Montana Supreme Court Upholds Victory For Petroleum Industry

By William Perry Pendley

DENVER- A Montana voluntary, nonprofit trade association of oil and natural gas producers, gathering and pipeline outfits, petroleum refineries, and service providers and consultants that seeks to maintain a favorable climate for the petroleum industry on June 19 celebrated a ruling by the Montana Supreme Court that preserves a Montana state court decision that Montana complied with state law in approving new gas wells (Montana Wildlife Federation v. Montana Board of Oil & Gas Conservation, No. DA 11-0537, Mont. Sup. [enhanced version available to lexis.com subscribers]).

  The Montana Petroleum Association had intervened in the lawsuit filed by two environmental groups to contest their challenge of the Montana Board of Oil and Gas Conservation's approval of 23 infill natural gas wells in eastern Montana. The groups challenged the adequacy of an environmental study and its analyses of the impact of oil and gas development on sage grouse. The July 2011 ruling followed a hearing in Fallon County in May 2010. The Association was represented before the Montana Supreme Court in April by Steven J. Lechner of Mountain States Legal Foundation (MSLF). He urged the court to sustain the lower court's ruling.

"We are delighted with the Supreme Court's ruling, especially given that all but three of the wells that allegedly impact the sage grouse have been drilled," said William Perry Pendley, Esq., MSLF president.

In 1915, a natural gas field was discovered in the Cedar Creek Anticline in Fallon and Carter Counties of far-eastern Montana. In 1925, gas production began, and, by 1995, the Cedar Creek gas field consisted of 150 wells producing approximately 10 billion cubic-feet of natural gas per year. Since 1995, both the number of wells and the gas produced have increased significantly. Before 1997, gas well spacing rules limited development to one well per 320 acres. In 1997, well spacing was increased to one well per 160 acres. In 2003, well spacing was again increased to one well per 32 acres. This spacing continues today.

In 1989, a programmatic environmental impact statement was prepared by the Montana Board of Oil and Gas Conservation as to oil and gas drilling in Montana. Pursuant to that study, as of 2008, more than 1,100 wells had been drilled; the Board of Oil and Gas Conservation estimates an average of an additional 71 wells will be added to the field per year.

On August 11 and 12, 2008, the Board issued environmental assessments for 23 new gas wells proposed by Fidelity Exploration and Production Company in the Cedar Creek gas field. On October 9, 2008, two environmental groups, the Montana Wildlife Federation and the National Wildlife Federation, filed suit in state court challenging the environmental assessments associated with approval of Fidelity's gas well permits.

Mountain States Legal Foundation, founded in 1977, is a nonprofit, public-interest legal foundation dedicated to individual liberty, the right to own and use property, limited and ethical government, and economic freedom. Its offices are in suburban Denver.

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