There’s gas in that there sage

Rising natural gas prices make Columbia River basin in central Washington look good, even though well costs would be high

by The Associated Press

Prospectors are buying up natural gas rights throughout central Washington. They are focusing on three areas: Saddle Mountain near Mattawa, Whiskey Dick Mountain west of Ellensburg and the Rattlesnake Hills north of Prosser.

They believe the Columbia River basin could yield multimillion-dollar gas fields. Companies from around the nation are bidding for mineral rights on federal, state and private lands throughout the region.

“The fur’s flying,” said Bevery Heaverlo of Moxee, who owns an oil and gas consulting business, Brewer Energy. Gas’s surging price and anticipated demand is fueling the interest.

Natural gas prices have escalated from their low in 1988, when it traded for as low as 88 cents per 1,000 cubic feet. Lately prices are trading between $2.60 to $3 per 1,000 cubic feet, said Clay Riding of Puget Sound Energy in Bellevue.

Companies believe Central Washington may be one of the largest oil and gas frontiers in the Lower 48.

Basalt mantle hard and deep

In the 1950s, Standard Oil Co. drilled 10,655 feet into the Rattlesnake Hills before giving up.

In 1984, Shell Oil Co. found large volumes of gas after shattering a drilling record of 17,518 feet into Saddle Mountain. But the energy giant said the gas wasn’t commercially viable.

Exploration halted by 1989, a victim of low prices and high drilling costs. Companies that had paid millions of dollars for mineral rights left the area. Now they’re coming back.

“It’s time to make hole,” Heaverlo said.

Earlier this year, a pair of out-of-state companies leased mineral rights to 30,000 acres of federal land in Yakima, Grant and Benton counties for $117,000.

“Usually, we don’t sell anything,” said Donna Kauffman, a land law examiner for the U.S. Bureau of Land Management, which leases federal land.

In October, Burlington Resources of Houston auctioned off an estimated 154,000 acres in Kittitas, Grant, Yakima and Benton counties.

And the Washington state Department of Natural Resources has received 20 applications for mineral rights to about 10,000 acres in Eastern Washington.

“A lot of people are watching what is going on here in Washington state,” said Ellis Vonheeder, a DNR program specialist. “We’re a frontier state.”

Bill Lingley, a state geologist, has been studying the area for more than 30 years.

“All the geological ingredients in the Columbia Basin are in place,” he said from his Olympia office.

“Eventually, significant gas discoveries will be made in the Columbia River Basin.”

Holes cost $3 million to $14 million

“Whenever I get an oil and gas company in,” Lingley said, “I show them these folds. You can watch their eyes just pop out.”

Fewer than two dozen significant wells have been drilled in the Columbia River Basin over 20 years.

Each hole costs between $3 million and $14 million to drill. The total investment to find a commercially viable well in the Columbia Basin would probably exceed $50 million, Lingley said.

“There are 15 dry holes for every discovery,” he said.

A discovery would only be considered commercially viable if it could recoup the considerable cost of completing a well and constructing and permitting a connector pipeline. Those run roughly $250 per foot to build, Lingley said.

Heaverlo figures it will be from 18 months to three years before the first drills bore through basalt. She’s seeking to raise at least $2 million with the goal of drilling Saddle Mountain.

Her competition is Golden, Colo.-based Energy Investments Inc., which outbid Heaverlo in a sealed bid auction for Burlington Resources mineral rights on Saddle Mountain.

Steve Chamberlain, owner of Energy Investments, also has leased rights to 50,000 acres of federal land in the Columbia Basin and is seeking rights to nearby state lands.