Large turnout expected

Public invited to submit questions

By Lisa Riley Roche – Deseret News

SALT LAKE CITY — U.S. Secretary of the Interior Ken Salazar will be in Utah Monday to meet with the Governor’s Balanced Resource Council.

“This will be the first time we’ve had the secretary of interior here at a public meeting,” Gov. Gary Herbert said in announcing the visit Thursday.
He said Salazar will talk with the council about public land issues, which are “fraught with emotion on all sides of the issue.”

The public is invited to attend the 10 a.m. meeting at the Capitol and to submit questions for the Democratic administration official. The governor initially had said attendees would be limited to “avoid confrontation and controversy” when asked if environmental activist Tim DeChristopher would be on the guest list. DeChristopher is charged with submitting false bids on federal oil leases.
“This is going to be a public meeting, so I guess those who show up will be allowed to come,” Herbert said. “There will be limited space, and we’ll have some we’ll want to make sure who are there.”

Herbert invited the secretary to Utah last November during a meeting in Washington, D.C. The governor said Salazar expressed interest in the council, which is made up of diverse environmental interests.
“It’s significant he’s willing to come here under any circumstances,” Herbert said, noting the state is at “ground zero on many of the public lands fights.

Just what the meeting will accomplish remains to be seen.
“Some of it is just better understanding. Part of the problem we’ve had in the past is just the lack of dialog and understanding,” the governor said. “We don’t talk to each other and perceive each other to be the enemy. I think everybody has good intentions on all sides of the issue with public lands.”

One issue likely to be addressed, he said, is the resource management plan for the Uintah Basin set aside by President Barack Obama’s administration.
“It’s something we ought to be able to move ahead with and not worry that somehow, for political purposes, the rug’s jerked out underneath us,” Herbert said, citing the economic importance of allowing drilling by companies that already have invested millions of dollars in the region.

The governor’s senior environmental advisor, Ted Wilson, acknowledged the meeting “is good public relations,” but said it is also key in furthering the state’s relationship with the administration on public lands issues.

Displacing commercial energy with non-commercial renewable sources will cost billions to the consumer and to the federal government.

Back in May of 2007, Senator Lamar Alexander asked the Energy Information Administration (EIA) to develop an analysis of Federal energy subsidies focusing on subsidies to elec- tricity production.

The analysis was limited to sub- sidies provided by the Federal govern- ment, those that are energy-specific, and those that provide a financial ben- efit with an identifiable budget impact. Federal energy subsidies and interven- tions discussed in the body of this re- port take four principal forms:

• Direct Expenditures. These are Federal programs that directly affect the energy industry and for which the Federal government provides funds that ultimately result in a direct payment to producers or consumers of energy.
• Tax Expenditures. Tax expen- ditures are provisions in the Federal tax code that reduce the tax liability of firms or individuals who take specified actions that affect energy production, consumption, or conservation in ways deemed to be in the public interest.
• Research and Development (R&D). Federal R&D spending focuses on a variety of goals, such as increasing U.S. energy supplies, or improving the efficiency of various energy production, transformation, and end-use technolo- gies. R&D expenditures do not directly affect current energy production and prices, but, if successful, they could af- fect future production and prices.
• Electricity programs serving tar- geted categories of electricity consum- ers in several regions of the country. Through the Tennessee Valley Authority (TVA) and the Power Marketing Administrations (PMAs), which include the Bonneville Power Administration (BPA) and three smaller PMAs, the Federal government brings to market large amounts of electricity, stipulating that “preference in the sale of such pow- er and energy shall be given to public bodies and cooperatives.”

The Federal government also in- directly supports portions of the elec- tricity industry through loans and loan guarantees made by the U.S. Depart- ment of Agriculture’s Rural Utilities Service (RUS). With the exception of the Federal electricity programs, this re- port measures subsidies and support on the basis of the cost of the programs to the Federal budget provided in budget documents. Support associated with Federal electricity programs is measured by comparing the actual cost of funds made available to these entities to EIA estimates of the cost of funds that they might otherwise have incurred in the absence of Federal support.

Total Federal energy-specific sub- sidies and support to all forms of energy are estimated at $16.6 billion for fiscal year 2007. Total energy subsidies have more than doubled in real terms (2007 dollars), increasing from an estimated $8.2 billion in FY 1999. Tax expen- ditures have more than tripled since 1999, rising from $3.2 billion that year to more than $10.4 billion in 2007.

Natural gas and petroleum liquids receive a lower level of support from electricity production-related subsidies and support than other fuel groups. Overall, electricity production-related subsidies are spread broadly across the various fuel groups, probably more so than in the past.

Electricity production subsidies and support per unit of production (dollars per megawatthour) vary widely by fuel. Coal-based synfuels (refined coal) that are eligible for the alternative fuels tax credit, solar power, and wind power receive, by far, the highest sub- sidies per unit of generation, ranging from more than $23 to nearly $30 per megawatthour of generation.

