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GILLETTE — The Powder River Basin is Wyoming's largest natural gas producer, but it could be producing 20 percent more gas.

More than 6,000 coalbed methane wells are out of production, half of them awaiting regulatory approval to manage the byproduct water associated with producing the gas, according to the Wyoming Oil and Gas Conservation Commission.

"This development of coalbed methane gas is very tightly regulated," said OGCC supervisor Don Likwartz. "It's an important revenue source to the state, but it's got to be done right."

Likwartz testified before the Coal-bed Natural Gas Water Use Task Force on Thursday afternoon in Gillette.

The situation Likwartz described is nothing new to state officials. The William D. Ruckelshaus Institute at the University of Wyoming took a yearlong look at the issue and reported to the governor's office in December that the state's failure to come up with a regulatory framework recognizing the unique impacts of coalbed methane development threatens future growth of the industry.

That's of particular concern because the industry has captured only 5 percent of the $140 billion resource in Wyoming. At the same time, the state hasn't come up with a way for landowners to refuse coalbed methane water if they don't want it.

The industry is under increasing pressure from Montana, which is expected to impose stringent water-quality standards that will prevent coalbed methane producers in Wyoming from discharging the byproduct water into Montana-bound streams.

Likwartz said that could reduce gas production until the industry and the state come up with a strategy to manage increased volumes of produced water.

"There are 80 different coalbed methane gas operators in the Powder River Basin," Likwartz said. "Trying to get all the operators to work together often is difficult."

The 2006 Legislature formed the Coal-Bed Natural Gas Water Use Task Force to comb through water management recommendations from the Ruckelshaus and dozens of other studies that have been conducted since the industry sprang to life in 1998.

Currently, the industry has many options for managing the water, including irrigation, sub-irrigation, stock watering and various treatments that allow those and other uses.

However, the volume of coalbed methane water being produced in the basin far exceeds those practical uses, so industry and state officials are considering a number of recommendations targeting those volumes that aren't put to a specific use. Those options include piping it to the North Platte River, piping it to Campbell County coal mines for dust suppression or potentially piping it to injection points.

"People need to understand that this task force wants to hear from the public," said Rep. Pat Childers, R-Cody. "We want to get some ideas on how to improve the situation."

John Robitaille, vice president of the Petroleum Association of Wyoming, said he hopes the task force doesn't eliminate any of the industry's current water management options. Any water management strategies the task force recommends ought to be in addition to the current set of options, he said.

"Any recommendation has to be feasible," Robitaille said. "We can't use a one-size-fits-all approach."

Tom Doll, an operations manager for Williams Production RMT, said his company has wells that are drilled but are awaiting production. He said permitting a water management plan takes time because companies must balance their options with their checkbooks.

"You've got to make some capital decisions on how you're going to manage the water," Doll said.

Complicating the issue further is that the task force must sift through studies that sometimes contradict one another.

For example, the Environmental Protection Agency's Region 8 office in Denver conducted a feasibility study that said coalbed methane companies can afford water treatment and injection programs and still produce the gas profitably. That study, however, was quickly swept off the table and never formally completed. Instead, the U.S. Department of Energy came out with its own study that some saw as an attempt to debunk the EPA's findings.

"The government is the government. So politics being what it is, there hasn't been any demand for us to complete (the study)," EPA natural resource economist Brad Crowder said in a recent interview.

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