A Colorado company seeking approval from federal and state agencies for methane farming in the Powder River Basin must still deal with concerns from the coal industry and a landowners group.

The Wyoming Department of Environmental Quality is considering granting a permit to Luca Technologies Inc. that would allow the company to put substances underground to encourage the growth of methane-enhancing bacteria. The U.S. Bureau of Land Management also is reviewing the company's plans.

The bacteria are naturally present in water-saturated coal seams. They eat the coal and produce methane gas as a byproduct. Officials with Golden, Colo.-based Luca expect their process will create a slow but steady stream of gas from existing coal-bed methane wells that otherwise wouldn't produce.

Environmentalists are concerned state regulators don't have a sufficient set of rules for the process, and the coal mining industry is concerned the method could hurt the value of coal it intends to mine.

The industry's anxiety is bolstered by a new BLM report that indicates methane farming could interfere with the billion-dollar coal mining industry in the Powder River Basin. The report, released to the public on Dec. 20, says it's not yet clear if the method saps the value of coal that hasn't yet been mined.

"Luca's wells are as close as three miles from existing coal leases. Methane farming may continue for 50 years, possibly longer," the report states. "There is a strong possibility of conflicts between methane farming and coal mining."

The BLM's conclusion troubles Marion Loomis, executive director of the Wyoming Mining Association, which represents the state's coal mining industry. A review of maps of the Luca projects in the Powder River Basin show some wells are placed "immediately in the way of mining," he said.

"We're certainly concerned and would hope their development would be encouraged in areas where they won't be mining," he said. "There's some unanswered questions that can only be answered by developing those pilot projects and test projects. I would like to see those go forward; I just don't want to see them ahead of our mining operations."

Bob Cavnar is chief executive officer for Luca. He downplayed Loomis' concerns and said there is no conflict between methane farming and coal mining. The company will plug and abandon any wells in the way of an expanding mine, as required by law, he said.

There are at least three miles separating the Luca wells and existing mines, he said.

"At current mining rates, it will be at least 30 years before these mines reach any of our wells, at which time we will plug and abandon the wells to make way for mining," he said.

Luca has begun reviving gas production from about 100 coal-bed methane wells a few miles west of Gillette by recharging them with groundwater drawn from about 15 other wells.

"The production has come back well. We're still in the early stages. These wells were shut in for almost two years, and so we're in the process of bringing production on. But they're doing well," Cavnar said.

Luca hasn't put microbe-stimulating substances into those wells yet. The company first wants to obtain a Wyoming Department of Environmental Quality permit to do so in some 230 coal-bed methane wells it has acquired a few miles north of Gillette.

State officials say they expect to issue the underground injection permit early this year, after a public comment period on the permit closed Dec. 30.

"It's different in the aspect that it's not waste disposal. The majority of underground injection permits that we issued are almost entirely for waste disposal," said Kevin Frederick with the department.

He said the department has received a handful of comments on the proposed permit, including from the Powder River Basin Resource Council, a group that has questioned the wisdom of the process.

While Cavnar describes the substances Luca plans to use as nutrients similar to food additives, Jill Morrison with the council calls them chemicals that are potentially harmful.

"Basically our concern is those types of chemicals should not be injected in any amount into the drinking water aquifer," Morrison said.

She mentioned as potential concerns acetic acid, decanoic acid and potassium phosphate, all of which can be slightly toxic in sufficient concentrations.

The total volume of microbe stimulants Luca plans to put into its wells are diluted into a "single percent" volume, then diluted even further in the aquifer, Cavnar said.

"It mixes again with water already there. So it's very, very low once it hits the formation itself," he said.

The Wyoming Oil and Gas Conservation Commission spent much of last year weighing how to permit Luca's process. In September, the commission decided that federal regulations for protecting groundwater, which the state Department of Environmental Quality is responsible for enforcing, were sufficient.

The BLM announced Dec. 20 it was extending a public scoping deadline for Luca's plans for more wells north of Gillette from Jan. 3 to Jan. 17.

The two-week extension was needed because the BLM made available its report about possible conflicts between coal mining and the Luca process, said the BLM's Lesley Collins.

Reach Jeremy Fugleberg at 307-266-0623 or jeremy.fugleberg@trib.com. Read his blog at http://trib.com/news/opinion/blogs/boom/ and follow him on Twitter: @jerenergy.

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