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Water Supply Reserve Account - Grant Application Form <br />Form Revised May 2007 <br />Facilitating Water Activity Implementation: <br />• Time is of the essence in evaluating potential impacts by CBM development in the Sand Wash Basin <br />before CBM production expands. Characterization of the geohydrologic framework early in the <br />CBM extraction cycle can assist in regulation of resource development and assist in regional planning <br />efforts. It is also very important to gather baseline data to compare against when possible impacts are <br />evaluated in the fixture. <br />The CGS has completed CBM Depletion Studies in three other basins to date (see <br />http://Qeosurvey.state.co.us/Default.aspxAabid=488 ) and recognized the need for a similar study in <br />the Sand Wash Basin. <br />Time is of the essence for this study and a Water Supply Reserve Account will be available much <br />sooner than other options. Funding has been sought through a CGS Severance Tax Decision Item and <br />a CWCB Construction Grant. <br />The Water Activity Addresses Issues of Statewide Value: <br />• The study will addresses depletive effects by CBM development on interstate compact-entitled <br />waters. <br />4. Please provide an overview of the water project or activity to be <br />funded including - type of activity, statement of what the activity is <br />intended to accomplish, the need for the activity, the problems and <br />opportunities to be addressed, expectations of the participants, why <br />the activity is important, the service area or geographic location, and <br />any relevant issues etc. Please include any relevant TABOR issues that <br />may affect the Contracting Entity. Please refer to Part 2 of Criteria <br />and Guidance document for additional detail on information to include. <br />Type of Activity: Study of Ground Water Resources in the Sand Wash Basin <br />With an Assessment of Potential Depletive Impacts on Ground Water and <br />Surface Water Resources Arising from Coalbed Methane Development. <br />Background and Justification: Typical production of coalbed methane (CBM) involves the reduction of <br />hydrostatic pressure within deep coal seams by pumping ground water in order to release methane from the <br />coal structure. Since the targeted coal-bearing sediments can be hydraulically connected with surface water, <br />or the coal-bearing sediments may themselves be aquifers tapped by local water users, there is potential for <br />injury to existing surface water rights or ground-water users. The Colorado Geological Survey (CGS), <br />Colorado Oil and Gas Conservation Commission ("OGCC"), and the State Engineer's Office Division of <br />Water Resources ("DWR") have recently completed assessments of potential stream depletions due to CBM <br />production in the Piceance, San Juan, and Raton Basins (see <br />httu://2eosurvey.state.co.us/Default.aspx?tabid=488 ). These studies have indicated that potential stream <br />depletions can be significant depending on geology and stage of CBM development for a given basin. <br />Estimates for current stream depletion identified in these studies range from less than 1 acre-foot per year <br />(ac-ft/yr) in the Piceance Basin to 2,500 ac-ft/yr for the Raton Basin. <br />The Sand Wash Basin is another structural basin in northwest Colorado that contains coal-bearing <br />sedimentary sequences similar to those hosting CBM in the Piceance, Raton, and San Juan Basins CBM. <br />Although CBM development in the Sand Wash Basin has not been as extensive as in the three other basins, <br />6