Steamboat Springs Routt County Commissioner Doug Monger thinks a partnership announced this week between Shell Oil and Quicksilver Resources could be a positive for energy exploration in the county.
“I’m really pleased that we’ll maybe get some wells drilled and find out if there is oil down there,” Monger said Friday.
Quicksilver this week announced the partnership, which will allow the companies to jointly develop oil and gas in an area covering more than 850,000 acres in Northwest Colorado. According to a Quicksilver news release, the Shell Oil subsidiary Shell Western Exploration and Production LP and Quicksilver will split their interests in the Sand Wash Basin in Moffat County.
“This alliance with Shell in the Sand Wash Basin is a validation of Quicksilver’s efforts over the past two years to unlock significant oil reserves in the Niobrara shale formation,” Quicksilver Chairman Toby Darden said in news release. “We will now combine our resources to push a much larger project forward.”
Monger thinks the partnership between the companies was formed because each has something the other doesn’t.
“Shell probably has deeper pockets to bring the projects to fruition, and Quicksilver has the leases,” Monger said.
The partnership between the two companies is expected to become official before the end of the year after a due diligence period and other closing conditions.
According to the news release, Shell Oil will be the operator of the majority of the lands subject to the partnership, though Quicksilver will continue to operate wells it drilled prior to the agreement.
Monger said he was looking forward to having one contact for both companies. The partnership also could signal that wells will be operated using Shell Oil’s practices.
Shell Oil previously has expressed a willingness to abide by Routt County’s conditions for approval for oil and gas wells. Those conditions have been a point of contention with Quicksilver, which has argued the county does not have authority to impose guidelines beyond those mandated by the Colorado Oil and Gas Conservation Commission.
One point of particular contention has been water-quality monitoring wells.
Routt County imposed a water-quality monitoring condition on a recently approved oil well permit for Quicksilver. Quicksilver officials strongly objected to the water monitoring condition, as did the Oil and Gas Commission. Shell, however, has agreed to Routt County’s water-quality monitoring condition.
Monger said the partnership could signal a different relationship between the oil companies and Routt and Moffat counties.
“It depends as they move forward who is going to be the lead player and how they want to play with the counties,” Monger said.
Spokespeople from Shell Oil and Quicksilver on Friday did not respond to requests for comment about the partnership.
To reach Matt Stensland, call 970-871-4247 or email mstensland@SteamboatToday.com