STEAMBOAT MAGAZINE - 2/21/12 Know Your Niobrara

Feb 21, 2012

Spring-Summer 2012 Feature: Oil & Gas by Jennie Lay

Know Your Niobrara

Will oil in Routt County boom or bust?

Illustration by Julia Hebard.

An emerging oil play in Routt County’s front yard has roused local consciousness. The arrival of exploratory wells initiated an elevated level of discourse between industry and the community, and between local government and state officials.

Drilling operations have the potential for significant effects on the Yampa Valley’s water, air, soil, wildlife and recreational opportunities. Decisions that will be made soon in Routt County have long-term impacts – on land, communities, the economy and maybe even our legacy.

The arrival of drilling rigs, flaring wells and fracking was foreseeable. The oil and gas industry has been prospering in neighboring areas for years – including record-setting drilling paces throughout the mid-2000s in Garfield and Rio Blanco counties.

Oil exploration is not foreign in Steamboat Springs’ local headlines either. As early as 1900, a “Steamboat Pilot” headline read “Crude Petroleum Flows from the Ground.”

For nearly two years, landmen have been acquiring potentially lucrative severed mineral rights in Routt County. These are sub-surface property rights below homes and ranches – ones that surface owners around the West rarely control. Landmen have spent millions of dollars with the State Land Board and Bureau of Land Management during public auctions – and bought multi-million-dollar ranches in South Routt, often sight unseen.

Last summer, Shell Oil and Quicksilver Resources filed for drilling permits at the county planning department. Local Division of Parks and Wildlife employees began working with energy companies to assess impacts on wildlife at proposed drill sites. A flare from a Quicksilver well on Wolf Mountain Ranch lit up the horizon near the Hayden airport.

By fall, community information gatherings from Hayden to Steamboat overflowed with inquisitive citizens. People crowded into county commissioner work sessions and planning commission meetings, returning week after week, while planning staff studied oil and gas regulations from other counties to learn from their experiences.

Opening November’s packed oil and gas work session with the Routt County Planning Commission, planning director Chad Phillips noted that he was grateful that the pace allowed the issue to generate and build public interest.

At stake are new oil wells in the 6,000-feet-deep Niobrara Shale Formation, a complex rock formation created 90 million years ago by an inland sea spanning several geological basins from Colorado’s eastern plains west into Utah, and from New Mexico to Wyoming. The layered shale and limestone typically ranges from 200 to 400 feet thick. In “Geology Profiles of the Steamboat Springs Area,” Newell P. Campbell describes the Niobrara Shale Formation as “bluish gray to dark gray; shale platy with white specks; abundant marine fossils; highly fractured limestone at base; weakly to moderately resistant” with a maximum thickness of 1,100 feet.

The Niobrara has been a hotbed of activity since Houston-based EOG Resources sprang a gusher at a Weld County well named “Jake” in 2009. Initially, the Front Range well yielded 1,558 barrels of oil a day, compared to an average 300 barrels a month from an average onshore U.S. oil well.

A combination of horizontal drilling and hydraulic fracturing, or “fracking,” is the pivotal technology making recovery of oil and gas accessible. Water, sand and a mixture of chemicals are shot under pressure into the rock to create hairline fractures and release oil and gas from newly opened fissures. The chemicals are designed to keep sand suspended, reduce friction and disinfect tiny new spaces.

The composition of fracking fluids varies from well to well, depending on individual geologic characteristics. Over the years, the industry resisted disclosing the makeup of their fracking fluid mixtures, arguing that they’re proprietary – and harmless. It has also opposed federal legislation to regulate fracking under the Clean Water Act.

Colorado now requires disclosure of types and concentrations of fracking chemicals, which will be available in a searchable database within a year. Trade secret claims must be justified and certified by companies, and can be disputed. Data is posted on FracFocus.org.

Fracking generally involves water – as many as 5 million gallons for a single horizontally drilled well – and each well can be fracked multiple times. Some of the water mixed with fracking chemicals comes back up with the oil and some stays in the earth. What comes up must be cleaned and disposed of. But GasFrac Energy Services, a Canadian company, uses propane or butane gel instead of water. Once injected, it turns into a gas and exits the well with the oil or gas. While this may be a good solution in the drought-weary West, the hitch is that it’s flammable. This is the system Quicksilver used to frack its first well on Wolf Mountain Ranch, near Hayden, last summer.

Oil ad gas drilling in Moffat County west of Steamboat Springs. Photo courtesy EcoFlight 2011.

With nearly 100,000 acres in conservation easements in Routt County, Wolf Mountain Ranch’s Pirtlaw Well is the county’s first on a conserved property. A proposed well on the Camilletti Ranch is on a conservation easement that the Routt County Purchase of Development Rights funded in December.

