Reports: Tougher water rules could cost industry
By MATT GOURAS
Associated Press writer Thursday, January 12, 2006
HELENA, Mont. -- Separate federal and state reports on a proposed
crackdown on coal-bed methane pollution say the rule could slow
development, potentially costing the industry and state coffers
hundreds of millions of dollars.
The reports come as the state Board of Environmental Review mulls
tougher regulations for the industry.
The proposed rules would require that water withdrawn from wells be
injected back into the aquifers. If that's not possible, because of the
geology, the water, which is often high in saline, would have to be
treated before being discharged into rivers and streams for irrigation.
The rule could cost the industry anywhere from $600 million to roughly
$1.5 billion over the next 30 years, according to an economic impact
analysis from the state Department of Environmental Quality.
The industry could lose as little as 6 percent of expected profits, or
as much as 74 percent, depending upon a number of variables such as
natural gas price, the report concluded.
Under the worst-case scenarios, the state would lose up to $271 million
in tax money from the industry, according to the report.
Benefits of the rule, the report said, include less risk of polluted
rivers, streams and land. Also, the proposed rule could ensure more
availability of well water to future generations.
The Northern Plains Resource Council, a conservation group pushing the
proposed rule, said Monday it is still reviewing the state report as
well as the separate federal report.
"I think where we will diverge from the DEQ report is under the
worst-case scenario," said Mike Reisner, staff attorney for the
Northern Plains Resource Council.
The federal Department of Energy, which got involved in the issue at
the request of Wyoming officials who worry the Montana rule could
hamper their own state's methane exploration, released its own report
Monday.
It also concludes tougher water quality rules will hamper the industry.
"The more stringent and costly the water management option, the less of
the CBM resource in the basin that will be economic, generating lower
domestic gas production and lower public revenues," researchers working
for the Department of Energy wrote.
Their report notes that wastewater from the coal-bed methane wells
could be an asset in the arid West, and might be used for agricultural
purposes.
To get at coal-bed methane, water must be removed from deep underground
to relieve pressure on the gas. Most of the development in Montana has
occurred near the Wyoming border, in the Powder River Basin.
The federal report said the impact of tougher water quality rules is
less severe if natural gas prices continue to increase because the
industry is more able to pay for costly mitigation efforts.
The coal-bed methane industry has been opposing the proposed new rule,
saying the rules are premature.
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