County meeting explores oil and gas development issues, concerns | SteamboatToday.com

County meeting explores oil and gas development issues, concerns

— There was no answer to the question of the night at the Routt County Courthouse on Thursday, but that's the nature of wildcat drilling for oil and gas.

About 30 people took their seats in the Commissioners Hearing Room to hear a presentation from David Neslin, director of the Colorado Oil and Gas Conservation Commission, about the state's regulations of exploratory oil drilling. Based on a show of hands, about 12 of those people were representing the energy industry.

It was Steve Aigner, of the Community Alliance of the Yampa Valley, who finally asked the question on everyone's mind.

"I don't have any idea how many drilling permits we expect to have put in front of us in the next 12 months to a year and a half," Aigner told county officials. "Can anyone tell me?"

Chris Brookshire, the county planner who analyzes applications for oil and gas drilling permits, said interest has definitely picked up in 2011 compared with 2010, but it's difficult to predict how much of that interest will turn into drilling rigs.

"I do have a lot of conversations going on with a lot of people about sites they are considering," Brookshire said. "But I don't know how many will turn into permit applications. I do have four applications on my desk right now."

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Interest in energy exploration in Routt County has been growing since February 2010, when a well drilled into the Niobrara shale beneath Weld County just south of the Wyoming border began producing 1,000 barrels of light sweet crude in its first day of operation and continued producing.

The Niobrara shale layer extends west under the Rocky Mountains to Routt County, where it is within reach of drilling rigs about 6,000 feet beneath the surface. The interest in drilling here first came to light as landmen for oil companies appeared in numbers at the county Assessor's Office to search for detached energy and mineral rights where the surface owners no longer controlled the riches that might lie beneath them.

"We may not see a growth in energy exploration," Commissioner Diane Mitsch Bush said Thursday night. "On the other hand, we know from other areas the Niobrara may produce and it may produce a lot. So it's important that our regulations cover the interests of the community. I think it's really important to learn from the other counties, from the state and other people with experience so we can build on those, leading to balanced oil and gas regulations in our county."

Neslin told the gathering that oil exploration in Routt County goes back to the 1930s, but local oil and gas production represents a small fraction of Colorado's total.

"Oil and gas production here is a relatively small but important part of the state's overall production," Neslin said. "Historically, 380 wells (were) permitted in Routt County, most of which were never drilled or abandoned or plugged. There are currently 28 producing wells in the county with seven more permitted but not drilled and two pending."

The oil and gas produced in Routt County annually represent less than 1 percent of the state's hydrocarbon energy production, he added.

Neslin took an hour to give a detailed overview of how his agency processes drilling applications and inspects operations in the field. He paid particular attention to the subject of hydraulic fracturing, commonly referred to as fracking.

"Hydraulic fracturing is virtually ubiquitous of oil and gas drilling today. If they were not using (fracking), most (wells) would not be economically practical to drill," Neslin said. "High pressure injection of fluid and sand with (proportionately small amounts of chemicals) into the formation, releasing the natural gas or oil and improving the productivity and ultimately the recovery from that well."

Steamboat Springs water advocate Ken Brenner told Thursday's gathering that during a recent statewide water conference a spokeswoman for the Colorado Oil and Gas Association said vertically drilled wells typically use 1 million gallons of water and wells drilled horizontally use as much as 5 million gallons.

Actual consumption varies with the percentage of fracking fluid that is recycled, he said.

Sasha Nelson, a Steamboat native and representative of the Colorado Environmental Coalition, praised the county for launching a public discussion of energy exploration early in the game but urged local officials to broaden the sources it relies upon for information about the regulatory environment.

By adopting strong regulations, Nelson said, the county isn't necessarily putting undo constraints on the oil and gas industry. In many cases, strong regulations reward good corporate citizens like Quicksilver, which is currently drilling on Wolf Mountain, for their efforts and helping them to remain competitive.

Steamboat Springs attorney John Vanderbloemen asked the county for clarity on how it protects the rights of private property owners adjacent to oil drilling rigs on federal lands like those managed by the Bureau of Land Management.

County Planner Chad Phillips said he and Brookshire had analyzed BLM drilling regulations and determined they are consistent with the county's.

— To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com

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