So far, only a half-dozen drilling permits are in the pipe locally, but things move fast in this industry. In the past year, all permits approved at the state level have yet to transform into local planning requests for permits to drill. As of press time, the Colorado Oil and Gas Conservation Commission has issued 10 Niobrara drilling permits in Routt County, 18 in Jackson County to the east, and 50 in Moffat County to the west. In early January, barely two years after Jake, Halliburton committed to building a $20 million sand terminal to support its fracking in the area.

Routt County commissioners have delved into a concerted process of creating regulations that reward companies that do things right. They have received hundreds of public comments and are actively considering recommendations from an oil and gas working group. The commissioners specifically asked the group to hold nothing back.

Their recommendations may have additional weight after a January court decision in Gunnison County. The court found that the state has “no express or implied preemption” of local regulations. This “preemption” has been an oft-noted concern by county staff and commissioners, since the Colorado Oil and Gas Conservation Commission has long contended that their rules trump local ones.

Community sentiment is divided. Some residents express trust that the state is adequately regulating the industry and urge commissioners to move forward with approvals that would usher in new business. Others have expressed distrust of the Colorado Oil and Gas Conservation Commission, the state agency that is tasked with both promoting and regulating the state’s oil and gas industry.

Both sides generally agreed that Routt County will have to take on some level of monitoring and enforcement responsibilities. The Colorado Oil and Gas Conservation Commission employs 15 field inspectors who cover the entire state – including a single inspector based in Northwest Colorado. Spot checks cannot possibly oversee the long list of resources the county has committed to preserving.

A 24/7 flare burned at Quicksilver's Pirtlaw Well, a butane gas frack on Wolf Mountain Ranch, near Hayden.  Photo courtesy Sasha Nelson/Colorado Environmental Coalition.

On either side of the argument, fracking has become a household word.

The Interstate Oil and Gas Compact Commission reports that more than 90% of all oil and gas wells are now fracked. Early versions of the technology date back to 1946, and FracFocus reports that fracking has been used on over 1 million wells, and with as many as 35,000 wells of all types currently being fracked each year. Industry contends that water near fracking operations is safe because oil and gas-bearing formations are thousands of feet below aquifers and water wells, with layers of rock in between.

Science has been slow to confirm a connection between health problems and fracking. But in December, the Environmental Protection Agency released a draft scientific report linking underground water contamination near Pavillion, Wyo., with EnCana’s nearby fracking. Residents there suffered an array of health concerns, many of them serious, and their water supplies revealed at least 10 compounds found in frack fluids. The EPA has ongoing long-term fracking studies going on around the country.

Fracking chemicals are not the only concern. Local employment, possible worker shortages, man camps for transient workers on drill sites, and increased pressure on schools, social services, fire and police are also issues. Air quality is of import during drilling, development and production – and the Colorado Department of Health and the Environment currently has no active monitoring stations in the Yampa Valley.

Shell’s senior staff geologist, Matt Holman, points out that “not all operators are the same…Spoiling the landscape is a fundamentally poor business practice and you’ll put me out of business quickly. It’s valid to be concerned about these things.”

In mid-January, the Routt County Planning Commission tabled a drilling permit request by Quicksilver on the Camilletti ranch. Unconvinced that proposed mitigations for drilling impacts would be adequate, they voted unanimously to wait for decisions on county drilling conditions due to be released in late February.

Among the community requests are mandatory baseline air and water testing, ongoing well site monitoring, comprehensive drilling plans, clustering of wells, pre-screening of drilling contractors, consideration of wildlife overlays, scenic byways, viewsheds and subdivisions, emergency plans and protecting surrounding property owners who aren’t covered by the terms of a lease.

In 2011, new Jackson County oil wells went in along the North Platte River near Walden.  Photo courtesy Jane Pargiter/EcoFlight 2011.

In the Yampa Valley, there has also emerged a tale of two counties: As Routt County officials attempt to tighten regulations before releasing permits, Moffat County strongly supports oil and gas exploration. The “Craig Daily Press,” wrote, “Editorial board members had to shake their heads and smile Tuesday at a new plan afoot in Routt County….These new conditions would go beyond the energy restrictions already in place at the state level. Energy development shouldn’t be allowed to wreck the natural landscape, but this latest push to muzzle progress goes too far. The oil and gas industry is regulated enough.”

Brian Arel, a planning commission member, spoke out as a concerned citizen during a work session. Having visited Quiksilver’s well on Wolf Mountain Ranch, he called it “impressive” with a Texas flag flying high and “workers from seemingly everywhere but here,” he says. He also realized, “I’m a believer in rights, but what I realize is that I’m a believer in surface property rights.”

Routt County is showing commitment to long-range planning, in case Niobrara exploration yields significant results. But since more than 90 percent of Routt County is zoned agricultural, much of the supporting industry impacts for drilling will fall on the City of Steamboat Springs and the towns of Hayden and Oak Creek.

The question is, are we ready for it?

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