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Archive for Tuesday, September 2, 2008

Gas prices spur methane boom

September 2, 2008

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— Once considered too expensive to drill out, coal-bed methane is bringing landowners in the coal-rich Cherokee Basin some hefty royalty checks these days.

The southeast Kansas region had fewer than 30 coal-bed methane wells in 2000, but thanks to soaring gas prices, there are 4,400 of the wells operating there now.

The methane is an odorless gas trapped under ancient sea water about one-fifth of a mile below the ground. In the early 20th century, production was part of a vibrant natural-gas industry in the state.

But when drillers began focusing more attention on the massive Hugoton gas fields in southwest Kansas, methane production on the eastern side of the state plummeted.

With the Hugoton gas field's output waning, the Cherokee Basin is making up the difference - and more.

"Here's little southeast Kansas, and it's producing more gas than Hugoton's losing," said David Bleakley with Colt Energy, an investor in the basin.

It's not uncommon for a landowner in the basin to be paid $30,000 for entering into a mineral rights lease, they receive monthly payments of $3,000 to $5,000 if half a dozen wells produce.

The increased production hasn't come without its headaches, though.

Pipe-hauling trucks tear up roads and force costly repairs, compressors that run the pumping equipment are loud and gravel roads to the wells cut into the fields of corn, soybeans and wheat.

Also, some farmers say some drillers don't treat them and their land with respect.

Getting the methane out of the ground isn't an easy endeavor, though. Drillers first have to relieve underground water pressure and pump the water into basketball court-size pits. One well could cost about $100,000 to bring into production.

Because most of the deep water being pumped out is salty, a big spill could cause environmental problems. That's why the water in the pit has to be transported to a disposal site.

After that, water continues to be pumped out as the methane flow slowly increases. That water is injected back into the ground, causing minimal environmental impact, said Larry Brady of the Kansas Geological Survey.

Top production of a well may take two to five years to achieve.

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