Energy Drilling Coming to S.E. Colorado?

There are about 46,000 active oil and gas wells in Colorado, and as the demand for more fuel increases, there may be some wells developing in southeast Colorado, an area of increased interest in land for leasing.   County clerks and assessors, as well as elected officials in several communities, have commented on an influx of oil company representatives in their areas, seeking to contact land owners regarding the lease of land for mineral and drilling rights. 

With that possibility in mind, SEBREA, Southeast Colorado Business Retention, Expansion & Attraction, hosted a regional meeting at Otero Junior College regarding the oil and gas industry activity in the six county area, Thursday, April 5.  SEBREA is comprised of area economic development directors and county commissioners, plus other interested business representatives.  The group invited Mike Leonard, the Colorado Oil and Gas Conservation Commission Field Inspection Supervisor and Sara Landry, Colorado Oil and Gas Association Community Outreach Representative, to provide an overview of how the permitting process works.   

Leonard outlined some of the basic drilling industry information for developing a well.  He explained that any leasing of land that occurs is private, not conducted through a state agency.  Each county or city should have a LGD, or Local Government Designee who receives information on the permitting process.  For Prowers County, that person is Mary Root, Land Use Administrator.  The information the LGD receives is also sent to the Colorado Department of Health and Environment as well as the state Parks and Wildlife Department.  A community representative has 20 days to comment on the permit once notification of an application has been given.  Private citizens may make recommendations to their representatives, but cannot offer comments directly to the company.  Leonard said his department reviews all comments generated, and some of them may be attached to the permitting process, as a condition of approval of the permit.  A community cannot request monies directly for approval of a permit, but can request assurances to safeguard land and roadways from damages. 

An operator usually posts a minimum $20,000 bond for clean up costs and must have proof of general liability insurance.  Eighty percent of the water used at the drilling site must be reclaimed, and the land’s original footprint must be restored as much as possible, for as long as it takes, to complete the post drilling project.  Any oil spills at the site must be reported to Leonard’s agency and he issues a summary report within 24 hours to the driller and to the surface land owner, of any deficiencies he encounters.    Colorado has 15 site inspectors for the 46,000 wells.  Leonard explained that a leasing application also involves a seismic test of the site, followed by test well drilling.  If a site appears promising, the operation will expand into oil or gas drilling from that point once the permit has been approved. 

Leonard remarked on the difference between land surface rights versus mineral rights.  He said as a rule a mineral rights owner generates more revenue than a surface rights owner.  As drilling technology has improved over the years, most drilling now takes place horizontally, with several drilling operations originating from one central pad.   Some landowners, believing they can extract a larger lease fee by stalling on a permit or asking for higher than usual fees, should first contact a lawyer.  Actually he said, that should be the first step for any landowner who has been approached by a drilling company representative.  Not unlike eminent domain, there are legal provisions that allow companies to drill under land blocking a path to leased land.   Leonard explained that you will be entitled to a basic reimbursement for the drilling, but it will be adjusted to reflect the cost of operations to the operator.   

Drilling can have impact on well water, hydrology and surface water.  He cautioned that a landowner should wait until the company has drawn a permit before a file is submitted for water test wells.  Baseline readings are taken, as well as in-progress water samples and post drilling samples.  A review of the operation is conducted by his organization for adherence to Best Management Practices to protect the wells and surface water systems.  Because a company is responsible for the water, a close-looped system of water use is basic to the operation which maintains greater water savings, less mud loss and less impact to the land.  Wells are drilled at least 350 feet from high density populated areas and 150 feet as a minimum setback from less populated buildings.  As a rule in Colorado, 92% are 500 feet from other construction and 74% have 1,000 feet of separation.  Additional information on oil and gas drilling operations can be found at www.cogcc.org, the Colorado Oil and Gas Association c/o Sarah Landry at 303-861-0362 or www.fracfocus.org

By Russ Baldwin

 

 

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