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Company Backs out of $45 Million Deal to Buy Troubled Wyoming Gas Field

Legacy Resources reverses its plan to acquire gas assets near Pavillion, Wyom., shortly after the EPA unveiled test results showing water pollution nearby.

Getty Images file photo

A deal to sell a controversial central Wyoming natural gas field has fallen apart amidst allegations that drilling there has caused water pollution.

Texas-based Legacy Resources backed out of a $45 million deal to buy the field near Pavillion, Wyom., from EnCana last week, soon after the Environmental Protection Agency said it had detected cancer-causing benzene at 50 times the level safe for humans and other carcinogenic pollutants during its latest round of sampling.

The cancelled sale could signal difficulty for companies trying to turn over aging gas fields if there are environmental or health concerns related to their operations.

“Although Encana retained responsibility for any outcome resulting from the ongoing groundwater investigation undertaken by EPA, due to the continued attention surrounding the investigation, and uncertainty regarding further development, Legacy is not prepared to go forward with the transaction,” said EnCana spokesman Doug Hock, in an email to ProPublica.

Legacy Resources did not respond to a call requesting comment.

Legacy Resources announced it had agreed to buy EnCana’s Pavillion-area wells, which produce an estimated 13 million cubic feet of gas a day, on Nov. 1. At the time, the company also said it planned to drill new wells in Pavillion to tap the 45 billion cubic feet of gas it believes lies underground.

But the prospects for future development have dimmed.

Residents had long complained of widespread water contamination and alleged that fracking was to blame. EnCana had trucked in replacement drinking water to some residents. The company faced increasing controversy when the EPA announced in late 2009 that it had found hydrocarbon contaminants in residents’ drinking water wells. The agency advised residents not to drink their water and to ventilate their homes when they showered or washed dishes. ProPublica began reporting on concerns about water contamination in Pavillion in 2008.

On Nov. 9 the EPA announced more test results from samples taken in Pavillion, this time from two water monitoring wells drilled to 1,000 feet – far below most drinking water wells in the area. It found benzene, along with acetone, toluene, naphthalene and traces of diesel fuel. It also detected a solvent called 2-Butoxyethanol (2-BE) that is commonly used by the drilling industry to fracture wells. It also can be used for cleanup at well sites.

EnCana has maintained that the pollutants found in Pavillion-area wells occur naturally, and that drilling is not to blame. “Nothing EPA presented suggests anything has changed since August of last year – the science remains inconclusive in terms of data, impact, and source,” Hock wrote to ProPublica.

Hock said that the EPA’s monitoring wells were drilled into a zone known to contain methane gas, and suggested the pollutants would have been expected to be there. He said that the 2-BE was only detected in one sample and could have leached from the plastics used to drill many drinking water and monitoring wells. In previous statements to ProPublica, he has said that the 2-BE might have come from household cleaning agents, which can contain the chemical. Hock did not reply to questions about whether EnCana had used 2-BE in fracking or any other processes in Pavillion.

The EPA’s latest findings are consistent with previous samples taken from water wells at 42 homes in the area since 2008.

The agency has so far been careful not to draw conclusions about the cause of the pollution. EPA officials had said they planned to release a detailed report analyzing possible causes of the pollution by the end of November, but now say it will be at least a few more weeks.

Mary B. Sweeney

Nov. 29, 2011, 1:34 p.m.

Great. A gas field so polluted that even the gas industry doesn’t want it. Is this what we have to look forward to in New York?

Ms. Sweeney

Short answer: Yes, unless people occupy the utilities commission and the governor’s house demanding otherwise.

Sundai Balander

Nov. 29, 2011, 2:13 p.m.

Let’s see how long it takes for EPA to backtrack on their findings.  They spend the majority of their time covering up for the energy industry, rather than protecting the public? Backroom consent decrees prevent,  or severely hamper any prosecution of the polluters.  When they are caught in sex and drug party scandals with the Energy Company Officials one has to wonder where loyalties lie. (Denver news item, 2008, or early 2009)

Read “INCONCLUSIVE BY DESIGN” by Russel, Lewis, and Keating.  Free PDF download on net. If everyone read this, Regulative and Legislative heads would roll. We need to vote all the bums out. Change the LAW and make the perps. accountable

How old is Encana’s gas field?  How many wells did Encana drill, and how many existed prior to their leasing of the land (if any)?

Don’t horizontal wells cost about $4 million to drill and frac?  $45 million sounds cheap, except, Encana’s wells are only producing an estimated 13 mcfpd?  Doesn’t a single “monster well” start out at 8 to 12 mcfpd? 

As I asked, how many wells are currently only producing a total of 13mcfpd?

This all sounds like small potatoes, yet look how much environmental and health damage the drilling/frac’ing is seemingly linked to!  That’s a hell of a price to pay for how much gas?

Yes, James Barth, you are correct. That is a hell of a price to pay. PA is knee deep in it now and I suspect it is going to get ugly.They are just going to ship it over seas anyway so that we have to pay more for it.  Gas companies only have allegiance to stake holders and politicians only are beholden to their money and so that sadly leaves the mess and the rest on us. The profit of a few at the cost of many.

Marc W. McCord

Nov. 30, 2011, 9:45 a.m.

Mr. Barth, if you read the works of Dr. Marc Durand, Professor of Applied Geological Engineering (retired) of the University of Quebec at Montreal, then you will see that Dr. Durand suggests that the whole claim about the amount of gas that can be produced from a well or a field is greatly exaggerated, and that is done knowingly.

Dr. Durand uses a scientific method to demonstrate that a well will lose about 70% of its output within the first year due to depletion of pressures that move the gas to the surface, and that after 3-5 years a well will produce only about 5-10% of its original output, at which time only about 20% of the gas in a field will have been recovered (see http://fracdallas.org/docs/busplan.html for a full explanation.)

The whole industry is a fraud. The game is selling gas companies, not selling gas. In the case above EnCana thought that had an “out” that would dump the future losses on Legacy, which did not back out over the realistic economic losses they would surely suffer, but rather because of bad public relations and potential problems caused by toxins and carcinogens leaching into water wells and contaminating them.

Dr. Durand is supported by Dr. Anthony Ingraffea, Professor of Geological Engineering at Cornell University, in his analysis about the amount of recoverable gas from a field and about the likelihood of water well and aquifer contamination as a result of hydraulic fracturing.

Gas companies make decisions based entirely upon economics with little or no regard for the damage their processes do that harm people and the environment. The FracDallas (http://fracdallas.org/) website details this industry and its objectives very clearly and in great depth.

Lest you forget, the Bushies had 8 years to contaiminate the EPA and of course many of the other federal agencies by appointing incompetent, unqualified political hacks to positions of authority within the agency. They in turn did nothing to earn their salaries but a lot of damage in advancing their political ideologies of “small govt”. So, don’t blame the EPA, they are still cleaning house and have a ways to go. The important thing to remember is that they have become effective enough, to worry the repugs. And what is even more significant, under Obama, govt scientific reports are truly reflective of the data produced during research. Under Bush, the WH interns would sensor reports and remove parts that were not “politically correct”.

Remember if you live in areas with natural gas; that money is much more important than the mere increase in death certificates.

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