Future of Coalbed Methane Development

Current Basin-wide Fruitland coalbed spacing allows one gas well per 320 acres. Recent infill applications for specific areas have been approved by the COGCC, allowing an optional second Fruitland coalbed gas well on each 320-acre spacing unit. Infill drilling within 320-acre spacing units is currently occurring and may be a future trend Basin-wide.

The SUIT recognizes the benefits of coalbed methane development, including infill wells, and generally supports CBM development. The BLM under its trust responsibility understands the importance of energy resource development to the Tribe and the nation and has approved infill Fruitland wells while simultaneously preparing a soon to be released Draft Environmental Impact Statement (DEIS) for continued oil and gas development on the SUIT Reservation. The preliminary DEIS states that expanded Fruitland CBM development including infill wells and enhanced recovery methods is the Agency and Tribal preferred alternative. The BLM, BIA and Tribe also recognize that there may be a potential link between down-dip Fruitland production and the gas seeps and coal fires being documented at the Fruitland outcrop. The Southern Ute Indian Tribal Council acknowledges and accepts vegetation kills at the outcrop on Reservation lands as a cost of producing the CBM resource. The calculated losses from dead trees are considered inconsequential in comparison to the economic value of the CBM resource. Recognizing that resource losses are a factor with coal fires and outcrop seepage, the Southern Ute Indian Tribe is seeking professional assistance to extinguish the coal fires. They are also considering a pilot “picket fence” network of shallow gas wells capable of capturing migrating coalgas before venting occurs at the outcrop. The Tribe and the gas lease operators continue to experiment with mitigation measures to recover the resource and minimize environmental impacts to the Reservation and adjacent areas. Health and safety issues attributable to the seeps are limited since there is no permanent habitation on the outcrop within the Reservation.

To date, the COGCC has approved all spacing applications for Fruitland infill wells on Tribal, and fee mineral acreage. Some limited Fruitland infill drilling and production has taken place north of the Southern Ute Indian Reservation on fee mineral ownership lands. Currently, (October 1999) AMOCO has two “Applications for Permit to Drill” (APD’s) pending at the San Juan Field Office to drill Fruitland CBM wells in spacing units for which the COGCC has approved a second well. These are the first Fruitland infill APD’s to be received for locations on mineral estate. The San Juan Field Office anticipates more infill Fruitland applications in the near future, on both Tribal and mineral acreage.

If oil and gas operators and regulators continue to see sufficient economic merit and legal justification to perpetuate the current trend of drilling optional infill wells on existing 320 acre spacing units, 1000 additional infill Fruitland coalbed methane wells (350 north of the Ute Indian Reservation) could yet be drilled in the Colorado portion of the San Juan Basin. With more widespread development on the horizon, the development of a monitoring/contingency plan is a necessary and prudent regulatory agency management endeavor.