Powder River Basin: Savior of the United States Energy Industry?

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The following is an advisory by Industrialinfo.com (Industrial Information Resources Inc.; Houston, Texas). When natural gas was first discovered in the United States in Fredonia, New York in 1821, whole new possibilities opened up for the youthful US energy industry. Here was a new gas, one that did not require coal, one that was clean, one that was efficient and most importantly, one that could light the streets of the pre-industrial United States and allow them to catch up to Europe as far as civilized society was concerned. By 1900, 17 states were producing natural gas in the US and the country was well on its way to a beautiful future in the energy industry. However, today, the traditional natural gas reserves are slowly being depleted, as evidenced each year by fewer drilling permits being submitted and approved and as natural gas production numbers slowly fall. With Amoco's development of the coalbed methane fields in the San Juan Basin in the early 1990's, new hope sprang to life in the energy industry. Coalbed methane was discovered to be a new source for natural gas, giving the energy industry new hope of a low cost fuel to lead them into the future.

In the early to mid-1990's coalbed methane was discovered in the Powder River Basin in Wyoming. Companies attempted to utilize the same methods developed in the San Juan Basin and failed. As a result, development was virtually halted. Along came two independent developers from Casper, Wyoming, Bruce Martens and Chuck Peck. Realizing that traditional methods would not work, they dismissed conventional wisdom and attempted to develop the basin utilizing new ideas and techniques. They were a success and a new industry was born.

The Powder River Basin holds 4.3 million acres of coal or about 800 billion tons of coal, where an estimated 25 trillion cubic feet (TCF) of recoverable coalbed methane waits to be developed, making it a world-class resource. `Market forces may demand a daily production rate of 2 billion cubic feet of gas per day. This rate provides a reserve/production ratio of about 35 years` writes State Geologist Lance Cook in an article published by the Wyoming State Geological Survey.

A find of this magnitude opened the doors for experienced development companies, such as Western Gas Resources and Pennaco. `Initially, the driving force behind our pursuit of coalbed methane was to more fully utilize our existing infrastructure and add new gas volumes to our gathering and transmission systems in the basin,` says Western Gas Resources President and CEO Lanny Outlaw.` It soon became apparent that development of the coalbed methane play could provide a tremendous opportunity for Western. Not only was it well-suited to our existing infrastructure, it involved many aspects of our core expertise - gathering, compression, treating and transportation.`

Currently companies such as Western, Pennaco, Jonah Gas Gathering, ExxonMobil, Devon Energy, and Williams Field Services are spending close to a combined $1 Billion developing the basin. This includes wells, gathering systems, compression, pipelines to deliver gas to mainlines, gas treatment facilities and exploration.

The future for the Powder River Basin looks bright, providing a new, fresh source of natural gas to an energy industry that was in search of domestic sources for the future and proves that thinking outside the box can produce viable energy resources. `The Powder River coalbed methane play has negated conventional coalbed methane wisdom.` Says Peter Dea, geologist and industry executive, `The true joy for any exploration geologist is to look at accepted paradigms and disprove them - to ask themselves why others think something can't work and figure out ways to make it work. And because some explorationists were not willing to accept conventional thinking, coal reservoirs all over the world will now get a second look.`