He also listed the countries that export oil to the United States, with the most coming from Canada, followed by Saudi Arabia, Mexico, Venezuela, Nigeria, the United Kingdom, Iraq, Norway, Angola and Algeria.

"Fifty-seven-point-eight (percent) of the total is from foreign countries," Hinchey said. "That's why it's so important for Congress to have the national energy policy bill."