Coal-bed methane production is on the rise in the Powder River Basin, and along with it comes more water.

With the industry facing the problem of having more water than can be put to beneficial use, others are presenting some potential solutions.

The Wyoming Pipeline Authority has set out to answer the question of whether it makes commercial sense to pipe water produced from coal-bed methane wells to a treatment-and-injection site or to the Big Horn or North Platte rivers. Pipeline officials are seeking nonbinding estimates from coal-bed methane producers of how much water they could put into a water pipeline project.

During a meeting in Casper Tuesday, Pipeline Authority director Brain Jeffries said the scenario is based on piping 100 million barrels of water per day at a cost of 30 cents per barrel.

"The reaction was that 30 cents seems on the high side of some of our current alternatives," Jeffries said.

However, there's some additional value in adding a water pipeline to the industry's water management methods. Jeffries said many companies like the fact that the pipeline would give them some regulatory certainty. The industry currently faces a great deal of uncertainty about water management requirements because of ongoing litigation between the states of Wyoming and Montana.

In addition, the Wyoming Environmental Quality Council recently adopted a rule that could place some water volume restrictions on the industry.

"They said there was a regulatory certainty value attached to this project," Jeffries said.

Several pending coal-gasification and coal-based power generation projects may also provide a good fit for some of the coal-bed methane water.

Bob Kayser of Wyoming Gasification and Synfuels Co. said his company is one of two finalists chosen to partner with the Wyoming Infrastructure Authority in an integrated gasification combined cycle, or IGCC, project. His company's proposed facility could consume about one-third of the estimated 100 million barrels per day pipeline capacity currently being considered.

The need to manage water is only becoming more intense in the Powder River Basin. Two natural gas pipeline companies are considering expansions based on projected growth in coal-bed methane production. And as more gas flows, more water flows to the surface from the producing coals.

Wyoming Oil and Gas Conservation Commission supervisor Don Likwartz said the industry produced more water in the first 10 months of 2006 than in all of 2005. Final water production for 2006 could top 680 million barrels.

"It's going to be the highest year ever for water production," he said.

Energy reporter Dustin Bleizeffer can be reached at (307) 682-3388 or dustin.bleizeffer@casperstartribune.net.