SHERIDAN -- In late September, seated in his office amid mountains of maps, financial documents and other paperwork, Ed Presley contemplated the future of an industry many have left for dead.
Presley is CEO of High Plains Gas, which by his estimate was $50 million in debt. None of the 3,000 or so coal-bed methane wells owned by the company were producing.
And High Plains faced a state order to come up with $6.8 million in bond funding by Nov. 15 or forfeit its wells.
None of this seemed to weigh heavily on Presley, who spoke in optimistic terms about High Plains’ prospects for the future.
He fondly recalled a brief foray into political journalism -- one time he freelanced a piece about a Ross Perot campaign event in Dallas -- before outlining how he plans to make the company profitable.
Most of Presley’s hopes rest on a device called the Gazmo, a name he admitted to choosing because it sounded catchy.
The Gazmo would enable a coal-bed methane producer to bring natural gas to the surface without the water that typically accompanies it, thus greatly reducing operating costs and enabling a company to profit when prices hover in their recent range between $3 per million cubic feet and $4 per MCF.
Presley’s plans call for eventually purchasing up to 10,000 coal-bed methane wells, which, he estimates, could produce about 1.5 billion cubic feet of natural gas daily.
At that rate, he figures the company could annually gross $1.6 billion even if prices remained near their current level of $3 per MCF.
“Those are explosive numbers. They are disruptive numbers. Our technology is disruptive,” Presley said, his voice rising in excitement. “What iTunes was to the music industry, we are to the natural gas industry. Of course, that draws enemy fire.”
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Presley is under considerable fire these days. Some landowners have balked at allowing the company back on their land, saying High Plains will not be granted access until royalties promised under previous lease agreements are paid.
The Department of the Interior’s Office of Natural Resource Revenue recently hit the company with a $3.4 million fine for failing to report production on federal land.
But perhaps the biggest challenge in the company’s future is the state’s November deadline.
Wyoming policymakers have made closing abandoned coal-bed methane wells a priority in recent years. Last year, Gov. Matt Mead announced a $7.7 million plan to close 1,200 nonproducing wells in the next four years.
That tally did not include High Plains’ wells, though it may soon. In July, the Wyoming Oil and Gas Conservation Commission voted to give High Plains 120 days to come up with $6.8 million in idle bond funding.
The move followed years of pleas from state officials for High Plains to address its nonproducing wells, but those efforts were complicated in part by repeated changes in ownership.
Presley took over the company in 2013 and then quickly purchased Patriot Energy Resources, owner of about 1,300 nonproducing coal-bed methane wells, out of bankruptcy from Luca Technologies. Those wells now are included in the 3,000 owned by High Plains today.
If High Plains fails to raise the $6.8 million and present a plan for how it intends to restart production by November, the state will assume control of about 2,100 wells and plug them. The remaining wells are on federal land.
“Based on what I’ve seen, I’m not hopeful,” said state Oil and Gas Supervisor Mark Watson, who meets regularly with Presley to get updates on his progress. “I would like to see them pull it through. But they said they would have 15 (wells) online in August, and we still haven’t seen anything.”
Presley, in a follow-up interview Friday, took issue with Watson’s comments. The delay is due to factors outside the company’s control, he said.
Much of the infrastructure in the Powder River Basin’s dormant coal-bed methane fields has been unused for years or removed altogether.
The wells Watson mentioned are near Recluse. High Plains had hoped to send its gas through the One Oak compressor station, but like many facilities of its kind, it has been stripped of its engine, Presley said.
High Plains has been unable to find a similar engine that would meet the terms of the station’s air quality permit.
More important, by expressing his doubts over the company’s future, Watson is harming High Plains' prospects, Presley said.
Watson has previously said the Gazmo is commercially untested. Other state officials have expressed doubts about High Plains' ability to carry out its plans.
One potential investor rejected High Plains’ financing proposal, citing regulators’ comments, Presley said. Other companies that would ship High Plains’ gas have declined to sign contracts because they don’t believe the Sheridan firm will make it past the November deadline.
“He is poisoning the well, so to speak,” Presley said. “It is very liable, and it is slander against our company.”
Presley said he is confident the company can come up with the $6.8 million, but he added that High Plains will take Wyoming to court if the state tries to close the company’s wells.
