by Carla Dolce
In the Vance v. Wolfe (originally Vance v. Simpson) case decided last Monday, the Colorado Supreme Court affirmed a water court’s ruling that the extraction of water to release methane in coal bed methane (CBM) operations is a beneficial use that subjects CBM wells to the permitting, adjudication, and administration requirements of Colorado water laws.
The dispute leading to this decision started in the San Juan Basin where BP America was conducting CBM operations near ranches owned by William and Elizabeth Vance and James and Mary Fitzgerald. The ranchers, who possessed senior water rights, brought suit in late 2005 to compel the State Engineer′s Office (SEO) to require water well permits for the CBM operations. The water court ruled in the ranchers′ favor.
The affirmance of this decision by the Supreme Court puts CBM producers in the same position as Gardner, Navajo Western Water District, Paradise Acres and all other well water users who have to buy or lease augmentation water to replace water depletions. According to the Papadopulos Stream Depletion Study (2007 draft) sponsored by the Colorado Geological Survey, CBM production depletes about 2,500 acre feet (815 million gallons) of water each year from the Raton Basin which includes the Cucharas River. Local water experts believe it would be virtually impossible for CBM producers in Huerfano County to obtain water rights sufficient to augment the quantity of deletions found in the Papadopulos study.
Does this mean the end of CBM operations in our local Raton Basin? Probably not. While the Colorado Supreme Court was mulling over this case, the oil and gas industry was lobbying our state legislators. They weren′t alone. Water rights groups were right there with them. They also heard the SEO’s concerns that an affirmance of the Vance case could potentially give them the impossible task of examining 38,000 well permit applications in 60 days – the statutorily mandated time they have to examine an application.
The result is H.B. 1303, introduced by Sen. Jim Isgar, D-Hesperus, and Rep. Kathleen Curry, D-Gunnison, which passed the Colorado House on April 7 and is now in the Colorado State Senate. In an interview last Monday, Rep. Curry noted that this bill “is a compromise.” As it was originally introduced, the bill had presumptions for determining whether an oil or gas well is tributary to surface water, thus requiring a permit. Because the legislators couldn′t reach agreement on the criteria for these presumptions, the bill now before the Senate gives the SEO authority to implement rules for determining whether a well is tributary and needs a permit.
Rep. Curry noted that H.B. 1303 gives oil and gas drillers until March 31, 2010 to comply. They have until 2012 to have permanent augmentation plans. Although H.B. 1303 was written to apply to all 38,000 oil and gas wells in Colorado, Rep. Curry believes the Senate might amend it to apply only to Colorado′s approximately 5000 CBM wells since the Vance decision appears to be limited to those wells.
How this will affect local CBM production is uncertain. Paul Powell, from Petroglyph′s main office in Boise, Idaho said his company is still analyzing the Vance decision and waiting to see if and in what form H.B. 1303 passes before making any decisions regarding their CBM operations in Huerfano County.
In an interview Wednesday, Dick Wolfe, the State Engineer, said that Petroglyph and Presco, Inc. have been working on modeling studies for the past year to show which portions of the Raton Basin are nontributary. He said these studies will be a significant factor, along with the Papadopulos study, in determining which CBM wells in the Raton basin will not need permits or augmentation plans. Local water experts say CBM producers are also conducting studies to show water depletions from those wells that will need permits are drastically lower than the Papadopulos study found. In the interim, the economic downturn may well have a greater impact on local CBM production than either the Vance case or H.B. 1303.