Oil and gas resources are often found in the pore spaces of sedimentary reservoir rocks, such as sandstone and limestone. These resources migrated from source rocks rich in organic material, such as marine shales. When rocks containing this organic material are subjected to heat and pressure, the organic compounds break down over time, resulting in the formation of oil and natural gas. Once formed, oil and gas can migrate through pores spaces in the host rock or along fractures until it encounters structural, stratigraphic, or combination traps. Coalbed natural gas (CBNG) is present in areas where gas is trapped in the coalbed where it was generated.

The Planning Area has 5,648,770 surface acres of oil and gas (for all surface owners). The Planning Area has 4,219,790 acres of BLM mineral estate, or about 74.5 percent of the total area. State, private, and other entities manage the remaining 1,441,669 acres (25.5 percent). Approximately 898,775 acres of state and private surface lands in the Planning Area are split-estate lands that overlie BLM-administered oil and gas mineral estate (subsurface) (BLM 2009e).

Exploration

The BLM is responsible for authorizing and administering geophysical exploration operations on all public surface lands, and under the rights granted under all federal oil and gas leases unless the USFS administers the surface (whether or not such leases are under non-federal land) in the Planning Area. The Wyoming Oil and Gas Conservation Commission (WOGCC) is responsible for authorizing all operations on state and private surface land in instances where such operations are not covered by rights granted under federal oil and gas leases. The BLM authorizes geophysical exploration under a federal oil and gas lease via Sundry Notice approval if the applicant of the geophysical Notice of Intent (NOI) is the federal oil and gas lessee/operator (43 CFR 3150). At the leasing stage, the BLM applies appropriate stipulations on federal oil and gas leases, including standard oil and gas stipulations (Appendix I), and special stipulations identified in the RMP.

Oil and gas reservoirs can be discovered by direct or indirect exploration methods. Direct methods include mapping of surface geology, observing seeps, and gathering information on hydrocarbon observed in drilling wells. Indirect methods often use geophysical methods such as gravity and magnetic and seismic surveys to delineate subsurface features that might contain oil and gas resources not directly observable. The petroleum industry utilizes 2D and 3D seismic technology to obtain subsurface stratigraphic and structural information useful for exploration of oil and gas reserves. 2D seismic technology uses explosives in drilled shot holes for source points along linear survey lines. 3D seismic techniques generally use source points such as vibroseis or shaker trucks in a grid pattern over a large area that can cover hundreds of square miles.

Several companies have leased BLM-administered lands in the Planning Area, and limited exploratory drilling for natural gas has commenced. Two specific areas include:

Southeastern Beartooth Front – There has been seismic exploration along the eastern Beartooth Front northwest of Clark, Wyoming, and exploratory drilling is anticipated. Initially, this activity was situated on private and state land and mineral estates, but is now expanding onto federal (USFS and BLM) lands.

Deep Basin-Centered Gas – Another area receiving new interest is a northwest-trending structural trend related to the deep Bighorn Basin-center gas play, although there is disagreement to the amount of natural gas in these reserves. The USGS estimates that there are more than 989 billion cubic feet (Bcf) of natural gas in low permeability basin‐centered gas accumulations in the Bighorn Basin (USGS 2008a). In addition, an estimated 13 million barrels of undiscovered natural gas liquids are projected to exist in the Bighorn Basin. The Wyoming State Geological Survey is investigating three major types of natural gas resources in Wyoming  tight‐sand gas (basin‐center gas or deep basin gas), shale gas, and under‐pressured gas (Wyoming State Geological Survey 2008). There could be large amounts of all three types of natural gas in the Bighorn Basin.

The approved number of NOI to conduct geophysical exploration operations has been approximately one or two per year since 1999 (BLM 2009b). There has been an increase in the number of seismic ventures in the state, and this trend is expected to continue based on data from the WOGCC (BLM 2009b).

Oil and Gas Leasing Procedures

Leasing procedures for oil and gas, including CBNG, are the same. Based on the federal Onshore Oil and Gas Leasing Reform Act of 1987, all parcels must first be offered competitively. Lands that do not receive competitive interest are available for noncompetitive leasing for a period not to exceed two years. The BLM Wyoming State Office holds competitive sales four times a year by oral auction and issues competitive and noncompetitive leases for a term of 10 years. If the lessee establishes hydrocarbon production, the competitive and noncompetitive leases can be held for as long as oil or gas is produced. The federal government receives yearly rental fees on nonproducing leases. The state of Wyoming receives approximately half of all money generated from oil and gas leases. Royalty on production is received on producing leases, approximately one-half of which is allocated to the state of Wyoming. After acquiring an oil and gas lease, and prior to development, an application for permit to drill (APD) must be filed with the WOGCC and the appropriate BLM field office if the well is on a federal oil and gas lease in the Planning Area. After the BLM approves the permit, the company may proceed with drilling according to the conditions of the permit’s approval.