“We would take all legal measures available to us to make sure we don’t lose these wells and our bonding,” he said.
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Presley was born and raised on a farm in central Ohio. His first involvement in the oil and gas industry came when he was 10, in 1956, when a company drilling on his family’s property paid him 25 cents an hour to grease pipe joints.
He has since worked as a roustabout, a roughneck, a cat skinner and a welder. In 1978, in his telling, he helped revive Akron Petroleum’s ailing production.
He and a partner then went to West Virginia, where they began drilling for oil in the Devonian shale, only to be stopped short by falling oil prices.
Presley moved to Nevada in 1988 and worked several years as a paralegal before starting his own consulting business advising energy, mining and ranching interests operating on public land. It was about this time, in the early 1990s, that Presley dabbled in political journalism.
He stayed in Nevada until 2001, when a client persuaded him to come to Wyoming in hopes of breaking into what was then a booming coal-bed methane industry.
He met Kit Jennings, a former state senator from Casper, a few years later, and the pair began working on a precursor to the Gazmo.
Presley said the device works, despite claims to the contrary. About 2004, it was installed in a handful of wells, which subsequently stopped producing water but maintained natural gas output for several years. The wells were nonetheless shuttered in 2009, when the industry collapsed.
Asked why he hasn’t tried to sell the technology to larger companies instead of taking on High Plains’ liability, Presley said they had made such an attempt.
“We did not have success trying to market this thing,” he said. Of the big companies, he added: “They had blown their wad drilling these (coal-bed methane) wells.”
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Presley’s plans hinge on his ability to get wells turned back on and get Gazmos installed. High Plains has secured financing that will provide a cash advance for every well turned on and Gazmo installed, he said. The deal is contingent on his getting 10 wells with Gazmos up and running.
For every well started with a Gazmo, High Plains can take its advance to restart another well. The company has budgeted $50,000 to retrofit a well with a Gazmo, though actual costs are likely to be closer to $30,000, Presley said. High Plains currently has four Gazmos, which Presley makes himself.
Revenue from those wells will be placed in a trust for landowners with surface use and mineral rights agreements with the company. By entering the trust, landowners would agree to waive any previous claims against High Plains. They simultaneously receive their current mineral payments.
“We’re going to pay everyone 100 cents on the dollar,” Presley said.
Presley recently outlined this plan at a meeting with landowners in Arvada, and many came away impressed.
Duane Odegard estimates he has close to 100 High Plains wells on his ranch in Sheridan and Campbell counties.
“We’re fully behind them. We’d like to see them make a go of it. No one else is,” Odegard said.
He questioned why the state is in a hurry to close the wells. Wyoming would receive revenue if the wells come back online and be off the hook for having to oversee the cleanup. Landowners would also receive royalty payments, Odegard said.
Odegard and other High Plains backers recently embarked on a letter-writing campaign to Watson and Mead, who sits on the Oil and Gas Conservation Commission, asking them to reconsider the deadline.
Others are less optimistic. State Sen. John Hines has a cluster of High Plains’ wells on his Campbell County ranch. A Republican who will retire at the end of this year, Hines said the company agreed to send him a contract outlining the terms needed to re-enter his property. He has yet to see it.
“I told them point-blank they have to pay me everything (owed) before they do anything,” Hines said. “They tell me that’s no problem, but they’ve been telling people that for years. If they don’t follow the agreement they had in the past, in my view, they don’t have a lease.”
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Presley today is focusing his efforts on starting 70 wells in the Recluse area. The effort is contingent on his getting a contract to ship High Plains’ gas.
The company is also working to get between 200 and 300 wells running on the ranch of High Plains’ attorney, Tom Throne. High Plains recently received funding to build a pipeline from the Throne ranch to the Thunder Creek compressor station, meaning the wells there should be online in November or December, Presley said.
Presley hopes the company will be installing 50 Gazmos a week by next spring.
Sitting in his Sheridan office back in September, the High Plains CEO said he understood the concerns and doubts about his company. Past mistakes by previous owners eroded public trust in the firm, he said.
But he pleaded for more time from the state to let him implement his plan.
“Understand we’re doing something that nobody else has done. We are sitting here and reviving a company that was purposely left for dead,” Presley said. “We want to do what no one else has done: correct this problem in this basin. We are here to correct that problem.”
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