The Southern Ute Indian Tribe reservation could see as many as 770 additional coal-bed methane wells in the next two decades as operators seek to extract the last remnants of the gas from the prolific Fruitland Formation.The additional wells, which would be drilled mostly from existing pads, would require an increase in density, from 160-acre spacing to 80-acre spacing.
Tribal Chairman Matthew Box said new drilling would occur at a moderate pace, with the benefits of future drilling being weighed cautiously.
"It is not our intent to run up to the 770 right away, possibly over a period of 20 years," he said in a phone interview Thursday.
Under the existing spacing, the reservation would see as many as 370 new coal-bed methane wells and about 270 conventional gas wells in the same time period. Currently, there are about 1,300 wells on the reservation.
The infill plans were the subject of a Draft Programmatic Environmental Assessment by the U.S. Bureau of Land Management. The document was released this week; public comments are being accepted on it for 30 days.
The BLM, the Bureau of Indian Affairs and the tribe share responsibility for regulating drilling.
Though the previous standard well spacing for the Fruitland Formation had been 160 acres, in the past several years, operators have sought tighter spacing to avoid production declines.
Coal-bed methane production began in earnest here in the early 1990s and peaked in about 2003. A report commissioned last year by La Plata County forecast revenue from gas companies' operations here would fall by nearly half in a decade, even with the hundreds of new wells.
The Colorado Oil and Gas Conservation Commission has approved various infill requests on nontribal land, and La Plata County has more than a dozen agreements with operators to address the surface impacts of the increased density.
An infill agreement the county struck last year with BP, La Plata County's biggest natural-gas producer, contemplated as many as 250 additional wells, which must be drilled on existing pads whenever possible.
The tribe risks losing its gas through adjacent drillers' holes if it does not keep pace.
"Ultimately, the nontribal land would end up getting a disproportionate share of the resources," said Tom Shipps, whose firm Maynes, Bradford, Shipps & Sheftel serves as general counsel for the tribe.
He said this would happen slowly over decades if there is not "an equalization of the wells that can be drilled."
The land involved in the BLM analysis consists of the western and central portions of the reservation.
Richard Rymerson, BLM minerals chief at the San Juan Public Lands Center, said more wells serve for getting more gas but not for getting it faster.
"An operator wants to drill as few wells as possible to recover the resource. Obviously, the more wells you drill the more expensive it is," he said.
The Tribal Council has approved infill drilling with requirements to mitigate the impacts, and Box on Thursday said the leadership was in agreement with the findings of the environmental assessment.
The tribe has taken steps recently to tighten air-quality regulation on the reservation, and Shipps said stricter emissions controls would be required of new facilities. He said the council has expressed support for also requiring existing facilities to make conversions to meet more rigorous standards.
Box emphasized the importance of public input, particularly from the tribal membership, during the comment period.
"The tribe always does an extensive review," he said.
Rymerson said the final assessment would be issued around July.