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Chesapeake Energy Corp. can continue burning off natural gas from five oil wells near Douglas, WY, after the Wyoming Oil and Gas Conservation Commission gave its permission.

Before saying yes, the commission said the company should build a pipeline to transport the natural gas to market.

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“It puts us in this position, had that deal been done, we’d be talking about money for the state,” said Gov. Matt Mead, a member of the commission, at the hearing.

Mead was referring to a pipeline project for the area that Chesapeake abandoned after lengthy negotiations with a landowner. By the time they negotiated access to the land, Chesapeake determined it wasn’t economical to build the pipeline, said Tom Reese, an attorney representing the Oklahoma City-based company.

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Shortly after the commission approved Chesapeake’s request for flaring, State Geologist Tom Drean, a commissioner, asked commission staff in the future to require companies seeking permission to flare to identify in paperwork other companies working in the area.

Commissioner Ryan Lance, director of the Office of State Lands and Investments, agreed. He said the oil and gas industry needs to evolve beyond the “that’s my well” philosophy and learn to work together to build pipelines and infrastructure to move natural gas out of the area.

“I think the burden has to shift to the industry,” he said.

Flaring is a common industry practice for oil wells. Producers burn off some natural gas when there is not access to natural gas pipelines. But the tide in Wyoming is changing, with many landowners, conservationists and politicians wanting the gas to sell at market so the state can earn tax revenues. A Wyoming legislative committee is considering taxing flaring.

“The more I see of these, the more problematic it is for me,” Mead said. “I don’t know if fair negotiations were done or not. That may be a matter of perspective.”

But now the commission is in the position of approving more flaring, he added.

The commission capped Chesapeake’s flaring to 150 thousand cubic feet of natural gas per well per day.

Sandy Andrew, a Chesapeake operations manager, said the cap was achievable.
After the hearing, Reese and Andrew referred questions to Chesapeake’s corporate spokespeople.

The wells are 14 miles north of Douglas, said Grant Black, Wyoming state oil and gas supervisor.

The company doesn’t flare all natural gas in the well, Black said.

“There’s a process at the surface,” Black said. “With equipment that they extract liquids from the gas.”

Those liquids end up saved and then sold on the market. What’s left is “the gaseous portion.” That’s what they’ve been flaring, Black said.

Chesapeake has been flaring gas from some of the wells since September 2012. Other wells flared since February.

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