Plumbing The Pasture

By Terry McCarthy/Gillette

Pete Dube, who is from Buffalo, Wyo., pulls up in a pickup hauling a trailer with six horses and looks out across his land. In 1995, when he bought the 5,000-acre ranch in the Middle Prong Valley of the Powder River basin, nothing much disturbed the landscape except the deer, the pronghorn and the few cows that grazed the rolling hills and valleys.

Today semis are thundering along new dirt roads, heavy bulldozers are digging trenches for pipelines, overhead power lines are crisscrossing the valley, and drilling rigs are going up like mushrooms after a spring rain. Dube's spread is just another block on a gas company's exploration map as the Powder River basin becomes the center of a sudden boom in natural-gas drilling, one driven by rising prices, new extraction techniques and a recent federal decision to put 2,500 new wells on public land.

"I own the land, and I don't want anyone on it--but now I don't have any control anymore," says Dube, 39, a tall, mustachioed man with a quiet voice and a long stare. Like many, but not all, landowners in the Powder River basin, Dube owns only the surface rights to his land. The mineral rights are split among the federal and state governments and other private owners in a complex title history dating back to the homesteading acts of the early 1900s. So Dube could do nothing to stop CMS Oil and Gas, which owns the mineral rights to his land, when it approached him two years ago about drilling in fields he had intended to keep clear for grazing cattle and hunting deer. The law obliged him to give the drilling company access to his land, even though his compensation for the "surface disturbances" amounts to just $20,000. CMS and other drillers, on the other hand, were making serious money. Wellhead prices for gas were shooting up--from $1.75 per thousand cu. ft. in February 1999 to about $5.84 in February 2001. The boom was on.

Ten thousand wells have been drilled into the coal beds of the basin, most of them in the past two years, to tap methane-gas reserves estimated at 25 trillion cu. ft.--the equivalent of a year's consumption for the entire U.S. Nearly 100 wells are being drilled each week, and the gas companies say the entire 8 million-acre basin could have 50,000 to 100,000 producing wells before they are finished.

Everyone calls it "the play," a stratagem that deploys the ranchers who lease out their land, the crews who drill a well in three days, the landmen who track down mineral rights in hundred-year-old ledgers in county clerks' offices and the lawyers, contractors and equipment suppliers in Gillette, Wyo., who will be making a killing for as long as the boom lasts. Environmentalists worry about damage to the land from the drilling, but everyone agrees that burning natural gas generates far fewer pollutants than oil or coal. "This is a very exciting play," says Terry Dobkins, a vice president of Pennaco Energy, one of the most active gas companies in the area. "It has high potential and low impact compared with the oil industry."

But low impact is not the same as no impact. To release gas from a coal bed, each well must pump out large quantities of water--about 12,000 gal. a day--much of which has too high a sodium content to be used on the land. This water has to be stored in the large reservoirs that now punctuate the landscape. And the gas companies need pipes, roads, compressor stations and power lines to pump the gas out of the ground and into pipelines that run to Denver and Chicago. "It's a very complex mess, basically, and it is changing the landscape dramatically," says Jill Morrison, an organizer with the Powder River Basin Resource Council, an unlikely alliance of ranchers and environmentalists who have joined forces to mitigate the impact of the drilling.

"We are not out here to try to block this--we want to cooperate to make it a responsible, sustainable development and stop the 'rape, ruin and run' approach of some of these companies," says Morrison. The council advises ranchers like Dube on their rights and helps them find lawyers and make surface-disturbance agreements with the gas companies.

The coal-bed-methane boom took off so quickly and has generated so much money--in the region of $900 million in the past two years--that the state of Wyoming has imposed few regulations on the drillers. Most land-use agreements are made between gas companies and individual ranchers, and the companies offer immediate payment to pressure the ranchers to do deals without delay. "One well ain't worth much--you need a lot of wells, and the drillers move quickly," says Vernon Johnson, an oil and gas veteran who runs an energy-services partnership in Gillette. "Some of the ranchers are scratching their heads at this, but as soon as the pipes are buried and everything is cleaned up, it will be O.K."

Others aren't so sure. "When I bought this place, you could ride up on the ridge and see nothing," says Dube. "Now you see trucks, pipelines, compressor stations. It's funny, I tell people now I know what the Indians felt like when they saw the wagon trains coming."

--With reporting by William Campbell/Gillette

With reporting by William Campbell/Gillette