April 10, 2007

By Russell Stigall

Frontiersman

Robert Fowler, CEO of Fowler Oil and Gas Corp., addresses an audience at the recent Friends of Mat-Su annual meeting. Fowler proposes using directional drilling and other new technologies to meet the Mat-Su Borough’s strict standards for production of coal-bed methane. The borough has some of the strictest coal-bed methane standards in the country. Fowler’s pilot well will be drilled on the Kircher property at the corner of Trunk and Bogard roads. Russell Stigall/Frontiersman

MAT-SU - Up from the ground came a bubbling brew. But unlike Jed's Texas tea, methane is the cash cow pooled under Mat-Su Valley land.

And the Valley has a lot of methane stored in vast seams of coal.

“The entire Cook Inlet area is full of coal,” said Jim Fowler of Fowler Oil and Gas. “There's much more coal here than in the Powder River Basin in Wyoming, with much higher gas content. Methane could be a tremendous boost for the local economy.”

Coal bed methane was a contentious issue in the Valley when Evergreen Resources was awarded CBM leases in the Mat-Su area in 2003.

Public outcry against Evergreen's project led the Alaska Department of Natural Resources to hold public meetings to help develop operating standards for Evergreen's CBM leases.

More than a year later, Pioneer Natural Resources announced in the fall of 2004 that the Mat-Su leases acquired through its merger with Evergreen would be relinquished to the state. Soon after, the Mat-Su Borough Assembly passed an ordinance making it illegal for a shallow-gas driller to operate on private land without compensation, according to the Northern Alaska Environmental Center Web site.

Fowler said his company is often compared to Evergreen. But he doesn't like the comparison.

“Our technology is very different,” he said.

Fowler said he grew up in the Valley and graduated from Palmer High School. His family has been in the Valley for more than 50 years.

Fowler's first pilot project will take place at the Kircher unit, 840 acres of forest and farmland at corner of Bogard and Trunk roads.

“We expect a very large quantity, commercial quantities of gas. That is what we see coming out of the first one,” Fowler said.

The Kircher unit is made up of different pieces of drilling technology pulled together, he said.

“No one has put together all the pieces that meet the requirements of the Mat-Su Valley. We're not asking the borough for any variances. We have to put together a drilling program that meets all the permitting requirements,” Fowler said.

Fowler has an aggressive timeline for his project.

“I would hope that the fist well is online and producing by late summer or early fall,” Fowler said.

One concern from the Evergreen days was the use of hydraulic fracturing, or fracing, to get at more methane in the coal seams.

In fracing, a pressure charge cracks the coal bed and releases more gas. However a fissure could allow methane or saline water to contaminate nearby drinking water supply. Or a bad frac could cause a sinkhole.

FOG's procedure does not fracture, Fowler said.

“Anyone in their right mind will not fracture the coal anymore. It is just too environmentally damaging,” Fowler said.

FOG can avoid fracing due to the difference between horizontal drilling and vertical drilling.

The drainage area around a vertical pipe has a radius of about 150 feet. Multilayered horizontal drilling, which involves perforated pipe in contact with methane-holding coal seams, can have a reach of up to two miles.

Horizontal drilling can access 640 acres with one well.

“That is a square mile,” Fowler said.

The well is housed in a 10-foot-by-10-foot structure.

A horizontal drilling system looks like an inverted Christmas tree - one vertical well with a whole bunch of offshoots.

“We want to avoid a moonscape of many vertical wells,” Fowler said.

Fowler is offering royalties to both surface and subsurface owners - 7.5 percent of profits go to surface owners, 12 percent to subsurface, or 20 percent if a landowner owns both. FOG documentation estimates profits for owners of both surface and subsurface to be between $1,000 and $6,000 per acre per year for the next 50 years.

Another advantage to Fowler's process is it does not bring water to the surface.

The drillers separate gas from water below ground and inject the water into porous sandstone below the coal.

“You've seen pictures of the Powder River Basin? We didn't want that for the Valley,” Fowler said.

It appears that FOG's horizontal drilling and low pressure gas extraction deal with many of the issues faced with past CBM extraction schemes, said Kathy Wells of Friends of Mat-Su, a responsible development advocacy group that opposed the coal-bed methane plan of Evergreen Resources.

“We are encouraged,” Wells said. “We've always known that it could be done right. It is just very expensive to be done right.”

Wells said she is still not sure how Fowler will keep the water underground or how he will get uncompressed gas into the Enstar lines.

“I have heard that it is impossible to get gas out of ground and into pressurized Enstar lines without compressors,” Wells said.

In response, Fowler said that the Enstar distribution lines his project will feed are not highly pressurized. While the horseshoe-shaped transmission line around the Cook Inlet is pressurized to around 1,000 pounds per square inch, local distribution lines are around 20 psi.

The pipes feeding to Enstar lines will be buried and out of sight, Fowler said.

Fowler has contracted Scientific Drilling, of Houston, Texas, and Anchorage to do the drilling. The company has drilled more than 2,600 coal-bed methane wells.

Contact Russell Stigall at 352-2267 or russell.stigall@frontiersman.com