The Wyoming Oil and Gas Conservation Commission approved Chesapeake Energy Corp.’s request to continue burning off natural gas from five oil wells near Douglas — after first chiding the company for not building a pipeline to transport the natural gas to market.
“It puts us in this position, had that deal been done, we’d be talking about money for the state,” said Gov. Matt Mead, a member of the commission, at Tuesday’s hearing.
Mead was referring to a pipeline project for the area that Chesapeake abandoned after lengthy negotiations with a landowner. By the time access to the land was negotiated, Chesapeake determined it wasn’t economical to build the pipeline, said Tom Reese, an attorney representing the Oklahoma City-based company.
Shortly after the commission approved Chesapeake’s request for flaring, State Geologist Tom Drean, a commissioner, asked commission staff in the future to require companies seeking permission to flare to identify in paperwork other companies working in the area.
Commissioner Ryan Lance, director of the Office of State Lands and Investments, agreed. He said the oil and gas industry needs to evolve beyond the “that’s my well” philosophy and learn to work together to build pipelines and infrastructure to move natural gas out of the area.
“I think the burden has to shift to the industry,” he said.
Flaring is a common industry practice for oil wells. Producers burn off some natural gas when there is not access to natural gas pipelines. But the tide in Wyoming is changing, with many landowners, conservationists and politicians wanting the gas to be sold at market so the state can earn tax revenues. A Wyoming legislative committee is considering taxing flaring.
“The more I see of these, the more problematic it is for me,” Mead said. “I don’t know if fair negotiations were done or not. That may be a matter of perspective.”
But now the commission is put in the position of approving more flaring, he added.
The commission capped Chesapeake’s flaring to 150 thousand cubic feet of natural gas per well per day.
Sandy Andrew, a Chesapeake operations manager, said the cap was achievable.
After the hearing, Reese and Andrew referred questions to Chesapeake’s corporate spokespeople. The Casper Star-Tribune contacted three of them. One said she had no additional comment and referred questions to the state. One was on vacation. One did not respond to questions.
The wells are 14 miles north of Douglas, said Grant Black, Wyoming state oil and gas supervisor.
The company doesn’t flare all natural gas in the well, Black said.
“There’s a process at the surface,” Black said. “With equipment that they extract liquids from the gas.”
Those liquids are trucked out of the area and sold on the market. What’s left is “the gaseous portion.” That’s what they’ve been flaring, Black said.
Chesapeake has been flaring gas from some of the wells since September 2012. Other wells have been flared since February.
The company originally requested to flare eight wells, but at the Tuesday hearing, Reese said they only needed permission to flare five. Three of the wells were flaring less than 60 thousand cubic feet a day. Wyoming Oil and Gas Conservation Commission rules allow companies to flare gas without agency permission as long as it doesn’t exceed 60 thousand cubic feet a day, Black said.