Update on Cimarex Helium-Methane project
by Dawn Ballou, Pinedale Online!
August 27, 2009
Cimarex Energy Co. (XEC) is progressing on its project to develop a methane and helium gas recovery facility on State of Wyoming land on Riley Ridge west of Big Piney. The facility will be located on a ridge south of South Piney Creek on the eastern flank of the Wyoming Range.
Last April, the Bureau initiated an Environmental Analysis process for proposed federal right of ways and Applications for Permits to drill for the Riley Ridge Federal Unit, which Cimarex operates. The State of Wyoming granted a Wyoming Special Use Lease for the plant site in early August, 2008. The Wyoming DEQ Issued the project their Air Quality Permit in June 2009 after the company successfully obtained offsets for the minor amount of emission from this new low emission plant design.
On Tuesday, August 25th, we spoke with Scott Stinson, Project Manager for the Riley Ridge Madison Gas Development Project, to get an update on the project. He said crews are currently on the mountain drilling the first new well, which will reach a depth of about 18,000 feet later this Fall. Drilling is only scheduled for the first several summers of the project. Current BLM stipulations require drilling to be suspended from November 15th – August 1st.
Cimarex commenced earth work on the plant site in early July, doing site work and grading. The top of the drilling rig is visible from Big Piney. A portion of the plant construction site can also be seen from Big Piney, just below the drilling rig. A white tank that is visible on the hill is used to store water for dust control. The tank will eventually be removed. The site location has been carefully chosen so the completed facility will be screened and not visible from Big Piney or forest users on the Lander Trail through South Piney Creek to the maximum extent possible.
Stinson said they have a crew of 50-75 people working on site right now drilling the piers and doing foundation work. Cement trucks are delivering loads from Big Piney for the plant support piers and foundations. The company hopes to have all the foundation and Storm Water Pollution Prevention Plan (SWPPP) work completed this season so construction can begin next summer on buildings and other components of the project at the site. They expect to have up to three times as many people working on the site next year. There are currently around ten companies providing services and work on the project.
The road into the site goes through private property. The company has a guard posted 24-hours at the entrance to prevent unauthorized entry onto the private property and through into the project area. No new roads or drilling pads will be constructed for this proposed project.
Lorraine Keith, public information officer with the Bureau of Land Management, said they expect to have the Cimarex Environmental Assessment out for public comment in the next couple of weeks. The EA will address potential impacts the project right-of-way pipeline (natural gas and helium), power transmission line, and fiber optic lines might have on resources. Other than providing initial information to the BLM, the company has not been involved in writing the EA. "We do get to pay for it though," said Stinson. The EA already has a price tag of over $1.1 million.
Items of concern expressed at public meetings and from land owners last year include visual impacts on the Lander Trail along South Piney Creek, displacement of resident Wyoming Range elk populations, brucellosis concerns, potential impacts to nearby sage grouse leks, traffic, and emergency spill scenarios.
The life of the project is expected to be 40-50 years. A great deal of effort has gone into locating the structures as much as possible out of view from users of the South Piney Creek/Lander Trail road in the valley below or to anyone using the National Forest.
As part of wildlife mitigation associated with this project, Cimarex has invested approximately $1.5 million on a 3-year project studying elk movement, changes in land use over time, elk movement due to weather and season changes, damage prevention, and wildlife habitat enhancement in coordination with the Wyoming Game & Fish Department. The first piece of this research, The Piney Front Elk Study is expected to be released this fall.
Recent concerns over air quality in the Upper Green River Valley have caused some regulatory delays for the project. DEQ requires "emission offsets" for air quality protection, however the company didn’t have anything to work with for the offset requirement. They were able to meet their offset requirement by paying for improvements at a large gravel pit and retrofitting pneumatic equipment at another operator’s facility in Sublette County. The project will include installation of an air quality monitoring station and cameras that will be tied into the Wyoming Department of Environmental Quality web site.
The gas-recovery process will separate liquid hydrogen sulfide (H2S) and carbon dioxide (CO2) from the gas stream which will be re-injected underground back into the original formation at the site. The project also involves the disposal of 850 barrels per day of produced water which would be re-injected into a 13,100 foot disposal well. No ponds or storage reservoirs will be utilized in this project proposal.
Ultimately, there will be three more wells drilled at the project site. The plant is expected to be completed and online in the fall of 2011.
"Our price for the helium is locked in," Stinson said. "Right now the price of methane is the pits." According to the Wyoming Pipeline Authority, the average daily midpoint price for natural gas was $2.62/MMBtu at the Opal Hub during the week of August 24, 2009 (http://www.wyopipeline.com/excelcharts/basis_map.htm). The Transco Zone 6 New York Hub East was paying $3.39/MMBtu. "We want a $4-5 range average over the next 50 years for the methane," Stinson said. Even at the lower price, the company will still be able to pay their bills and make money. "We won’t shut the doors," he said, reflecting on the current low gas prices compared to the past several years.
Anyone who has questions about the Cimarex project can contact Scott Stinson, Project Manager for the Riley Ridge Madison Gas Development Project, at 307-276-4040, sstinson@cimarex.com, or Lorraine Keith, BLM Public Relations officer, 307-352-0399, Lorraine_Keith@blm.gov.
Company contact:
Cimarex Energy Co.
Corporate Headquarters
1700 Lincoln Street, Suite 1800
Denver, CO 80203
Phone: 303-295-3995
Fax: 303-295-3494
www.cimarex.com
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