Questar to Drill Nine Wells On Mesa in 2000
Company doesn't like BLM's proposal to limit pace of development
by Rob Shaul

Questar Exploration and Production Company, the oil and gas operator with 16,000 acres worth of federal mineral leases on top of the Mesa as part of the Pinedale Anticline Natural Gas Project, plans to drill just nine wells next summer. "We know there's the fear that once the [Pinedale Anticline] EIS is completed the oil and gas companies plan to put out 10-20 rigs all drilling holes in the Mesa. That just won't happen," said Jay Neese, Chief Landman with Questar during an interview last Friday.

Questar's Local Presence

Questar's name came up most recently when Ultra Petroleum sold most of its interest on the Mesa leases last spring. Questar E&P and Anschutz purchased 8% of Ultra's acreage in the Green River Basin for $13.2 million. However, Questar has been involved in natural gas exploration on the Mesa since the 1950s.

In 1963, Mountain Fuel drilled Mesa Well No. 8 - the first well on the Mesa. Mountain Fuel had held the Mesa leases since the early 1950s, and ended up drilling three non-economical wells on the Mesa.

In the mid-1980s, Mountain Fuel changed its name to Questar. Today, Questar Corporation is a $2.1 billion company with 2,282 employees headquartered in Salt Lake City. The company has several subsidiaries including Questar E&P, Wexpro, and Celsius.

Ultra Petroleum purchased farm-out rights for the Mesa from Questar back in 1997-98. Ultra drilled 3-4 wells on the Mesa using these rights. Last spring, Questar purchased back those rights from Ultra and now holds a controlling interest of the majority of federal minerals leases on the Mesa.

Continuing Exploration

Questar's drilling strategy for 2000 will be focused on exploration of the Mesa gas reserves, says Mr. Neese. To that end Questar plans to keep just two rigs drilling next summer, after the final Anticline EIS is approved, and drill no more than 9 exploratory wells. "Our approach is conservative," explained Mr. Neese, "we don't let the drill bit get ahead of the information base." Questar will use the results and information garnered from the new wells to develop a more intense drilling program beginning in 2001.

Questar's conservatism is based on money. The typical Anticline well reaches over 13,000 feet deep, takes 40 days, and is very expensive. It costs $1.5 million to drill one of these wells, and completing the well adds another $1 million to $1.5 million, increasing the total cost per well to upwards of $3 million. Thus, dry holes have to be kept to a minimum. Even with producing wells, it will take 3-5 years of gas flow for one of these wells just to pay for itself say the Questar officials.

Draft EIS Reaction

One alternative the BLM identified in the Draft EIS was slowing the pace of the Anticline development by limiting the number of rigs that can be operating at one time in the project area. The BLM suggested limiting the number of operating rigs to five at one time. Of these, just two would be allowed north of the New Fork River.

Not surprisingly, Questar doesn't like this idea, says Mr. Neese. He points out that critical mule deer winter range restrictions will limit drilling to just six months per year as it is. Given that it takes 40 days to drill an average Anticline well, each rig can drill just four wells per year. If the BLM restricts the total number of rigs working north of the New Fork River to just two rigs, it would take Questar over 50 years to develop its leases. "That seems like an awful long time," says Mr. Neese.

Questar isn't overly concerned about the impact sage grouse restrictions will have on their operations. Mr. Neese noted several times during the interview that while an environmental group is poised to petition listing sage grouse as a threatened species, Wyoming still holds hunting seasons for the birds. He said Questar is still trying to understand what impact the BLM's proposal to limit drilling noise to just 10 dBA at active sage grouse leks between midnight and 9 a.m. will have on drilling operations. The aim of the noise level restriction is to minimize sage grouse disturbance while they're breeding on the leks.

According to the EIS, the drilling noise level 10,000 feet from a rig is 11 dBA. This means any rig closer than two miles from a sage grouse lek could conceivably have to shut down its operations at night - something unheard of in the oil and gas industry.

Another mitigation proposal submitted by the BLM is centralized production facilities for the Anticline Project. Questar isn't certain of what, if any, cost savings this idea would have on its operations said Ron Hogan, General Production Manager with the company. Mr. Hogan also questions whether centralized production facilities would save on disturbed areas or road construction.

In proposing centralized production facilities in the Draft EIS, the BLM suggested that individual wells wouldn't have to be visited during the winter months - the most critical for mule deer. However, Mr. Hogan says each wellhead will need at minimum, a heater to keep the water in the gas flow from freezing. The heater will have to be serviced which means someone will have to visit the wells periodically during the winter. In the Draft EIS the BLM suggested these visits be limited to "emergencies." This suggestion is not "practical, feasible or wise," said Mr. Hogan

Roads and Travel Plan

Currently, Questar accesses their lease from the south, using the Green River Road, says Mr. Hogan, who sits on the Anticline Transportation Committee. Concerning the proposed road to the Mesa through the Industrial Site west of Pinedale, Mr. Hogan said Questar would like to see a firm proposal before committing to supporting this idea. He is more open to a new road up the spine of the Anticline from the south. "I can see where that would have advantages," he said.