Story first appeared in The Wall Street Journal.
U.S. officials are expected Tuesday to approve a plan by Anadarko Petroleum Corp. to drill 3,700 natural-gas wells in eastern Utah, capping a year long review of a project that will be one of the largest in the region.
Approval for the Greater Natural Buttes project in the Uintah Basin comes as the Obama administration is supporting natural-gas production as a way to create jobs with a cleaner-burning fuel than coal or oil.
As Gas Prices Fall, a Sigh of Relief
Once Anadarko's wells are up and running, they would be expected to produce about one billion cubic feet of natural gas a day, according to Anadarko, enough to heat or cool about 5.5 million homes.
The Greater Natural Buttes project is the uncommon case in which an energy company won the support of environmental groups, which are often vocal critics of oil and natural-gas development. Anadarko agreed to pull previous proposals to expand drilling to new areas, including parts of a proposed red-rock wilderness area, said Heidi McIntosh of the Southern Utah Wilderness Alliance, an environmental group.
Instead, Anadarko said in its environmental-impact statement, its wells would be drilled from existing wellpads, using technology that allows the well to curve away from a straight-down path and tap new deposits. Natural Gas Expert Witnesses say that this method is a much more environmentally friendly drilling option.
Environmental groups have also raised concerns about air quality in the Uintah Basin, caused in part by oil and natural-gas production. Anadarko says it has responded to those concerns with technology that reduces emissions.
Energy policy is likely to be a top issue in the presidential campaign, with the Republican contender accusing the Obama administration of crimping the industry's growth by rejecting the proposed Keystone XL pipeline to carry oil from Canada through the U.S. Midwest. In recent speeches, the President has stressed his support for oil and gas drilling, provided it can be done safely.
Utahans have gotten used to the Obama administration closing off federal lands to domestic energy production, so this announcement is a long time coming. The 160,000-acre Greater Natural Buttes project was first proposed in 2006 by Anadarko subsidiary Kerr-McGee Oil & Gas Onshore.
Recently, several energy companies have cut back on drilling for natural gas in the U.S., following a production boom that has brought prices near $2 per million British thermal units, their lowest level in a decade. The natural-gas deposits being targeted in the Uintah Basin, however, carry higher-value liquids such as ethane, propane and butane. Also, prices for natural gas may recover over the 10-year period in which Anadarko plans to drill its new wells.
Before Anadarko starts to drill wells in the Uintah Basin, it needs to obtain individual permits for each well.
Utah officials say benefits of the deal would ripple statewide, since the number of producing wells in the state would jump more than 50% from the present level of about 6,000 and the industry has operations in other cities.
They said they expect another drilling approval to be announced in a few weeks on federal lands.
Unemployment in Uintah County, which hit 10.3% at one point, is down to 3.8%. With Anadarko estimating it will create 2,900 new jobs for the 3,700 new wells over a 10-year period, the economy in the county of 32,000 people should expand further.
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