Wyoming is looking to get its fair share of royalty payments on natural gas that is burned off from oil wells while petroleum companies figure out how to exploit an oil-bearing formation deep beneath the eastern part of the state.

A public meeting in Casper on Monday November 7, 2011 will bring together staff of the Wyoming Oil and Gas Conservation Commission and Office of State Lands and Investments to talk about the practice of flaring gas from oil wells on state land.

While some oil wells are more "gassy" than others, most produce at least some natural gas. Gas production, like oil production, typically peaks early in the life of a well.

Flaring occurs after an oil well is completed. The oil can be pumped into tanks near the well but a pipeline must be built if the gas is going to be sent to market instead of just burned off.

Increased oil development as companies try to exploit the Niobrara Shale underlying eastern Wyoming has heightened attention to flaring. In August, the Oil and Gas Conservation Commission gave Chesapeake Energy approval to flare up to 850,000 cubic feet of gas a day for six months from a Niobrara oil well in Converse County.

State royalties on the gas could have topped $100,000, Harold Kemp, assistant director of the Office of State Lands and Investments, told Wyoming Oil and Gas Supervisor Tom Doll in a letter.

"That's when we really started to be concerned about this turning into a pretty large volume of state interest gas going up the flare stack without royalty being paid on it," Ryan Lance, director of the state lands office, said Wednesday.

Ultimately Chesapeake didn't need to flare the well for the full six months after it built a pipeline to export the unusually large amount of gas, Doll said.

The issue is unlikely to go away, however, while companies drill complex wells down and then horizontally into the Niobrara Shale. Companies also may use several rounds of hydraulic fracturing _ pumping a pressurized mix of water, sand and chemicals underground _ to open up fissures and make a well more productive.

That can add up to a lengthy completion process and several weeks or months of flaring while a company evaluates a well's productivity.

"We're really on a fact-finding mission here to get some better understanding of how long does it take to fully evaluate one of these oil wells and therefore how long would you truly need to flare the gas," Doll said Thursday.

Flaring has been a big issue in the Bakken Shale oil play in North Dakota. The Niobrara underlying Wyoming and Colorado is geologically similar and often compared to the Bakken but despite considerable speculation over two years hasn't been nearly as productive yet.

Likewise, Wyoming flares far less gas: About 7 million cubic feet per day compared to 270 million a day in North Dakota, according to Doll.

About 1.7 million cubic feet of gas per day is flared from oil wells on Wyoming state trust land. Royalties on that gas would go toward public education in the state.

"We want to extract all the value we can from these leases because the school kids don't see the gas again after it goes up the flare stack," Lance said. "Frankly, I don't care if it's put in a pipeline, if it's sent up a flare stack or they turn it into peanut butter cups, I want to get a royalty from it."

Key questions that need to be answered with flaring include how close the well is to a gas pipeline and what's involved in hooking the well up to that pipe, said John Robitaille, vice president of the Petroleum Association of Wyoming.

Also, the amount of methane in the gas _ compared to other gases such as carbon dioxide  needs to be part of the state royalty calculation, Robitaille said.

"That's really an important aspect of this entire issue when we talk about flaring gas. The stream may not be entirely 100 percent methane. There may be other gasses in there that may contain little or no value whatsoever," he said.