Buyers Up • Congress Watch • Critical Mass • Global Trade Watch • Health Research Group • Litigation Group
Joan Claybrook, President
Contact: Hugh Jackson, 702-436-9239
Drilling for tax credits
Runaway coalbed methane development doesn’t need a tax break
For more than a decade, no form of energy production in the United States has been developed
more quickly, or more recklessly, than natural gas found in coal seams, typically called coalbed
methane. A negligible energy source prior to 1990, coalbed methane accounted for 57 percent of
the growth in U.S. natural gas production between 1990 and 1999, according to the Department
of Energy. Nowhere is coalbed methane developing more rapidly, and taking more of a toll on
the environment and precious groundwater resources, than in Wyoming’s Powder River Basin,
where the Bureau of Land Management anticipates a staggering 40,000 new coalbed methane
wells will be drilled over the next decade.
The coalbed methane drilling process involves massive
dewatering, and each day tens of thousands of gallons of
groundwater are summarily spilled across the countryside.
Aquifers are depleted, but the dewatering is not merely an
appalling waste—the water can inflict heavy damage through soil
erosion, and the high water volumes can alter river drainages. The
byproduct water is often high in sodium and other dissolved
minerals, which can contaminate surface waters, destroy vegetation
and wreck wildlife habitat. All that water, and what to do with it,
has prompted lawsuits, interstate tensions, bureaucratic buck-
passing and hard feelings within impacted communities, and
whether coalbed methane developers will be forced to mitigate the
environmental impacts of their activities frankly remains to be
There is no doubt, however, that coalbed methane is booming. The
last thing the industry needs is a tax break.
Energy legislation in Congress would extend and expand federal
“Section 29” tax credits for coalbed methane production.
Currently, section 29 tax credits apply only to wells dril