GILLETTE - Anadarko Petroleum Corp.'s $50 million water pipeline and re-injection system provides a solution to the difficulties of managing coal-bed methane water in the Powder River Basin.

But the system will only benefit Anadarko Petroleum and the surface owners it impacts - not any of the other dozens of operators plumbing the prolific, but waterlogged Big George coal seam. Some 70 percent of the basin's coal-bed methane reserves reside in the Big George, which also contains the highest volumes of highly saline water - water that is difficult and expensive to manage - on the semi-arid terrain of Powder River Breaks country.

So why not piggyback on Anadarko's system to solve the water dilemma for all the operators in the region?

Anadarko spokesman Rick Robitaille said the idea of building the system over capacity and potentially making money by taking coal-bed methane water from its neighboring operators in the region did cross a few minds at Anadarko. In fact, Anadarko used that exact business model when it built a 125-mile pipeline to transport carbon dioxide (CO2) from a gas plant at Baroil to its Salt Creek oilfield for tertiary oil recovery, setting itself up to become a supplier of CO2 should other oil companies in the Powder River Basin decide conduct CO2 sweeps.

But ultimately, the company chose not to overbuild the coal-bed methane water pipeline, citing liability and permitting concerns.

"This is a one operator facility. We anticipate using the majority of the capacity ourselves," Robitaille said.

"If they were to take produced water from operators, then they would be a commercial disposal facility," said Kevin Frederick, program supervisor for Wyoming Department of Environmental Quality's groundwater pollution control program.

As designed, Anadarko had to get a Class 5 "underground injection control" permit. The company must ensure that the water injected into the Madison will not degrade or change the class or use of that aquifer.

Anadarko's system is fitted with filtration to take out any coal fines or other particles that may ruin water pumps, but the permit does not require it filter out any existing pollutants. Frederick said DEQ would have to authorize water coming onto the system from outside companies, and because Anadarko owns the system, Anadarko would have to ensure those waters meet the same Class 5 specifications.

Frederick said that would make it a "commercial disposal facility," and said DEQ can certainly permit such a facility. But Anadarko doesn't have to, and it has chosen to not go down that road.

Even on its own, Anadarko's $50 million investment in re-injection is evidence that companies can spend money to manage water and still make money producing gas, said Kevin Lind, staff director of the Powder River Basin Resource Council. So it's frustrating that there doesn't seem to be a cooperative effort.

"Water seems to be viewed as a hurdle and a burden to the development instead of being viewed as another possibility to make money off the play," said Lind.

Lind said the industry and the many regulatory agencies that oversee the industry lack coordination. He said a cooperative pipeline/injection system is just one example of how the industry could consolidate its operations to minimize its environmental impact.

"No one is overseeing this," Lind said. "Nobody wants to have a coal-bed methane czar, but coordination is not good between the state and the federal agencies."

The idea of a cooperative pipeline and injection solution is not completely new to operators or regulators. Several years ago, ConocoPhillips sought permission to construct a trans-basin water pipeline to ship coal-bed methane water from the Powder River Basin to the Cheyenne River drainage where it would be discharged into a large settling pond and ultimately released on the surface.

But water volume and water quality concerns killed the project in the regulatory approval process. Even when going underground, it's difficult to find aquifers suitable for re-injection.

Robitaille said Anadarko would not have spent millions to build a 48-mile pipeline if it could have found a suitable aquifer for re-injection in its Powder River Basin field. He said the company could only justify the $50 million project by having the right "economy of scale." Anadarko acquired more lease acreage in the basin to have enough gas production and water volume to make the investment pay off.

Not every coal-bed methane company on the Wyoming side of the basin can spend millions to go to re-injection. Todd Ennenga of Devon Energy Corp. said his company carefully analyzes every water management tool at its disposal.

"We've taken a hard look at all of them. But we're pretty focused now on most of the conventional methods that have been going on for a while up there," Ennenga said.

Unlike other producers, Anadarko also happened to own the old Salt Creek oilfield near Midwest where it is currently using CO2 injection to employ a tertiary sweep of the oil reservoirs there. Just like other producers, though, Anadarko had found that it was drilling more coal-bed methane wells than it could put on production simply because it didn't have the capacity to manage the water.

"We felt that with the volume of water we didn't have a readily available (aquifer) formation in the vicinity of the (County Line) properties," said Robitaille. "We are investing on the basis that this is a management technique for the water which will facilitate production and ease environmental concerns and allow us to orderly develop our properties in the area."

That means more gas production, steady employment and more tax revenue to local and state coffers.

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