Although the current proposal for a coal-bed methane water pipeline and storage facility has been criticized as too expensive, the industry still needs more management options for water.

Mark Doelger, chairman of the Wyoming Pipeline Authority, said he will recommend that state lawmakers keep the proposal alive, and consider a severance tax break to help fund the project.

In the meantime, coal-bed methane production may be limited for lack of water management options.

In order to extract the methane that resides in coal, operators pump water from the coal aquifer, relieving the hydrostatic pressure that holds the gas in place.

Currently, the industry pumps about 600 million barrels of water from coal aquifers in the Powder River Basin each year, according to the state. Some of the water is used in irrigation and to water livestock, but a majority of the water is not put to a specific beneficial use.

In some areas, such as the Powder River Breaks over the Big George coal seam, there's not much capacity for water on the surface. That limits the amount of gas that can be produced.

Doelger said the industry seems to have hit a ceiling of 1 billion cubic feet of gas per day. "So in order for the play to grow you need more water management options."

Many landowners in the region say too much of the water produced from coal-bed methane wells is not put to beneficial use.

"Anything you can do to keep the water from going out of the state and put it to beneficial use, that's what I'd be in favor of," said Sheridan rancher Clay Rowley. "The water is really valuable."

The Coal-bed Natural Gas Alliance said it likes the concept of a pipeline and storage facility, but the economics have to match up.

"We support any and all beneficial uses of the water. If a majority of landowners in Powder River Basin back up this use, then we're behind it," said Monica Deromedi, spokeswoman for the alliance. "If we can make it so it is more economically feasible, then it sounds like a wonderful option."

But based on a pipeline capacity of 1 million barrels per day, coal-bed methane operators told Doelger the project is too expensive. The cost would be between 20 cents and 30 cents per barrel.

"If someone can run their water down a water course of the state for 5 cents per barrel, why would they come to us for 20 cents per barrel? So we've got to find a way to be competitive," Doelger said.

The industry's biggest operators, Anadarko Petroleum and Williams Production, account for approximately 43 percent of coal-bed methane production in the Powder River Basin. The companies coordinate some of their operations and have access to Anadarko's own water pipeline. That pipeline currently pumps coal-bed methane production water to Anadarko's carbon dioxide sequestration project in the Salt Creek oilfield.

Doelger said smaller producers, individually, don't have the budget to invest in such a project. But an aggregated system might work, if there were help from the state.

Doelger said the pipeline and storage idea is worth the state's investment. Industry projects it will produce 11 billion barrels of water over the next 20 years. Right now there are a number of proposals to build coal-fired power plants and advanced coal refinery processes, and one major component for the projects is a stable water source.

"If we believe water has value and should be conserved and put to beneficial use, well, this pipeline is one means to that," Doelger said.

The pipeline and storage proposal is one of several to come from the Coalbed Methane Water Management Task Force. The task force is preparing its final recommendations. To see all the proposals, go to the task force Web site, (cbm.moose.wy.gov).

Energy reporter Dustin Bleizeffer can be reached at (307) 577-6069 or dustin.bleizeffercasperstartribune.net.