Work never ceases on Dickau Road, a dirt byway 40 minutes north of Douglas where elk and antelope once made up much of the traffic.

Today, the commuters are of a decidedly different type. Large trucks rumble up and down the road day and night. They pass abandoned tank batteries and disposal wells, mementos to an oil boom gone by, arriving eventually at the epicenter of this most recent boom: a drilling rig towering above the patchwork hills of pine trees and sagebrush.

Frank and Terry Henderson live in the machine’s shadow. They have ranched this area for more than three decades. Antelope sightings are less frequent since Anadarko Petroleum set up the rig in February. The elk, which once crossed their pasture and ascended the hill where the rig now sits, are diverted 2 miles to the south.

Where the couple once heard the song of the meadowlark from inside their home, they now listen to the steady hum of engines. Occasionally, the muffled voice of a foreman barking orders over a loudspeaker can be discerned through the din. At night, the hulking machine casts a powerful light across the land, like a perpetual full moon.

“They’re lights all over this country now,” Terry Henderson observed from a seat at her kitchen table one recent morning. “It’s like there’s a town out here.”

“We’re out here for a way of life: to get away from people,” her husband added from the other side of the table. “They’re taking that solitude away from us.”

What is happening on Dickau Road is being repeated across eastern Wyoming. Production in the Powder River Basin and the area east of Cheyenne may not be on the scale of what North Dakota has experienced in recent years. But it is not insignificant, either.

The increase has transformed once-remote regions into industrial work zones. In other places, new housing development bumps against new oil development. The potential for conflict between landowners and producers is great – and Wyoming’s policymakers have begun to take notice.

Government response

Lawmakers during the recently concluded legislative session passed a measure to increase the bonds paid by oil companies on split estates, the situation where one party owns the surface and another the earth beneath it. The intent: offer greater protections to landowners in the event a producer runs into financial trouble and cannot cover the cost of reclaiming the land they develop.

Later this month, the Wyoming Oil and Gas Conservation Commission will hold a meeting to discuss potential changes to the rules on setbacks, flaring and the bonds companies pay on wells. But how that rulemaking will move forward is unclear following the abrupt resignation of state Oil and Gas Supervisor Grant Black last week.

Gov. Matt Mead committed to a review of the rules on flaring, setbacks and well bonds in the statewide energy strategy released last year, Mead spokesman Renny MacKay wrote in an email.

“The growth in oil development and the fact that some of this exploration is occurring closer to population centers are all the more reason to do a rule review,” MacKay said.

Oil output in Converse County increased 340 percent in the last five years, from 1.8 million barrels in 2008 to 8 million last year. In Campbell County, production grew from 8 million barrels five years ago to 13 million barrels in 2013.

To the south, in Laramie County, development has been less than what was projected several years ago. Excitement over expected production in the Niobrara shale formation then led some to compare Cheyenne to Pinedale, the site of a natural gas boom during the 2000s.

There were three drilling rigs operating in the county in March – a far cry from the 12 to 15 once expected by a former state oil and gas supervisor. The number of APDs, or applications to drill, has remained steady, hovering at about 150 in each of the last three years.

Rising production

Development is nonetheless on the rise. The number of producing wells increased from 106 five years ago to 166 today. Laramie County’s oil production more than doubled in the last three years, rising from nearly 600,000 barrels in 2010 to slightly more than 1.4 million last year, according to Wyoming Oil and Gas Conservation Commission statistics. And the county observed a spike in drilling applications last November, when the oil and gas commission received 44 APDs for the region – the highest figure in the last three years.

One company submitted a plan in January to drill a horizontal well beneath a subdivision. The well would be drilled in an adjacent farm field, travel laterally beneath Iron Mountain Road and end some 16,000 feet beneath Wyoming Ranchettes, according to Paul Cook of the Cheyenne Area Landowners Coalition, a citizens’ group. The oil and gas commission approved the permit application in March. 

Cirque Resources LP, the drilling applicant, and the landowner, Wayne Child, did not return requests for comment.

The coalition, which advocates on behalf of landowners facing energy development on their property, started receiving calls for help in late December, Cook said. A January meeting aimed at educating landowners about their legal rights at the Laramie County Library attracted an overflow crowd of about 50 people.

Their concerns ranged from fears over noise and increased traffic to reduced property values. But their main concern was about the risk posed to local water wells by nearby development, Cook said.

“What would this land be without usable water? It would be a high plains wasteland,” he said. “No amount of oil company money will fix an aquifer for human consumption."

John Robitaille, vice president of the Petroleum Association of Wyoming, acknowledged energy development abutting residential areas is a new issue in Wyoming. The petroleum association encourages its members to notify surface abutters of their plans, even though companies are legally required to notify only abutting mineral owners. It is important for companies to be good neighbors, he said.

Oftentimes producers’ flexibility is limited. They need to extract the mineral from where it is, a task complicated by the growing number of small-acre parcels that ring communities like Cheyenne and Douglas, Robitaille said. The most difficult stage for landowners is during drilling, when activity is the greatest.

Noise and traffic die down afterward, he said. “But certainly, when these types of situations arise, the companies are going to do everything in their power to eliminate the problems that are perceived by the folks out on the ranchettes.”

And he sought to quell concerns about energy development contaminating water, saying the wells being drilled today are much deeper than domestic wells. Water produced from such wells is not fit for human or animal consumption, he said.

“These are two entirely different areas and different water qualities,” Robitaille said.

Anadarko does everything in its power to mitigate landowners' concerns, said Robin Olsen, a company spokesman. The Houston-based firm voluntarily tested all domestic water sources in the vicinity of its drilling operations before the state implemented its new baseline testing rule and will continue to do so. 

The company is also committed to comprehensive reclamation, she said. It will provide seed specified by the landowner to replant grass in the development area and minimizes erosion on its the well pads.

“We recognize operations can place temporary burdens on landowners, and we strive to minimize those at every step,” Olsen wrote in an email, noting the company will take steps to minimize noise at a drilling site if notified by a landowner. “We’ll be happy to meet with the landowners to address their concerns during the temporary phase of drilling and completing.”

Local concerns

Back at their kitchen table, the Hendersons said they were not opposed to energy development. The country needs the fuel, they said. They are happy for their neighbor who owns the land where the rig sits and is receiving royalty payments.

The Hendersons do not own the mineral rights beneath their land, meaning they are legally obligated to allow producers with access to those minerals onto their property. They have signed two surface use agreements with Chesapeake Energy in anticipation of development on their land. Another contract will likely be negotiated in the near future.

Their current agreements commit Chesapeake to replanting the grass with a seed specified by the Hendersons. They also provide an annual fee for the acreage taken out of agricultural production. The money is better than what a farmer might expect to earn per acre.

But the couple said that is a pittance compared with what is lost: the solitude and an ability to make decisions about what happens on their land. They have heard the industry argument that the wells drilled today won't contaminate their water, but they can't help but be concerned. Their livelihood depends on their ability to graze their cattle here and their cattle are heavily dependent on the water wells they have installed. 

“We do want our country to be independent on oil and gas. We’re going to have to be the ones to have to give up something to make that happen,” Terry Henderson said. “But do we have to give up our whole lifestyle, our ranches, our way of living? We feel imposed upon. We feel like we are being asked a lot more than other people are, I guess.”

“And that’s something that cannot be economically compensated for,” Frank Henderson said.

His wife nodded and finished the thought: “Kind of like that one credit card commercial. Some things are just priceless.”

Reach energy reporter Benjamin Storrow at 307-335-5344 or Follow him on Twitter @bstorrow


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