Companies hoping to boost gas drilling in growing northern Colo.
December 4, 2005
FIRESTONE – Bailey Dotson walks across a 160-acre field that once produced corn and sunflowers, but will soon grow another crop: homes for families flocking to northern Colorado.”You could see that happening in the late ’90s,” Dotson, the chief executive of Best Buy Homes, said of the northward movement out of the Denver area, 25 miles to the south.But one of the fastest-growing areas in the nation sits on top of one of the more productive natural gas fields, setting up a collision of developers, land owners and companies drawn by soaring gas prices and demand for energy.Another 25 miles north of Firestone is Greeley, the fastest growing metropolitan area in the U.S. It grew by 16.8 percent, to 211,000 people, between 2000 and 2003, according to recent census figures.Land owners, farmers and ranchers along this northern stretch of Colorado’s Front Range have long coexisted with oil and gas wells.New tensions are erupting, however, as energy companies ask to drill more wells amid the new subdivisions and shopping centers. Area residents and business people have filed a protest, worried about losses in property values.The Colorado Oil and Gas Conservation Commission will consider a request Monday for more wells from three companies accounting for 75 percent of the production in the gas field known as the Greater Wattenberg Area. The field covers about 1.5 million acres, though the request wouldn’t apply to the entire area.Kerr-McGee Rocky Mountain Corp., EnCana Oil and Gas USA and Noble Energy Production Inc. want permission to drill a total of eight wells per quarter-section, or 160 acres, up from five wells.”If we’re unable to drill these existing wells, it will result in resource being left in the ground,” EnCana spokesman Doug Hock said.Kerr-McGee spokesman John Christiansen said the companies modified their request to reduce the impact. They have proposed drilling the wells closer together and using directional drilling, which angles the bit from the surface hole to reach farther underground.”Under the current spacing, there are resources that simply cannot be reached by existing wells,” Christiansen.As in western Colorado, site of a new natural gas boom, the so-called “split estate” is fueling clashes. That’s when one person owns the land but someone else owns the minerals beneath it.Companies that own or lease the minerals have the legal right to “reasonable use” of the surface to extract oil, gas or coal. Some property owners complain that drillers and miners run roughshod on their land.Dotson, who has worked in the area for about five years, said developers accept drilling as a fact of life in northern Colorado because it has been going on for a few decades.But Dotson and about 30 other land owners, developers, farmers and ranchers have hired a Denver law firm to protest the request to increase the density and number of wells.Currently, land owners must set aside five “windows” on every 160 acres for drilling – one in each corner and one in the middle. Factoring in required buffer zones, Dotson said, he loses about 8 acres per 160 acres for a loss of roughly $1.5 million because he can’t sell that land.Under the original proposal to amend the rule, Dotson estimated he would have lost as much as $5 million per 160 acres because buffers around the wells would have been larger.”That is a deal killer,” Dotson said.He said he still sees the change as unnecessary because of new technology. He said companies could extract the same amount of gas by drilling fewer wells from the edges of a quarter section.Hock of EnCana said boosting the number of total wells per quarter section to eight would increase the amount of land that must be set aside to just 9.15 acres from 8.10 acres.”Our whole intent is to maximize our ability to extract the resource, but to do it with the minimal amount of surface impact,” Hock said.