U.S. Energy Corp. and Crested Corp., announced that their Rocky Mountain Gas, Inc. (“RMG”) subsidiary has signed a gas gathering agreement with Bighorn Gas Gathering, LLC and a gas purchase contract with CMS Field Services, Inc. for its Clearmont coalbed methane project. The agreements apply to the entire 7,900 gross acre Clearmont project located in the Powder River Basin of Wyoming.
Under the terms of the gathering agreement, Rocky Mountain Gas will deliver produced gas from a minimum of 30 wells to a designated point of receipt on the property. From the point of receipt Bighorn will provide the pipeline and compression infrastructure necessary to deliver the gas into Bighorn Gas Gathering’s system. The gathering agreement has a term of 10 years and provides RMG with the right to deliver up to 10 million cubic feet per day once a total of 60 wells are connected to the system and producing. The gathering agreement may be expanded as conditions merit. The initial term of the purchase agreement is 2 years with the ability to extend it for an additional 4 years. Bighorn anticipates receiving the state air-quality permit for the compressor station in the third quarter 2002, construction will begin immediately and gas is anticipated to flow in fourth quarter 2002.
Rocky Mountain Gas recently announced it received a permanent water discharge permit for the Clearmont project and is currently expanding both the Roland and the Anderson coal pilot dewatering programs. The current program includes drilling and completing 6 new wells, placing 4 previously drilled and completed wells on pump and constructing the necessary water and natural gas gathering systems and water containment reservoirs. Once these work programs are completed, RMG will have drilled and completed a total of 30 wells on the property.