CASPER — A Greenwood Village, Colo., company will pay nearly $1.2 million for the right to operate about 100 coalbed methane wells on state lands in Sheridan County.
Bearcat Energy LLC was one of two bidders competing for the 24 state oil and gas lease parcels, submitting a bid of $35.73 an acre. The company will also post a bond of $85,700 to cover the cost of plugging and abandoning the wells should the company default on its obligation to develop and reclaim the wells, according to the Wyoming Office of State Lands and Investments.
The bids were unsealed last week.
Harold Kemp, assistant director of the agency’s leasing and royalty compliance division, said Bearcat’s winning bid was well over the estimated fair market value of the leases.
The original wells were drilled during the past 10 years, and many of them were not completed or properly cemented. Each lease was either defaulted on or was canceled by the state for various reasons.
Kemp said Bearcat will be obligated to bring the wells and related facilities up to state standards, and the company will likely modify many wells to target deeper coal seams.
“The folks involved in this have been in coalbed methane and understand it,” Kemp said.
Bearcat Energy LLC is a business in good standing, according to the Wyoming secretary of state’s office.
There is no phone number listed for the company, and company officials couldn’t be reached for comment.
Several companies have abandoned coalbed methane operations in the Powder River Basin because of bankruptcies. In some cases there are no willing takers. This summer the Wyoming Oil and Gas Conservation Commission hired a contractor to plug about 124 coalbed methane gas wells spanning several state, federal and private lease parcels in Sheridan County.
That effort is being funded by various bonds posted by lessees. The commission also has access to an “orphaned well” fund, which comes from a tax on oil and gas producers.
In 2009, coalbed methane drilling activity screeched to a halt in the Powder River Basin, mostly because of low market prices and softening demand.
Yet the industry actually marked a record production high of 558 billion cubic feet of gas for the year, according to the Wyoming State Geological Survey.
That came despite the fact that there were 3,500 fewer producing wells in 2009 compared to 2008. Part of the reason was that the industry had shut in its most marginal, lowest-producing wells.
Contact Dustin Bleizeffer at email@example.com or 307-577-6069.