Subsidies and support for these generation sources are substantial in relationship to the price or cost of electricity at the wholesale or end-user level. The average U.S. electricity price was about $53 per megawatthour at the wholesale level in 2006 and about $92 per megawatthour to end users.

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A: We have several regulatory issues coming to finalization within various departments of the WDEQ. In the Water Quality Division we are continuing to work on water management associated with coal bed natural gas wells. The EQC has received testimony and reports detailing how agriculture and coal bed development can work together. We are hopeful that the EQC will make a decision on the DEQ’s Ag Use Protection Policy that will allow for continued economic development of the resource in the state while also allowing for continued agricultural protection. We expect the EQC will continue to debate the policy in the coming months. PAW has been working with the DEQ to try and find solutions to all interested parties. In terms of the Air Quality Division, PAW has been working to lower the winter ozone levels we have seen in the past years. Do to voluntary efforts to reduce ozone precursors and added monitoring efforts, PAW members were successful in not having an ozone exceedence this past winter. An effort we’re very proud of. We are also working with AQD to develop even more ways to lower emissions by working on Best Available Control Technologies (BACT) on all production equipment. It is our belief that through these efforts we will continue to be able to develop the resource our country so desperately needs, while maintaining our Wyoming way of life.

Q: Activity has slowed. Why should operators remain engaged in the process?

A: Although drilling activity has slowed over the last year or so, the issues involving regulation changes, legislative proposals, and other programs are continuing at an alarming rate. We have seen no slow down in regulatory changes to coincide with the slow down in drilling. It is much more critical to maintain a high level of participation in PAW and all the committees that are offered to work on these efforts when our industry is in a downtime such as now. The regulatory agencies and the legislature don’t slow down when we do, in fact, they maintain or pick up pace. Now is the time when the staff at PAW needs the most input from member companies to maintain a work environment that is conducive to our business. Eventually, this downturn will come back up, and when that happens, we need to be able to continue to do business in Wyoming. PAW is working to maintain that ability, but we need industry to stay engaged and work within the committee structure within PAW.

Q: What is coming up ?

PAW has a new Safety Subcommittee that is partnering with the Wyoming Contractors Association to hold a Safety Summit on October 13. The summit will be held at the McMurry Training Center in Casper. Currently a full agenda is being prepared, however the Governor has agreed to present the opening remarks. We believe the industry needs to show case the commitment to safety we all know exists. Gary Hartman, who staffs the Governor’s Task Force on Worker’s Safety, will also be invited to present. We expect to have booths available for exhibitors as well. This is a follow up summit to the Rocky Mountain Safety Council’s Safety Summit held in Rock Springs earlier this year.

Despite a lull in oil and gas activity in Wyoming in recent months, PAW vice president Cheryl Sorensen and the Public Lands Committee has plenty to do.

She said she will continue to focus on gaining access to public lands, ESA issues, and reclamation.

The importance of RMP revisions “We are focusing on what chang-

es we will see within the BLM with all the changes in Washington within the Department of Interior. We expect to see new rules and policy on Sage-Grouse and other items.

PAW is a leader in working to pre- vent Endangered Species Act (ESA) list- ings. This continues to be a big focus for our committee. Another large project or focus is Reclamation; we are working a lot on this issue. We have two new Re- source Management Plans revisions that have begun within the last year; the Big Horn Basin RMP and the Powder River Basin RMP. These will keep our commit- tee busy as well.”

Stay engaged

With all the changes within De- partment of Interior (DOI) Sorensen is seeing changes within BLM and other regulatory agencies and there is also a push to have more species listed as Endangered. “Our committee workload has expanded tremendously and we have to continued to pay attention and work these issues,” she said. “If we sit back and become unengaged, when things pick up back in the field you may not know what environment you will be working in.”

Focus on reclamation

PAW will host its Second Annual Reclamation Workshop, after a sell-out crowd at the December 2008 gathering. “This year we look forward to having an informational agenda. Governor Dave Freudenthal is slated to speak and we are going to have Steve Ferrell the new direc- tor of Wyoming Game and Fish as well as BLM, University of Wyoming will be on the agenda again, and then great infor- mation from top notch Reclamation con- tractors, companies, etc. I would suggest that our Oil and Gas companies attend, from the decision makers to the guys out on the field, encourage your reclamation contractors to attend as they will see new regulatory information and new science. We also expect quite a bit of staff from Conservation Districts, BLM offices, and other regulatory agencies. The Reclama- tion conference is open to anyone, not just PAW members,” she added.

Sorensen also noted that due to the large amount of committee activity go- ing on a special Public Lands Commit- tee meeting on October 8th in Casper at the McMurry Training Center has been scheduled. “We will have a committee meeting starting at 8 am that day; at 10 am we will have a series of lectures rang- ing from dealing with an ESA listing to how the Utah lease sales can affect Wyo- ming.”

A word about reservoir reclamation

BY: BRENDA K. SCHLADWEILER, PhD.

