By Richard Martin, Editor-at-Large

Fanfare last month surrounded Gov. Ritter’s signing, on April 22, the bill enacting new, more stringent regulations on the oil and gas industry in Colorado - thus “ending an odyssey he started in his first weeks on the job,” as the Durango Herald reported.

A little-noted decision by the state Supreme Court, however, may have even greater long-term consequences for the fossil fuel business.

Ruling on an appeal by the state in a lawsuit filed in 2005 by a pair of ranchers in Archuleta County, the Court found that natural gas producers must obtain water-well permits for coal-bed methane wells, in which methane, the principal component in natural gas used as fuel, is pumped out of coal fields by removing copious amounts of underground water. The ruling effectively places the natural-gas industry under the authority of state water regulators - which makes sense, consider that the 5,000 or so coal-bed wells in the state use hundreds of millions of gallons of water annually.

Finding for the plaintiffs, 5-1 with one abstention, the Court ruled that producers using water to get at methane must replace the water supply if nearby users with prior rights are affected.

The ruling highlights the fact that the Western Slope drilling boom, already slowed by the recession, is facing severe hydrological limits on water-intensive production technologies. Future oil-shale development could be even more hamstrung: “As much as 378,000 acre-feet of water could be required annually” to support oil shale production at the level projected by the Bureau of Land Management, a study released last month by Western Resource Advocates found ”more than the Denver Metro area uses each year.”

Anticipating those needs, big oil companies have set about buying up water rights in the region, essentially setting aside supplies that would otherwise go to agriculture or urban development. Conditional rights “associated with more than 200 separate proposed structures, such as reservoirs and pipelines in the Colorado and White River Basins,” have been procured by companies including Exxon Mobil, Shell, and Chevron. Since these rights have been bought up piecemeal over time, there’s been little state oversight or long-term planning around the consequences for overall water supplies in the state.

The natural gas industry has one other lurking issue that could haunt it once the economy recovers and gas prices rise again: pollution from methane seepage into aquifers. “A string of documented cases of gas escaping into drinking water … across North America is raising new concerns about the hidden costs of this economic tide,” the non-profit investigative-journalism group ProPublica reported in a study published last week. 

The ProPublica report used as one of its primary sources a report commissioned last year by Garfield County, a center of natural-gas production on the Western Slope. Prepared by Geoffrey Thyne, a senior research scientist at the University of Wyoming’s Enhanced Oil Recovery Insitute (which ProPublica calls “a pro-extraction group”) the Garfield County Hydrogeologic Study used a form of molecular “fingerprinting” to establish which geologic formations methane in water supplies came from. Though it’s been dismissed as “junk science” by industry advocates like Anthony Gorody, president of Houston-based Universal Geosciences Consulting, the report found that dozens of water wells in the area have been contaminated by methane and that deep gas wells, some extending thousands of feet below the surface, may be insufficiently constructed and maintained to ensure that no gas leakage is occurring.

The state has yet to respond to, or even thoroughly study, the Garfield report. Much of the information around seepage from natural-gas production remains speculative, for now. What’s clear is that the intertwining of gas and water supplies in the high desert of the Western Slope is a potential disaster that neither the state nor the industry can afford to ignore forever.