GILLETTE - Environmental regulators in Montana are considering more stringent water quality standards that could force Wyoming's coal-bed methane industry to cut production.

The pending rule change spurred the Wyoming governor's office to take advantage of available U.S. Department of Energy funds and commission a consultant to come up with some possible survival strategies. A draft study detailing about a dozen options will be delivered to the governor this week.

One option, according to Tulsa, Okla.-based ALL Consulting Inc., is to build a water pipeline from the Powder River area between Gillette and Buffalo to central Campbell County. From there the water could be used in a massive dust suppression program throughout the county and the Powder River Basin coal mining industry.

Gov. Dave Freudenthal said state and industry leaders have mulled similar ideas for some time, and he's hoping the study will move ideas closer to some innovative actions.

"If it turns out to be a litany of 10 things we've already talked about, I'm going to be disappointed," Freudenthal said on Friday.

The Montana Board of Environmental Review is considering a "zero-degradation" rule that industry leaders say essentially forces them to either re-inject water produced from the gas wells. Those rules would effectively reach across the border into Wyoming because the industry here is situated in a basin that drains into Montana.

So far, only a minute volume of water from coal-bed methane wells in Wyoming actually enters Montana via the Tongue, Powder and other northbound rivers in the Powder River Basin. But the industry is only just beginning to tap the largest coal-bed methane zone in the basin: the Big George.

It's the deepest, thickest producing methane zone in the basin, and it also contains the highest volumes of the lowest quality coal-bed methane water in the region. And soon the industry may have a significant increase in water production and fewer options to manage it.

"I don't think this is an issue of water quality," said Bruce Williams, production manager for Fidelity Exploration & Production Co. "Connect all these dots, and it seems to me this is a rulemaking designed to obstruct development and doesn't have anything to do with clean water."

Supporters of the tougher standards say they will finally compel Wyoming's industry to come up with more innovative ways of managing the huge volumes of saline water pulled to the surface in the production process. They say without a stringent directive to re-inject the water, there will always be an unlucky landowner stuck with damages.

"If we could accommodate (re-injection) we probably would," said Williams, noting that Wyoming has issued some 316 re-injection permits, but only 47 of those wells actually achieved re-injection.

"We have continued to fight this battle for years and years and years," Williams said. "We have gathered real data. The real water quality data says that there's not a problem with the water quality."

The study

Freudenthal and his administration continued to try to convince Montana officials to abandon the rule change this month, insisting that it's an unnecessary policy that could throw a wet blanket on an industry that represents about 25 percent of the state's total natural gas production.

"It is our belief we can manage the situation without going to the extreme measure of mandating either treating or injection," Freudenthal said.

If Montana adopts the new standards anyway, Wyoming's industry won't have much time to step in line. Montana regulators could adopt the rule in April. That's why most of the water management "alternatives" that ALL Consulting will submit are strategies that can be implemented rather quickly - such as the pipeline for water suppression in Campbell County.

"It's not a technical problem. It's an economical problem. It's certainly a fix that the governor and (the Wyoming Department of Environmental Quality) and the county offices have said could be a good match," said Bruce Langhus, a geologist with ALL Consulting.

"Industry is going to have to change gears pretty quickly. If an option is two years away from implementation, that's probably not worth anything," Langhus said.

Freudenthal insists the state is not scrambling to come up with quick-fixes. Rather, ALL Consulting's work is the culmination of several years of research on the matter.

"I think we had foresight, we just don't have an answer yet," Freudenthal said.

Langhus said further details of the study will have to come from the governor's office after it receives the draft this month.

Energy reporter Dustin Bleizeffer can be reached at (307) 682-3388 or dustin.bleizeffer@casperstartribune.net.