Fowler Oil and Gas (fka FWOG)

[humboldt111502]

Methane wells reviewed; fair grounds may be drilled

http://www.adn.com/news/alaska/matsu/story/9203367p-9119769c.html

NEW GROUND: Borough works through permitting process for the first time.

By ZAZ HOLLANDER
[e-mail]

Published: August 8, 2007
Last Modified: August 8, 2007 at 05:41 AM

PALMER -- Fowler Oil & Gas Corp. promises a new kind of coal bed methane industry in the Matanuska-Susitna Borough, a low-key gas boom involving willing landowners and few industrial downsides.
But that doesn't mean the company is escaping scrutiny.

Borough officials say they're exercising caution as Fowler's proposal -- the first under the borough's coal bed methane ordinance -- goes through the permitting process.

The borough planning director earlier this summer hired an Anchorage consulting firm with experience in coal bed methane to provide an informed review, said Frankie Barker, a borough environmental planner.

"We wanted to look at this really carefully," Barker said. "We are not experts in coal-bed methane. We know that."

Officials pushed back until Oct. 1 a public hearing originally scheduled for Aug. 20 to give themselves enough time to "get all the pieces together," Barker said.

Bob Fowler, a Palmer native who serves as Fowler Oil & Gas chairman and CEO, said the borough actions came as no surprise.

"They told me even before I submitted the application back in April they would bring in a consultant just to do a final review on it; that was nothing new," Fowler said. "I recommended it too."

The Anchorage-based consultant, Bristol Environmental & Engineering Services Corp., asked for more information about water monitoring, permitting, and historical and cultural issues, according to both Barker and Fowler.

A Bristol representative said she could not discuss specifics without permission from the borough. Barker, in an e-mail, declined to release letters from Bristol until the review is complete.

Fowler said the issues raised were no big deal.

"It's a little bit of everything," he said. "The application covered about 98 percent of everything and they just wanted some clarification, that's all."

TESTING THE NEW LAW

The borough law on coal bed methane drilling, enacted in 2004, limits well density, requires setbacks from homes and schools, and sets forth rules for notifying the public.

It sprang from the firestorm surrounding Evergreen Resources Inc., a Colorado firm, the year before. The company wanted to explore for methane, the chief component of natural gas, in coal seams across the Mat-Su.

To that end, the company acquired state subsurface leases beneath some 300,000 acres.

Scores of residents balked at the prospect of a new industry bringing industrial gas operations into their backyards without their permission, potentially threatening drinking water wells. Evergreen left the state without sinking one commercially viable well.

Now, some who fought the Evergreen bid say Fowler's success could pave the way for a different company down the line, one with less integrity.

The state requires proven prospects be "unitized" to conserve oil or gas resources, a process that can make it easier for other developers to extract the gas in the future, said Chris Whittington-Evans, a Palmer business owner who served as board president of the pro-planning group Friends of Mat-Su during the Evergreen debate.

"As much as we might like to hope that [coal bed methane] development is a small scale mom-and-pop, local-guy deal, everywhere else it proves otherwise," Whittington-Evans wrote in an e-mail. "Fowler may do it right, and I am happy he's working in that direction, but his success may be our undoing. If the gas is there, they will come."

Friends of Mat-Su executive director Kathy Wells said such concerns illustrate the need for the borough's new conditional use permit process. The process allows the public to seek safeguards from planning commissioners.

"This is, I think, a very good opportunity to test this ordinance because he's stepped up to the plate, filled out the paperwork and the planning commission is going to get their very first (condition use permit) on this," Wells said.

"Maybe they'll want more conditions -- I don't know."

If everything falls into place for Fowler, he wants to drill a single well in a hayfield owned by Henry Kircher's estate near Trunk and Bogard roads.

ONE WELL WITH 800 BRANCHES

Fowler's horizontal drilling strategy probes coal seams sideways with some 800 branches from the main stem, like an upside-down tree.

Four landowners across 840 acres stand to gain royalties. Over the next 50 years, Fowler hopes to extract much of the 382 billion cubic feet of methane he estimates lies trapped in coal seams.

Along with the borough permit on the Kircher well, Fowler needs a drilling permit from the Alaska Oil and Gas Conservation Commission, as well as permission to inject water pulled from coal seams into deeper sandstone formations.

Fowler said his company is waiting to file an application.

First, he said, company president Arlen Ehm hopes to get an exemption from state regulations that require the firm to obtain a separate permit for each of the 800 lateral branches they hope to drill.

Once an application is filed, the commission tries to process it within a week, commissioner Cathy Foerster said, though Fowler's unconventional proposal may take a bit longer.

Fowler said it would take about a month to drill the pilot well. Then gas would start flowing immediately. He expects to know right away if the well pans out.

Fowler said he is also considering wells near Palmer-Fishhook and Farm Loop roads, as well as the Alaska State Fair grounds, but won't apply for any permits for new wells until this first well proves out.

"I have no qualms about it but I just have to be careful how I phrase it," he said. "To me, it's a slam dunk, but not everyone looks at it that way.

COMMENTS WANTED

• The borough is accepting public comment on the Kircher well until Sept. 10. A public hearing before the planning commission is scheduled for Oct. 1 at 6 p.m. at the Central Public Safety Building, Station 6-1. For more information, go to www.matsugov.us/Planning/publicreviewdocs.cfm and scroll down to the bottom of the page. To avoid trouble with landowners who don't own rights to subsurface resources beneath their property, Fowler Oil & Gas Corp. CEO Bob Fowler is looking for coal bed methane on large parcels of land where owners also hold title to the mineral rights.

That category includes the Alaska State Fair.

Along with potential well sites near Palmer-Fishhook and Farm Loop roads, the company is considering drilling for methane at the fair grounds on the Glenn Highway south of Palmer, though Fowler still needs permission from the fair, as well as two to four other adjacent landowners, he said.

Fair officials declined to discuss any specifics this week.

Fair general manager Ray Ritari said he forwarded a letter of intent from Fowler to an attorney for review. He wouldn't identify the attorney, saying, "It doesn't matter."

The three members of the fair's energy subcommittee researched the proposal as well, subcommittee member Mari Jo Parks said.

The subcommittee will address the Fowler proposal, as well as a separate proposal to build a natural gas-fired power plant at the fairgrounds, at the board's regular meeting Thursday.

The fair board meets at 7 p.m. in the boardroom of the fair's main office.