Transcript Update on Water Issues in Wyoming

Update on Water Issues in
Wyoming
IPAMS Summer 2007 Meeting
Vail, Colorado
Brian Jeffries
Executive Director
Wyoming Pipeline Authority
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What is the Wyoming Pipeline Authority?
• Board of Directors appointed by Governor
• Mission (i) to promote the infrastructure
necessary to produce oil and gas assets of the
state and (ii) to promote access to high value
markets
• If it can move in a pipeline, its within our charter
• Bonding capability to $3 Billion
• Not a regulatory, enforcement, rate making or
policy setting body
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Issue - Authority over water quantity
• Topic of proposed bill in ’06-’07 legislature –
DEQ to regulate quantity of water in association
with permit (SB 55)
• Topic of proposed regulation developed by
Environmental Quality Council (EQC)
• Opinion of State Attorney General – the State
Engineer has authority – Governor vetoed
regulations proposed by EQC
• Petitioners appealing to State District Court
3
Quantity response
• State Engineer’s Office considering regulations
• Requirement that channel have sufficient
capacity to receive projected quantity
• Limitations on discharges to channel capacity
• Presented possible statute language at May 30th
Coal Bed Methane Task Force Meeting
4
Issue - Water/Gas Ratio
• According to Wyoming Geological Survey, 18%
of wells two years or older have a W/G ratio
above 10.
• Roughly 10% have a ratio above 20
• What ratio over what period of time should be
allowable for a given well?
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Water Gas Ratio Response
• State Engineer considering limitations on
permits
• Presented possible statute language at May 30th
Coal Bed Methane Task Force Meeting
• Review of W/G ratio after initial period of time (2
years?)
• W/G ratio required below threshold to
automatically retain permit?
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Issue – Watershed based permitting process
• Alternative to company by company permitting
• Would yield “generic” permit with conditions
applicable to all operators
• Twelve step process
• Willow Creek and Pumpkin Creek initial
candidates
• Industry and environmental groups appealed
result
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Proposed Water Pipeline
• WPA seeking support for a 1 Million Barrel per
day pipeline from central location in Powder
River Basin
• Steel or HDPE pipeline - 42”
• Two potential destinations – Madison Formation
in Teapot Dome Field, North Platte near Casper.
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How much water?
1400
CBM Water Production (MBbl/d)
Historical thru 2006 forecast thereafter
MM Bbls per year
1200
1000
800
600
400
200
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
0
Water Placed in Pipeline
Other Water
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Source: WOGCC and Coal Bed Methane Task Force
What does 1 MM BBls per day or 47,000 acre-ft/yr or
64 cubic feet per second look like?
10
Water conversions
• 1 MM barrels/day = 42 MM gallons/day
• 42 MM gallons/day = 5,615 mcf/day
• 5,615 mcf/day = 64 cfs
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Teapot Dome
Field
Casper
12
Water Pipeline – steps taken
• Initial high level engineering review
• Two rates developed, one for Teapot Dome one
for North Platte
• Gross assumptions for rate design – 100% debt,
ten year debt retirement, project full on day one
and full for ten years.
13
Water Pipeline – commercial steps taken
• Non – binding expressions on interest sought
around two rates
• Four responses so far, two responded with
quantity, one reflects need for different
alignment, one is not interested
• Awaiting additional responses
• Answers depend on determination of drilling
plans etc.
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What is the appeal of the pipeline?
• Producers - Economic and regulatory certainty
• State – no trans-basin diversion issue (Teapot
Dome), no state line water quality issue, no
surface discharge issue, added opportunities for
conservation and utilization
15
What is the appeal of the pipeline?
• Rocky Mountain Oil Field Testing Center –
revenue, EOR applications
• Other parties – Municipal use, augment stream
flows, power plant use, IGCC, Coal to liquids
plants, ag use. (credit to cost of service to
producers from income)
• “Storage” in Madison provides for extended
application of water beyond dictates of water
production timeline
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Questions define next steps
• Is there enough producer interest based on next
best alternatives?
• Can this be a water development project?
• Can we have access to the $500K appropriated
by the legislature?
• Every day delayed is a day of water lost to
amortize the costs.
17
Water Pipeline – points to consider
• When can the pipeline be in service?
• How reliable is the rate estimate?
• Does this exclude other solutions?
• Does the State support of the idea?
• Answers to follow
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Brian Jeffries
Executive Director
Wyoming Pipeline Authority
June 22, 2007
IPAMS – Vail, CO
[email protected]
(303) 619.3906
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