Yampa - Sand Wash Coalbed Methane Production Depletive Effects on Water Resources Study_Application

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Water Supply Reserve Account - Grant Application Form Fonn Revised May 2007 there is indication of increased interest by industry. According to OGCC records, as of 2006 there were 46 CBM well permits in the basin, representing all CBM production up to that date; there were 12 additional permits recorded for 2007 and seven so far for January 2008. OGCC personnel further indicate that water production from existing CBM wells in the basin has been substantial, suggesting that there could be impacts to surface and ground-water resources. Given the likelihood of increased CBM production in the Sand Wash Basin, the CGS believes it would be in the best interest of the state to assess potential impacts of CBM production on both surface and ground water early on as CBM development evolves. Because CBM development could be at the early stages in the Sand Wash Basin, this scope includes a component to gather baseline data which could be used to evaluate possible impacts from CBM development as it progresses over time. Furthermore, the Moffat County Land Use Board and Board of County Commissioners have expressed their immediate desire to have this study performed for their region. The boards have also requested that this type of study address potential impacts to local ground-water users, including exempt and non-exempt water wells. This scope of work takes into consideration this request for modification to the original scope of work in the other three CBM producing basins. Under current regulations and rules, water produced by CBM development is classified as an oil and gas production waste product and is not regulated by the Division of Water Resources unless it is put to a beneficial use (COGCC Rule 907). A pending case (Vance v. Simpson case) before the Colorado Supreme Court could induce regulation of these produced waters regardless of beneficial use. Therefore, it is prudent to embark on a study that will, (1) identify the geologic factors affecting water production and (2) address the potential effects of CBM development on water resources in the Sand Wash Basin. Tabor Issues: On November 5, 1996 Moffat County's electorate approved a ballot question allowing Moffat County to collect, retain and expend all revenues and other funds collected during 1995 and each subsequent year from any source. 5. Please summarize the proposed scope of work. Please refer to Part 2 of the Criteria and Guidance document for detailed requirements. On the following page there is an example format for the Scope of Work. You can use the example format or your own format, provided that comparable information is included. Scope of Work: This scope of work is structured in two primary segments. The first addresses geohydrologic characteristics of the coal-bearing sediments that contain the CBM resource and how these characteristics relate to surface and ground-water resources of the basin. The second segment will quantify depletive effects given current and projected CBM development. This grant request funds for both segments of work and will end in quantifying potential effects of CBM development and be used during land use planning, permitting, and commenting on various local, state, and federal land use activities. Geohydrologic Characterization Tasks: 1. Research CBM Production and Associated Water Production • Research and assess current and estimated future CBM production; • Develop correlations between gas and water production; • Assess CBM well distribution and densities; 7