DENVER – Energy companies drilling natural gas from underground coal seams must obtain water well permits or replace the water they use, the Colorado Supreme Court ruled Monday.
Groundwater pumped out during coal-bed methane drilling is not just a waste product, the court said, ruling on a lawsuit by landowners who say their water supplies are threatened by companies using groundwater to free natural gas in coal seams.
The decision means companies must defer to water users with older water rights and replace the water they use when it belongs to others.
Pumping groundwater relieves pressure that traps methane gas in coal seams. Other gas drilling might produce water, but not in the volumes that coal-bed methane extraction does. Millions of gallons of water might be pumped over the life of one well.
There are about 38,000 active oil and gas wells statewide, and roughly 4,000 of those are coal-bed methane.
The state engineer’s office and BP America Production Co. argued that water is a byproduct of drilling and should be regulated by state oil and gas rules. BP America re-injects the water it uses into the ground.
But the Supreme Court upheld a state water court ruling that the water is put to beneficial use and, therefore, is subject to state water laws. The justices rejected the argument that water pumped out while drilling gas was “merely a nuisance.”
The Colorado Oil and Gas Association, a trade group, said in a statement that coal-bed methane drilling hasn’t been shown to harm water-rights owners.
“The confusion brought about by this decision will just add more fuel to the fire of uncertainty affecting the oil and gas business in Colorado,” the association said.
The group argues that new oil and gas regulations are driving companies out of Colorado or forcing them to cut back production and investment.
Sarah Klahn, a Denver attorney who represented the landowners, said the decision requires companies to take their place in line to use water. People with older water rights must be compensated if someone affects their water supply.
“This gives us a way to protest, to go through the state engineer or state water court,” said La Plata County rancher Jim Fitzgerald, one of landowners who sued.
Fitzgerald and his wife, Terry, rely on springs from the HD Mountains in southwest Colorado and seeps for their vegetable crops and livestock. They worry that pumping large amounts of groundwater will sap their supply.
“Water is so precious to people down here,” Fitzgerald said. “And you see the pump jacks pumping, and they’re pumping water, not oil.”
Legislation negotiated by parties in the lawsuit would give energy companies a year to apply for water well permits and to submit water-replacement plans. The bill, headed to the Colorado Senate, would allow the state engineer to specify when gas companies involved in coal-bed methane drilling aren’t required to get water permits.
In other places, companies release water into streams. Much of the water from coal-bed methane wells in northeastern Wyoming is released into streams, raising concerns about high sodium levels that can damage vegetation and soil.
Klahn represents Wyoming landowners who are suing over coal-bed methane drilling’s effect their water. A district court dismissed the lawsuit and the Wyoming Supreme Court is considering an appeal by the ranchers.