Vol. 32, No. 5, 10. Wyomings Legal Framework for Management of Water Produced in Conjunction with Coal Bed Methane.

• Author: By Dennis Stickley and Lawrence J. MacDonnell

Wyoming Bar Journal

2009.

Vol. 32, No. 5, 10.

Wyomings Legal Framework for Management of Water Produced in Conjunction with Coal Bed Methane

Wyoming LawyerIssue: October, 2009Wyomings Legal Framework for Management of Water Produced in Conjunction with Coal Bed MethaneBy Dennis Stickley and Lawrence J. MacDonnell The rapid development of unconventional energy sources has presented several dilemmas for Wyoming's legal system. Case in-point: coal-bed methane (CBM). Once regarded as a dangerous by-product of the coal mining process, the recovery of CBM has resulted in a dramatic increase in natural gas production in Wyoming and several other states, as well as such countries as Canada to China.

Controversy regarding the development of CBM has come before the Wyoming Supreme Court on several occasions. The uncertainty concerning the ownership of CBM became the initial focus of judicial inquiry. In the case of Newman v. RAG Wyoming Land Co., 53 P.3d 540 (WY. 2002), the Wyoming Supreme Court reasoned that CBM was within the scope of reservations of "oil and gas" interests and not coal. While other jurisdictions have come to the opposite conclusion, the Wyoming decision was consistent with the ruling made by the U.S. Supreme Court, at least in terms of federal reservations, in the case of Amoco Production Co. v. Southern Ute Indian Tribe 526 U.S. 865, 119 S. Ct. 1719, 144 Led. 2d 22 (1999). While recent administrative decisions from the Interior Board of Land Appeals indicate that title to CBM from federal mineral leases may need further judicial review before the law in this area is well-settled, Wyoming landowners and their legal advisers have the benefit of greater certainty where rights to CBM are granted by private and state leases.

Concerns about the management of CBM, particularly the quality and quantity of water related to CBM production have raised another dilemma for the state's legal system. The disposal of produced water is an integral part of operations regardless of the formation where the oil and gas is located. The ratio of water to gas, as well as the amount and chemical composition of coproduced water varies widely among basins with CBM production. The cost of handling water that is coproduced with CBM also varies substantially and can add significantly to the cost of production to the point that it is...