Article published May 17, 2007

Montana looks to Wyoming, wants something different

By MATTHEW BROWN

Associated Press Writer

MILES CITY — Drive a couple of hours south of here into Wyoming to enter the heart of America's domestic energy rush — a landscape where natural gas wells are as ubiquitous as cattle and the economy is growing faster than a prairie stream swollen by melting spring snows.

But as Montana officials gaze across the 400-mile border separating the two states, they see something else: once-pristine wildlife habitat carved up by roads, underground aquifers being pumped dry so companies can reach vast reserves of gas, and schools and police scrambling to keep up with rising demands for services.

"Oil and gas development is happening really fast across the West. In Montana we don't want to get run over by that," said T.O. Smith, energy coordinator for the Montana Department of Fish, Wildlife & Parks. "When we look at Wyoming, we don't want to do development in Montana if we're going to see the same fish and wildlife declines they're seeing."

In a series of recent executive decisions, legislative actions and rules adopted by state agencies, Montana has laid out its terms for the energy development poised to sweep into the state. The common thread that runs through those policies can be summed up in one phrase: Not like Wyoming.

Pointing to their southern neighbor's struggle to balance prosperity against growing pains, Montana officials want energy exploration confined to fewer places and carried out at a slower rate.

Whether they can make that happen remains to be seen. The U.S. Department of Interior, through the Bureau of Land Management, controls the mineral rights on 40 percent of Montana's 147,000 square miles (the figure is 67 percent in Wyoming). And under the Bush administration, the agencies have pursued an aggressive policy of exploration.

Montana's determination to slow that drive reflects a shift in the state's politics, away from the frontier mentality still prevalent in Wyoming toward a more cautious approach that tempers promises of riches with skepticism.

Observers such as former Montana Congressman Pat Williams say the change is rooted in the state's past misadventures with natural resource development: A former copper mine in Butte is now a Superfund site. An asbestos-tainted vermiculite mine in Libby has left that town with a legacy of cancer.

Wyoming officials counter that Montana's change of heart reflects a more liberal turn, as new money and residents pour in from California and the East Coast. They add that Wyoming's economy relies so heavily on oil and gas — the industry accounts for about two-thirds of state revenues — that to change course now would invite fiscal disaster.

"Montana's got a more diverse economy and if oil goes sour they're not going to fall apart at the seams," said Charles Mason, an economist at the University of Wyoming in Laramie. "In this state, it's always been oil and agriculture and tourism, probably in that order."

The high premium Montana has placed on protecting its landscape was illustrated in the state's recent objection to a federal energy plan for the Powder River Basin, 20 million acres straddling the eastern Wyoming-Montana border.

The Bureau of Land Management is proposing for the area up to 18,000 coal-bed methane, or natural gas, wells. Companies already have drilled about 17,000 wells on the Wyoming side, versus 1,000 in Montana where lawsuits have stalled production.

Researchers say the frenetic pace of drilling in Wyoming has led to a sharp decline in populations of sage grouse, a chicken-sized bird that is a favorite of hunters. So when the lawsuits in Montana are resolved and work there accelerates, state officials have asked the federal government to impose seasonal restrictions that would bar drilling within 32,000-acre blocks surrounding any sage grouse breeding grounds.

Some in the industry say that would effectively close off much of the basin to development. Mike Volesky, natural resources adviser to Montana Gov. Brian Schweitzer, said the administration is confident the industry will adapt as global energy demands promise continued profits.

"We want those new revenues, too. But you only get one shot to do it right," Volesky said.

Don Likwartz, supervisor of the Wyoming Oil and Gas Conservation Commission, bristles at the implication that Wyoming did not "do it right."

Likwartz said the state is keenly aware of the social and environmental pressures caused by the state's surging oil and gas industry — from a lack of affordable housing and other overtaxed infrastructure in boom towns like Wamsutter, Rock Springs and Gillette, to declines in sage grouse and mule deer in some areas.

But he said Wyoming is reacting to those problems as they emerge, not shying away from energy development simply because they might. He added that longtime residents are more than happy with the trade off, which allows Wyoming to retain its status as one of only seven states with no income tax.

Federal regulators from the Bureau of Land Management say they, too, are aware of the down sides of oil and gas exploration and are adapting their policies accordingly. They say lessons learned in Wyoming will preclude a repeat of similar problems when exploration moves deeper into Montana.

Dave Breisch a BLM resource specialist in Miles City, said the decline in sage grouse in Wyoming is causing "the pendulum to swing to that side of center."

"The way the industry operates in areas of critical or crucial sage grouse habitat needs to change," he said.

Officials in Montana say they are waiting to see if the BLM can satisfy concerns over what they've seen in Wyoming.

Companies like Fidelity Exploration, which has extensive natural gas drilling operations in both states, are watching closely.

"We are going to work within the laws and the regulations that are in place," said Fidelity Vice President Bruce Williams.