Drilling for natural gas and oil in Northwest Colorado
Energy boom or bust? It all depends on what's found
May 17, 2014
Craig — Dorris and John Zimmerman have been living on their property just on the west edge of Craig for almost 40 years.
The couple built their home in 1967 and raised their children there. In 1987, they welcomed an energy company on their land, allowing it to implement hydraulic fracturing as one means to extract gas and oil from the earth. The well has been there ever since, pulling energy resources out of the ground. In that time the Zimmermans said the well has seen at least three hydraulic fracturing efforts.
The Zimmermans get enough money from the mineral lease royalties to "pay for groceries," Dorris Zimmerman said.
Hydraulic fracturing — also known as fracking — is a familiar method in Colorado, said Jeff Comstock, director of the Moffat County Natural Resource Department.
"It's a safe, proven technology. It has opened the doors that weren't open before. It's one of the reasons that the Niobrara is economical to develop," Comstock said.
The Niobrara formation has opened up the oil and gas economy for Colorado and for the country, Gov. John Hickenlooper said. The energy industry secures about 110,000 jobs for the state and brings $30 billion into the economy.
"There's jobs and economic impact that is significant. Also, there's international security. We're not sending kids to fight wars to protect our source of energy," Hickenlooper said. "North America is within a few years of being (energy) self-sufficient."
The Niobrara formation that holds oil and natural gas deposits all across Northern Colorado has seen many energy companies come and go — especially in Moffat and Routt counties.
Shell Oil announced it would leave the region in August, causing economic concern about what that meant to the energy industry in Northwest Colorado.
Yet in January, Southwestern Energy announced that it planned to purchase $180 million worth of Shell's mineral leases in the Niobrara, with an exploratory mindset.
In May, during Southwestern's quarterly earnings conference call, Chief Operating Officer Bill Way discussed the company's plans for the area.
On May 1, "we closed on our previously announced acquisition of approximately 312,000 net acres in Northwest Colorado, targeting the Niobrara formation. We plan to begin a five-well drilling program in June that includes four vertical test wells and one horizontal well, targeting a roughly 400-foot section in the rich condensate volatile oil window of the play," he said on the conference call.
The four vertical wells would function as a prospecting mission: to see if Southwestern can bump into valuable deposits.
"The vertical test wells are basically to see what is there and the horizontal is targeting a 400-foot section," said Christina Fowler, communications specialist with Southwestern Energy. "That's just to get an idea of what's there. We're not going to know until we get those results back and get a better idea."
That uncertainty isn't new for Moffat County. Energy companies began recognizing the potential in the Niobrara in the Yampa Valley and started acquiring leases in 2010. In 2011, they started drilling exploratory wells. Since then, several energy companies have been in and out of the formation, Comstock said.
While a new company's venture can be seen as a potential boom for business, five new wells can look like a drop in the bucket when Moffat County has 630 active wells and Garfield County boasts about 10,000 active wells, Comstock said.
Companies are more likely to start out with vertical drilling because it usually is less expensive, he said.
"In Moffat County, we've seen $1.5 million vertical wells and $11 million horizontal (wells) and everything in between," he said. Vertical drilling is "cost effective, and it can give you a better idea of what the geological formations are down there and what the capacity to produce would be."
Also, dampening energy boom spirits often are caused by negative associations some have with fracking. Drilling to certain depths along fault lines has been associated with small earthquakes.
"So if you stay away from where the faults are, you're not going to have that issue," said William Fleckenstein, interim petroleum engineering department head at the Colorado School of Mines.
People who have lived close to fracking feared contamination either by the chemicals used in the method or by the natural gas itself. But Fleckenstein — a petroleum engineer — said that the methane likely was not related to fracking.
Fleckenstein outlined the science of the issue and highlighted studies in New York state. Tests conducted far from fracking sites have shown that 9 percent of the wells in the study area were contaminated by methane, and 2 percent of the wells overall were at flammable levels. This is just a natural anomaly, Fleckenstein said.
As far as the possibility of chemical contamination, that, too, is highly unlikely, he said.
"There hasn't been a single documented case where people have fracturing fluid show up into an aquifer," Fleckenstein said.
Luke Schafer, Western Slope advocacy director for Conservation Colorado, said making sure regulations were up to date for the energy industry was important to keeping people and the environment healthy. But that didn't need to get in the way of development, he said.
"There's always evidence that oil and gas development have had a number of problems, like almost any industrial in a residential area can have. Those things are occurring, and that's part of the development process," he said. "I'm not singling out fracking. The people have reason to be monitoring oil and gas development."
He pressed that it was crucial to work with industry to find safe and effective ways to get at oil and gas.
"We don't have a specific position regarding just fracking. It needs to be done in a responsible manner, and some places just aren't appropriate for oil and gas," he said. "Development can coincide with conservation."
Hickenlooper said smart regulation and development were key to ensuring a strong economy.
"I recognize there's a lot of anxiety among many people about hydraulic fracturing. It's an industrial process. It is an innovation," Hickenlooper said. "When it began to be used along with horizontal drilling, it began to open all opportunities to recover natural gas and oil that had previously been beyond reach. Like any industrial process, you have to be careful to not spill the fluids."
The state stands out as an example for the country, he said. Regulations are in place that make sure people keep a close eye on the wells, ensuring there isn't leakage and that everything is up to standard, he said.
"Colorado is looked at nationally as a model," he said. "We're the one place where, at least in the past, the environmental community has been willing to sit down and work with the oil and gas industry to try and figure out what is the right compromise so we can still get natural gas out of the ground and at the same time make sure" residents' quality of life remains high.
Dorris Zimmerman, who has lived with fracking literally in her backyard for almost 20 years, stated she didn't have a firm stance on the fracking issue. She hadn't seen any damage to her land or livestock, and although she wasn't fond of large gas tanks hugging her property line, the well never has been any sort of nuisance. Her grass is green and her many animals always healthy.
"Even if it did have some adverse effect on us, I don't think we would complain about it because we love our country and don't want to depend on Middle East oil," Zimmerman said.
Contact Erin Fenner at 970-875-1794 or efenner@CraigDailyPress.com.