Providing coverage of Alaska and northern Canada's oil and gas industry
January 2008

Vol. 13, No. 3 Week of January 20, 2008

Fowler seeks CBM waivers

Asks for 9 exemptions, says regulations not designed for coalbed methane

Eric Lidji

Petroleum News

An Alaska company looking to revive a coalbed methane project near Palmer is asking the state for a handful of waivers to the Alaska Administrative Code before it can start drilling this spring.

Fowler Oil & Gas Co. appeared before the Alaska Oil and Gas Conservation Commission on Jan. 15 asking for nine exceptions to the code, including the gas well spacing requirements dictating the proximity of a well to a property line.

The company is pursuing coalbed methane on private land northeast of the intersection of N. Trunk and E. Bogard roads in the Matanuska-Susitna Borough, west of Palmer.

The proposed well, the Kircher No. 1, would sit 1,344 feet from the nearest property line, but state code requires wells to be at least 1,500 feet from a property line.

Arlen Ehm, president of Fowler, told the commission, “because of overlapping regulations by the AOGCC and the Mat-Su Borough, it was not possible to locate the Kircher No. 1 well so as to not require a spacing exception for one or both agencies.”

Current regulations designed before CBM

Fowler also requested eight other exceptions, all highly technical in nature.

The need for so many exceptions arises from the nature of the current regulations, which do not address coalbed methane, or CBM, Ehm told the commission in a letter.

“The existing regulations were developed and promulgated long before CBM came in existence and are designed solely for exploration and production of conventional gas resources,” Ehm wrote.

Coalbed methane development is rare in Alaska and the Fowler project, if successful, would be the first well in the state to develop the resource in commercial quantities.

AOGCC Commissioner Cathy Foerster told Petroleum News that the commission and staff have discussed the possibility of writing specific coalbed methane guidelines, rather than relying on exceptions, but decided not to until the process becomes common enough to justify the time and effort needed for a broad overhaul of regulations.

“For one well, it’s much more streamlined to go with the waiver process than re-write all our regulations,” Foerster said.

Looking to succeed where Evergreen failed

In coalbed methane development, a company drills a well into a coal seam to access methane trapped underground.

Denver-based Evergreen Resources attempted to develop coalbed methane resources in the Matanuska-Susitna Borough several years ago, but ran into opposition from landowners, community groups and the borough over the possible negative side effects of the operation.

Pioneer Natural Resources of Irving, Texas, bought out the Evergreen acreage and relinquished it back to the state in 2004.

Bob Fowler, a native of Palmer, started Fowler Oil & Gas the next year. In October 2007, the company got a conditional use permit from the Mat-Su Borough to drill a well for coalbed methane.

Although Fowler plans to drill only one well in the area, the company will explore thousands of feet of coal using multilateral underground wells.

Concerns remain among some property owners

While Fowler has passed many of the hurdles that stopped Evergreen, it still faces some questions from property owners in the area.

Several people came to the AOGCC hearing to testify about the proposed well, many concerned about the effects of the project on ground water in the area and others concerned about the amount of the bond Fowler must post before starting work.

Coalbed methane drilling requires large amounts of water, occasionally causing contamination problems or changes to the water table, critics say.

But Fowler believes new technology will prevent those problems in Palmer, primarily by working below the water table.

The commission did not rule on the nine waiver requests, deciding instead to keep the record open until Jan. 25 to accept more comments about the request.

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