CBM producer protests new drilling fee

Gillette, WY – Energy companies will now be charged $4,000 a well to cover the administrative costs of drilling on federal land.

The change came in a congressional directive signed by President Bush on Dec. 26. The idea is to reimburse the federal government for the cost of processing drilling applications.

Bureau of Land Management officials say $4,000 is the average processing cost for each oil or gas well drilled nationwide. The BLM says it has had to absorb those costs regardless of whether a drilling permit is granted.

But at least one coal-bed methane producer in the Gillette area says he doesn't like the new fee. Steve Degenfelder of Double Eagle Petroleum says he can't be guaranteed that a well will be approved, so paying the fee up front doesn't make much financial sense for his company.

Degenfelder says the new fee will prompt companies to drill more on state and private land.