The Bureau of Land Management (BLM) requires all reservoirs (im- poundments) constructed for the management of water produced in association with Coalbed Natural Gas (CBNG) be completely removed and reclaimed when production involving those reservoir(s) has ended. Although final specific BLM guidance, as directed by the Buffalo Field Office (BFO) for those offices dealing with such reservoirs, is not currently available, three phases will likely be considered for reservoir reclamation: Notice of Intent to Abandon Impoundment; Channel and Reclamation Plan; and Final Abandonment. The first phase is generally back- ground information gathering, the second being the proposed plan of reclama- tion based on the background report in part, and the third being the monitoring phase.

NOTE: The following summary of such requirements, in part, is generally based on the following documents: ) draft guidance by the BFO BLM for im- poundment reclamation guidance; and, 2) WDEQ Implemention Guidance for Reclamation and Bonding of On-Channel Reservoirs that Store Coalbed Natural Gas Produced Water (June, 2009). Final guidance on a specific project should AL- WAYS be discussed with the appropriate regulators PRIOR to project initiation.

Phase I or background information is a description of the existing site conditions before impoundment occurs or has occurred since many of these reservoirs pre-date final BLM guidance. Historical aerial imagery can be helpful to document infor- mation such as headcut or spring locations that may impact site stability and reclamation success. Consideration for stable channel flows through the reservoir, as well as below the reservoir should be taken. If successful reclamation is to occur, the erosivity of relatively unconsolidated, silty sediments will be an issue. Reservoirs built on former headcut locations will have large-scale issues as well. Erosion controls for flatter gradient channels will differ from those for steeper channels.

Phase II or the reclamation plan should include all considerations in the design and implementation of engineered structures, if needed, and reclamation techniques. The drainage area extent above the reservoir and anticipated storm event sizes should be determined and the channel slope between the upper and lower boundaries calculated. The availability and extent of previously salvaged or in-place topsoil or suitable plant growth material should be determined.

Collection and analysis of reservoir bottom sediment will be helpful in directing the overall reclamation plan and reducing overall costs. Analysis of bottom sediment will determine if this sediment must be excavated and removed or reclaimed in place, if a barrier is required to prevent upward migration of salts or metals, and if soil amendments are required. Specific parameters to test the bottom sediment should be based on historical soil and water quality data, along with anticipated salt, sodium, and/or fertility issues.

Appropriate seed mixes will be identified as part of the reclamation plan. Mulching may occur in areas where recontoured material is at risk of erosion based on soil texture and the character of the recontoured landscape. If mulching material is used, such material should be certified weed-free. Fencing may be needed to minimize grazing impacts. Erosion control measures and storm water diversions should be applied to reduce erosion.

Phase III or reclamation monitoring should be completed for a minimum of two growing seasons after reclamation to document success and recommend followup proce- dures as needed. A geodatabase should be used to track such changes over time, including the effort that went into the original reclamation and any followup procedures.

Activity has dipped, a new ad- ministration is in Washington, and Congress is focused on providing in- centives for the renewable portfolio.

State legislators are searching for new revenue streams to offset losses in sales taxes.

Hinchey said that he will focus in the impending session to continue to support and encourage oil and gas development in Wyoming by dem- onstrating that Wyoming hasn’t lost it’s potential. “We’re still a great en- vironment in which to do business,” he said. Hinchey works closely with legislators to ensure that tax incen- tives are not lost, infrastructure de- velopment is ready for the inevitable up tick and that wildlife challenges do not overtake common sense.

“This year the legislature is talk- ing about a possible increase in the severance tax and removing some of the sales tax incentives. Despite the downturn, the revenue committee is looking for any opportunity to raise taxes to meet budget demands. Now is not the time to raise taxes and re- move incentives for development.”

Infrastructure

PAW has worked with regula- tory agencies, UW and the Wyoming Pipeline Authority to proactively meet infrastructure needs, while fa- cilitating local governments efforts to meet industry needs.

“We have a number of great natural gas reservoirs in the state and with the new, and the new technology makes us very competitive with other regions of the country where gas may be much more expensive to develop and get to market.”

While natural gas has languished, oil is making slow but steady progress, and tertiary recovery efforts must go on. “We have some projects in devel- opment with an abundant supply of Co2. It’s imperative to move co2 to the older basins such as the Big Horn and to places like the Powder River Basin,” he noted.

Wildlife

The issues surrounding the ESA certainly have not abated, and PAW is active in providing the science neces- sary to forestall additional listings for species that are not warranted.

Through the first half of the year as permits trickled out of the Powder River Basin, Hinchey has continued to work with the Buffalo BLM to

resolve impediments to reaching the yearly goals of the office for 3000 per- mits whilst RMP revisions are on go- ing. “Yes, the demand has been down, that’s true, but it’s getting better,” he noted.

Legal issues

Hinchey is carefully monitoring an interim Judiciary committee bill that has wide ranging implications for operators and other small businesses. “This bill would allow any employee of a contractor to sue any company or individual contracting for the work should that employee be injured. This would affect anyone who uses a con- tractor,” said Hinchey. “This bill has implications for pipelines, construc- tion contractors or even individuals,” he said. “You could be sued for an ac- cident that is not directly related to you or your business.”