CASPER, Wyo. — An oil and gas well is in the way of a coal mine in the Powder River Basin, and the mine’s owners are suing.
Peabody Energy, through its wholly owned subsidiary BTU Western Resources Inc., is suing a part-owner of the well in federal court in Wyoming, claiming the owner has unreasonably rejected a deal to allow expansion of the company’s North Antelope Rochelle Mine.
If the company has to bypass the well site, it would miss out on mining 12.4 million tons of coal, Peabody said.
The company, which filed the lawsuit last week, expects to expand into the well area within the next few months, according to documents filed with the court.
A part-owner of the well has repeatedly refused to reach some sort of deal with Peabody over the well, the company claims in court filings.
Peabody said it’s willing to plug the well bore below the coal deposit and then mine past it.
Lease of coal rights
St. Louis-based Peabody purchased a lease of coal rights to expand the mine from the federal government, which owns the mineral rights under the land that also hosts the oil and gas well.
The well — known as Quillback 1-35 — is at best “marginally economic,” said Peabody in its filing with the court. A 2010 analysis showed the well is worth $59,510 — less than the $75,000 cost to plug and abandon it, the company said.
Peabody is suing Wild Hare LLC, whose registered agent is Burton K. Reno Jr. of Jackson.
However, Reno said Wild Hare LLC is not the owner of the well, just a Wyoming corporation with a name similar to Wild Hare Limited Partnership, which Reno said is the well’s true owner.
That corporation’s registered agent is Don Christmann of Pinedale, according to filings with the Wyoming secretary of state.
The corporation’s main office is listed to a small office building in Lubbock, Texas, and its license was revoked in 2003 because of delinquent taxes, according to state files.
Attempts to reach Christmann on Friday were unsuccessful.
Peabody says federal regulations and statutes recognize that mineral owners must accommodate one another’s use of their rights, known as the accommodation doctrine.
With the well near the end of its life and the coal development of the land underneath just beginning, Peabody claims Wild Hare should accommodate its plan to expand the mine.
The North Antelope Rochelle Mine produced 105.8 million tons of coal last year, the second-largest amount of coal among the basin’s mines, according to data from federal mining regulators.
Reno, of Wild Hare LLC, said he’s had to deal with a number of issues because of confusion between his corporation’s name and the real owner of the well, Wild Hare LP.
It’s a frustrating turn of events for Reno, who said the LCC was named Wild Hare because he thought it was funny.
“It’s not much fun anymore,” he said.