Numerous oil and gas operators depend on the ability to lease federal minerals under the BLM leasing program. Public land/leasable fluid minerals are leased to oil and gas operators through an established process for opening public land and areas nominated and approved for leasing. The BLM field offices are responsible for supervising and managing all exploration, development, and production operations on federal oil and gas leases in the Planning Area.

The general policy and main objectives of the BLM oil and gas program are to foster a fair return to the public for its resources, to ensure activities are environmentally acceptable, and to provide for conservation of the fluid mineral resources without compromising the long-term health and diversity of the land.

Oil and Gas Activity in the Planning Area

Under the existing plans, except for Wilderness Study Areas (WSA), some wild and scenic river (WSR) eligible waterways, and the Spanish Point Karst ACEC, BLM-administered lands in the Planning Area are open to oil and gas leasing and exploration. These specially designated areas represent a total of approximately 154,861 acres that are closed to leasing in the Planning Area. This is almost 5 percent of the BLM-administered surface acres in the Planning Area and 3.7 percent of the total 4,219,790 acres of federal mineral estate in the Planning Area (including split-estate lands).

There are 82 operators actively exploring for or producing oil and gas resources in the Planning Area. As of June 2008, federal oil and gas leases covered approximately 960,000 acres in the Planning Area (BLM 2008a) (Map 7). Table 3-11 lists the number of leases and total number of acres under lease in each county.

Approximately 547 oil and gas wells were spudded (started) in the Planning Area from January 1, 1999, to December 31, 2008 (BLM 2009e). Each well, including roads, pipelines, and similar infrastructure, is assumed to disturb approximately 2.5 acres for initial drilling operations (accounting for approximately 1,368 acres of new disturbance in the Planning Area). Upon completion of operations, interim reclamation measures are implemented, reducing the disturbance by up to 50 percent, or 684 acres (BLM 2009b). Table 3-12 lists oil and gas well statistics for the Planning Area.

There have been 9,928 surface well locations spudded in the Planning Area through March 3, 2009 (WOGCC 2009). Of the 9,928 wells spudded or drilled in the Planning Area, 6,133 wells, or 61.8 percent, have been on BLM-administered mineral estate. Twenty-five wells (0.25 percent) have been drilled on USFS-managed lands. An additional 3,770 wells (38 percent) have been drilled on private and state-owned oil and gas mineral ownership. At the close of 2008, there were 4,544 active oil and gas wells in the Planning Area (BLM 2009c).

There has been an overall upward trend in the number of APDs approved on federal oil and gas leases in the Planning Area since 2002, particularly after passage of the National Energy Policy of 2001 and the Energy Policy Act of 2005. However, starting in 2008 there was a decrease in APD submissions, which was primarily driven by market conditions for oil and natural gas.

Oil and Gas Production in the Planning Area

Oil and gas occurs in the Planning Area in numerous geologic formations, and members of formations that range in age from the oldest producing formation, the Flathead Sandstone (Cambrian age), through the youngest formation, the Fort Union (Tertiary age). Table 3-13 lists oil- and gas-producing formations and zones in the Planning Area through December 2008. In some formations, hydrocarbons are produced from more than one zone. The corresponding formations can be found in the stratigraphic chart (Figure 3-15) in Section 3.1.2 Geologic Resources. Cumulative production through 2008 in the Planning Area was approximately 2,168,185,301 thousand cubic feet of gas and 2,869,788,177 barrels of oil. The most prolific oil-producing formations have been the Phosphoria Formation and Ten Sleep Sandstone. The Madison has produced the third largest quantity of oil. A large amount of gas production has also been associated with the Phosphoria Formation, the Ten Sleep Sandstone, and within the Frontier Formation.

There are 137 named fields and 1 unnamed field in the Planning Area (Table 3-14) (Map 23). There are eight major producing oil fields in the Planning Area (by volume), with production of 130 to 590 million barrels of cumulative oil production. These fields are, in descending order, the Oregon Basin, Elk Basin, Hamilton Dome, Grass Creek, Garland, Little Buffalo Basin, Frannie, and Byron. There are six major producing gas fields in the Planning Area, with production of 151 to more than 408 Bcf of cumulative gas production. In descending order, they are Worland, Elk Basin, Oregon Basin, Hamilton Dome, Garland, and Little Buffalo Basin.

Since a production high during 1978, the rate of oil production in the Planning Area has steadily declined, with only a few short periods when production rates were flat. The rate of gas production declined from 1974 to 1983 and essentially flattened until 1989. The overall rate then increased until 1998, after which there was a decline in production rates. In 2008, oil production was at its lowest rate for the period from 1974 through 2008, and gas production was near its lowest rate for the same period (BLM 2009e). Table 3-15 summarizes past and recent oil and gas production rates for counties in the Planning Area.

