The regular monthly meeting of the Board of Oil, Gas and Mining met on July 31 in the Emery County Courthouse commission chambers in Castle Dale.
Chairman of the board, Elise Erler welcomed everyone to the meeting. She said, "It is a privilege to get out in the field where the activity is. We went on a field trip yesterday that was very informative. We talked to various operators and toured the coal bed methane fields. We are a citizen board appointed by the governor and we all bring different knowledge to the board. I have a geological background."
The other members of the board introduced themselves to the audience. The board consists of Bob Bayer, specialist in hard rock issues, Stephanie Cartwright, environmental issues, Doug Johnson, Alan Washburn, Kent Petersen, royalty issues and Jim Peacock.
The first item of business was the status report on informal rulemaking for proposed oil and gas bonding rule changes. It was pointed out this was a continued item to draft rules and increase the bonding amounts; to reduce the risks seen as the move from major operators to smaller owner/operators takes place in the gas field. The comments the board has received will become available and will be looked at. Formal rule making on a set of bonding rules will take place in the near future.
Erler reported on the field trip saying that Chevron/Texaco presented a short overview of how coal bed methane is produced and stored. John Baza, assistant director for oil and gas gave a demonstration on the difference in conventional gas operations and coal bed methane. A coal bed methane field produces two thirds more than a regular gas reserve. Utah has large reserves of retrievable gas. Alaska is also just starting to develop their coal bed methane resource. Conventional natural gas is composed of various hydrocarbons. Coal bed methane is composed of 90 percent methane gas.
With traditional natural gas, the gas provides the medium which drives the product up to service. Baza compared a dry gas reservoir to a balloon which has been inflated, when the balloon is punctured all of the air is released from the balloon which is similar to what happens when a well is tapped, the gas is released because of the pressure involved.
Coal bed methane molecules don't have any pressure on their own. The coal bed methane adheres to the surface of the coal. The coal bed methane is held on to the coal by the pressure of water holding it to the surface. The water has to be removed for the gas to be released. Operators must manage the water in a coal bed methane operation. The water is saline and most of the time it is reinjected by a reverse osmosis process, sometimes an evaporative system is used. One of the key issues is what to do with the water. The only way to produce coal bed methane is to relieve the water pressure.
The question was discussed of how these fields are regulated and what jurisdiction they fall under. Currently the gas is managed as gas and the coal as coal. DOGM is still the authority for multi-mineral development. Agreements can be worked out between parties for the joint development of coal and gas. If agreements can't be worked out then the board would have to step in and impose regulations. Petersen commented that the release of the coal bed methane could make the coal safer to develop.
The issue of the coal mining industry and water was also discussed and the division's role in water issues. A hydrological assessment is done for each mining operation. The assessment should predict what impact the mine will have on the hydrology within the area, an assessment of these impacts and the regulatory requirements are looked at. The hydrobalance between quality and quantity and the reserves stored in the hydro unit; as well as dynamic relationships. It also looks at changes, dimensions, quality and any changes in sedimentation. The civil engineer for the hydrology department for the division said that all those factors are considered in the development of a plan. They consider land users and their known uses in the hydrobalance.
Part of the process is gathering a huge information base, which includes water rights and how to put them to use as well as geological surveys of the mines; updated information from the Bureau of Land Management and the forest service studies, climate information and any other related information. The assessment plan should also include information dealing with what will be done should a flow be affected.
A boundary around each area is also established and the current boundaries of affected areas are being looked at for each mine. The current boundary for the Gentry Mountain area is being addressed. The area appears to be too large and covers area that is too far away to be impacted by mining. The engineer pointed out that impacts must be determined, he said stopping mining in an area because of impacts is a major issue.
It was also explained that at first each mine had their own plan, but now regional plans are being worked through. One case in point is in the Lila Canyon area where the plan extended beyond the natural geological boundary which didn't make sense.
Petersen pointed out that it is impossible to get too much data regarding these hydrological matters as well as other information. He said down the road somewhere you might wish you had more information to evaluate situations, such as the situation at Electric Lake right now.
The board discussed their upcoming schedule which includes seminars and a field trip to view horizontal wells which reduce impacts by reducing the size of pads.
The board opened the meeting to comments and questions from audience members. Tom Matthews from the Carbon County Commission told the board it was great to have a board meet in rural Utah. A lot of the boards don't do that but the DOGM does it all the time he commented. Matthews was concerned about the bonds for reclamation in the gas industry. He believes the bonds are not high enough. He said they have a good working relationship with the gas companies, but in looking down the road 15-20 years there may not be enough money there to do the reclamation work which will be required.
Erler said they are dealing with the bonding for gas operations and it is an issue which they are wrestling with.
Matthews pointed out the division has come down to answer their questions and the commission plans to take an active role in helping their district understand the issue.
Erler said that is what the division needs for the locals to work together and to stay involved. Next to speak was Darrel Leamaster from the Castle Valley Special Service District. He commented that his association with DOGM has at times been frustrating in dealing with coal mining and water. He mentioned the Bear Canyon spring in Huntington Canyon and how he went to the board with questions in 1980 about water issues and replacement of the spring should it be impacted by mining activities in the canyon. Leamaster said he was spanked by the board and informed that the board does not have jurisdiction to require an agreement for water replacement. Eight years later the mine impacted the spring and 50 percent of the water was lost.
A similar situation in Ty Fork was worked out when the mining operation found a replacement spring. Leamaster expressed concern for the Little Bear spring which supplies 3,500 people with their water. Mining tracts in Millfork and the South Crandall lease are close to the Little Bear spring and present a concern for the CVSSD. Leamaster expressed concern that mines are not required to do anything about impacts until they actually interfere with the water which he feels is too late in the process. Leamaster has plans for a surface water treatment plant which he hopes the mines will agree to.
It was pointed out in situations like these the board is just following the rules established and can't deviate, but if there is a general concern then a change to the proposed rule could be made. The idea that DOGM is a regulatory organization and cannot become involved in contractual disputes was pointed out.
Leamaster wondered why there are studies which study impacts and then nothing is done about it.
It was pointed out that if a mine is found to have diminished water then the water must be replaced. It was also pointed out that sideboard agreements between the special service district and the mines would not be prevented.
Petersen said the reality of the situation is that the CVSSD is short of water and the development of a new spring takes time as does a surface storage facility.
It was pointed out that mines should explore options for replacements. Leamaster pointed out they have looked for other springs for development, but that nothing compares to Little Bear spring. It produces on average 300 gallons per minute. The Millfork tract lease has been issued to PacifiCorp and the South Crandall lease is not out yet, Leamaster reported.
Peacock mentioned on a different topic how pleased he was with the gas company that is converting the water from the coal bed methane process into usable water. "It is commendable," he said.
The board went on to take care of the docket items on the agenda for the day.