The bugs are back in town.

Two Colorado energy companies hope Wyoming lawmakers approve rules that will govern how both firms use an innovative method of harvesting natural gas from coal. But that method is a subject of some concern regarding its environmental impact.

Luca Technologies and Ciris Energy are pushing forward with work on their novel processes — both of which use microbes that live in coal and create more coal and gas by their eating habits. Both companies would use the microbes to generate natural gas from coal.

The process could provide a new source of natural gas and also unlock millions of cubic feet of gas from old or abandoned coal-bed methane wells.

“We are looking to transform the natural gas industry,” said Brian Cree, chief operating and financial officer at Luca, in a presentation before the Wyoming Infrastructure Authority on Tuesday. “We think of ourselves not necessarily as a typical gas company, but as a company that farms natural gas.”

However, in April the Wyoming Oil and Gas Conservation Commission stopped Luca’s field testing — in which the company injects nutrients into old or abandoned wells and collects the gas emitted by the microbes — because Wyoming has no regulatory process for permitting and overseeing microbial conversion projects.

Luca and Ciris initially went to the WOGCC, then the Department of Environmental Quality, to get a permit, said state Sen. Kit Jennings, R-Casper. But both agencies hesitated, he said.

“They really didn’t have a clear-cut way to do it,” Jennings said.

Last month, Jennings introduced legislation to clear the way for such a regulatory framework. The bill,

Senate File 116, passed the Wyoming Senate 29-1 last month; the House Minerals Committee will take up the bill next week.

Under the bill, applicants could seek permission from the WOGCC for well and reservoir injections, either for an individual lease or on a unit basis.

Applicants would have to show that groundwater won’t be “adversely influenced” by the injections and that all groundwater quality regulations are being met. If they’re granted a permit, they would also have to notify all groundwater permit holders within half a mile of the injection well.

“They’re trying to get a permit to do everything legal, by the rules,” said state Rep. Allen Jaggi, R-Lyman, the bill’s House sponsor. “This could be very, very beneficial, because we’re using something that’s kind of not being used, kind of worthless, kind of discarded, and we’re producing something good off of that.”

Clash over testing

But Shannon Anderson of the Powder River Basin Resource Council, a landowner association in northeast Wyoming, said her group first wants to see a “well-defined pilot project” for microbial conversion before clearing the way to issue permits.

“Does this technology work? What is the impact on the coal resource? What is the impact on the water resource?” Anderson asked. “We should get those questions answered before we develop kind of a broad, sweeping regulatory bill.

“From what we understand, it’s pretty much a lab idea that now we need to go out in the field and see if it works.”

Not so, said Cree, of Luca Technologies. He insists the process is straightforward, even if the technology is sophisticated, and points to the company’s extensive well pilot program to show the process is tested and ready.

“We’ve done this over 400 times in the Powder River Basin,” he said. “So this is not just a lab experiment, this is something that has been tested since 2006.”

Luca Technologies feeds a mixture of nutrients to natural gas-producing microbes within old and abandoned coal mines. Those microbes, which over a long period of time produce coal, also produce natural gas. Fed by Luca’s nutrients, those microbes speed up their natural gas production, generating gas the company can collect and sell.

Cree downplayed any concerns about water impact. Unlike some processes, the underground water is never pulled to the surface and dumped, he said. Luca monitors the underground water and Cree said testing has shown that microbes fully consume the nutrient mix pumped underground.

“Three months after we’ve put them in the ground, everything that we’ve put in the ground — other than the tracer which helps us determine how far these nutrients move and where they go — is consumed,” he said. “It’s gone.”

Ciris Energy has tested a similar microbe-driven process underground, but also plans to open a demonstration plant to test the process near Wheatland this year. In the Ciris process, a chemical dissolves the coal and then bacteria digest it and convert it into methane gas.

Jerry Clark, Ciris’ chief executive, said his firm has conducted frequent testing as well and found no ill effects from its process.

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“That’s part of the beauty of our approach: There is no impact on the water quality standard,” he said.

More natural gas?

Luca began field work in Wyoming in 2006, three years after it opened a laboratory in Golden, Colo., where the firm is based.

Luca has raised $100 million in funding from private investors and venture capitalists and currently owns 1,350 wells in Wyoming’s Powder River Basin — old wells that the previous owners would have cemented shut.

Ciris Energy was formed in 2007 after nine years of research and developement and aims to develop clean-energy sources using “low-value hydrocarbons,” according to the company’s website.

Clark said his firm is entering agreements with existing producers and “in the middle of a variety of negotiations to acquire land and obtain rights for land” in the Powder River Basin.

Ciris agreed to a cooperative deal last year with Basin Electric Power Cooperative that would allow Ciris to build a demonstration plant in the “energy park” adjacent to Basin’s Laramie River Station coal-fired power plant. The state of Wyoming agreed in 2010 to pitch in a $4.8 million grant to help pay for the plant — funds matched by Ciris.

Clark said coal-bed methane gas production in the state has dropped and will only continue to drop. He believes the work of firms such as Ciris and Luca will stabilize the industry in the state if the firms can take advantage of the old and abandoned wells that aren’t pumped dry and haven’t yet been plugged.

“There’s an opportune time now while the infrastructure is there to make use of it,” he said. “While the water that is left there, we can preserve that and make use of it in a safe way, and keep the natural gas industry going in the state.”

Meanwhile, Luca is further advanced in its projects and aims to start commercial-scale production by the end of the year. Luca is also eyeing thousands of additional wells in the Powder River Basin that are either unused to soon to be shut down. Cree said Luca would use all the existing infrastructure: roads, pipelines, wells and well pads.

“I’m very hopeful that we can push that all the way through, get that bill enacted, so we can get back to work and start creating some new gas for the state,” Cree said.

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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: @jerenegy.