Coalbed Natural Gas

CBNG occurs in coal seams and may remain trapped where it was generated. The Bighorn Basin coalfield contains only minor amounts of coal compared to other Wyoming coal basins and is therefore not considered an important source of CBNG. Perhaps the single most limiting factor reducing the potential for CBNG resources in the Fort Union Formation is the apparent lack of thick, persistent coal in much of the basin (Roberts and Rossi 1999). Most of Wyoming’s CBNG is produced from the Powder River Basin of northeastern Wyoming. According to WOGCC, no actual CBNG has been produced from any of the Bighorn Basin coals. In 2006, an attempt was made to produce CBNG from several wells located on private surface and mineral estate; however, only water was produced (WOGCC 2008).

Coals in the Paleocene Fort Union Formation, and the Cretaceous Meeteetse and Mesaverde Formations are classified as sub-bituminous, and are estimated to contain 116 Bcf of CBNG as undiscovered resources (Roberts and Rossi 1999; USGS 2008a).

Fourteen CBNG wells have been drilled in the Planning Area on lands with privately owned surface and minerals; 13 of those have been plugged. The remaining well is currently shut-in (IHS Energy Group 2009). No CBNG has actually been produced from any of the wells drilled in the Planning Area.

Oil and Gas Reserve/Resource Estimates

Table 3-16 lists projections of the amount of oil, gas, and natural gas liquid resources in the Planning Area for conventional and continual assessment units. It is estimated that the Planning Area contains a mean undiscovered volume of approximately 62.05 million barrels of oil, approximately 913.23 Bcf of gas, and 12.05 million barrels of natural gas liquids (in the two assessment units with projected hydrocarbon volumes). The Planning Area’s oil resource could range from 16.51 to 124.99 million barrels, the gas resource could range from 293.61 to 1,879.61 bcf, and natural gas liquids resource could range from 2.63 to 25.95 million barrels. For a more detailed description of the methodology behind these estimates, see the Reasonable Foreseeable Development Scenario for Oil and Gas, Bighorn Basin Planning Area (BLM 2009e).

Projected Oil, Gas, and Coalbed Natural Gas Drilling Activity

For a baseline unconstrained RFD projection (limiting factors such as lease stipulations or the possibility that some areas might not be administratively available for leasing are not considered at this stage of analysis), it is estimated that during the 20-year planning cycle of 2008 through 2027, as many as 1,865 wells could be drilled in the Planning Area. Up to 150 of these wells could be CBNG wells. As many as 175 of the conventional wells could be deep wells (defined here as wells more than 15,000 feet deep) in the central portion of the Bighorn Basin (BLM 2009e).

Development potential is defined as high, moderate, low, very low, and none. It is estimated that average drilling densities per township (one township is about 36 square miles) during the planning cycle will be:

Oil and gas drilling activity is projected to be concentrated in several locations in the Planning Area, including:

Most of these fields are densely drilled. Many new wells in these areas will likely be drilled as infill or fringe wells in existing fields, or as reentries into existing wellbores. Some minor exploratory activity could occur just beyond field boundaries. Well spacing is projected to be variable, in the range of 20 to 160 acres (BLM 2009e).

Future well-drilling activity is likely to occur for either of the following two reasons: (1) to improve enhanced oil production, including the addition of wells in and around existing, mature oil and gas fields where there could be limited opportunity to develop existing reservoirs or additional deeper reservoirs, or (2) to explore for new oil and gas reserves away from existing, developed areas. Well densities will likely remain similar to current densities, with isolated townships having the potential for an increase in drilling density (BLM 2009e).

The USGS has identified the Mesaverde-Meeteetse Formation and Fort Union Formation coalbed gas assessment units as potentially productive for CBNG in the Planning Area. Only limited exploratory drilling for CBNG has occurred in the Planning Area. Based on available information, there are no current plans for CBNG development in the Planning Area. However, because there has been limited CBNG exploration in the recent past (though unsuccessful) and the Planning Area includes the two previously identified USGS CBNG assessment units, it is possible that limited exploration and development could take place during the life of the plan (BLM 2009e).

Readers will find additional information on projected oil and gas activity in the Planning Area in the Reasonable Foreseeable Development Scenario for Oil and Gas, Bighorn Basin Planning Area (BLM 2009e).

Management Challenges

A variety of management challenges for oil and gas exploration and development are associated with both public and internal BLM issues. Oil and gas development has a variety of beneficial and adverse impacts, which create a host of management challenges. Due to the breadth and depth of these management challenges, this section provides only a summary. The following is a partial list of known and potential management challenges for oil and gas exploration and development in the Planning Area: