Ultra Resources, city officials plan to talk Monday

November 11, 2011

Ultra Resources and Colorado Springs officials, still at odds over Ultra’s plans to drill for oil and gas on the Banning Lewis Ranch, are meeting next week.

At Ultra’s request, company representatives will meet with city officials at 10 a.m. Monday at City Hall. The meeting will be closed to the public.

City Council President Scott Hente said Friday he doesn’t know Ultra’s agenda for the meeting, which he’ll attend.

Yet it’s expected Ultra wants to discuss ways to resolve a dispute over an annexation agreement that governs development of the Banning Lewis Ranch, which makes up much of the Springs’ east side. The agreement was put in place when the city annexed the property in 1988, but the company is seeking to have it set aside to clear the way for energy exploration on the property.

Hente said he’ll go into the meeting with an open mind.

“I think it’s real important to sit down and talk to them and see what they want to do and what they propose and what we would want to propose,” he said.

Hente said he can’t make commitments on behalf of the city or his City Council colleagues, but he expects Ultra remains serious about its oil and gas drilling plans.

“They didn’t buy that land just to hold a bunch of meetings,” he said. “They bought that land because they have very specific ideas about how they want to use it.”

Ultra officials didn’t immediately return a telephone call seeking comment.

City Attorney Chris Melcher and representatives of Colorado Springs Utilities and the city’s land planning office also are expected to attend, Hente said. Ultra, a Houston energy production and exploration company, recently completed a $20 million purchase of 18,000 acres of the massive Banning Lewis Ranch, bounded roughly by Woodmen, Marksheffel and Meridian roads and Fontaine Boulevard.

The ranch has gone largely undeveloped since it was annexed by the city. In June, the property was auctioned as part of an October 2010 bankruptcy by the property’s California owners.

After being declared the winning bidder for the bulk of the ranch, Ultra said it wanted to drill on the property and submitted several filings in a Delaware bankruptcy court seeking to get out from under the annexation agreement. Ultra argued the agreement would pose an obstacle to drilling and that it had no plans to pursue residential and commercial development that was envisioned on the ranch since its annexation.

City officials responded in court, saying the annexation agreement — which spells out the ranch owners’ responsibilities on roads, utilities and other public improvements — is paramount to the property’s orderly development. In separate interviews, Springs planning officials have said drilling wouldn’t be permitted until the city agreed to rezone the property, amend its master plan and issue a conditional use permit.

As bankruptcy proceedings wound down, a Delaware judge agreed to allow the contested matters to be heard by a U.S. Bankruptcy Court in Colorado. Ultra since has submitted a court filing in Colorado that essentially restates the disputed issues; the city has until Nov. 30 to respond.

Ultra’s plans for the area go beyond Banning Lewis; the company paid $1.67 million in July and August to Denver-based Pine Ridge Oil & Gas LLC for leases on nearly 100,000 acres of land in eastern El Paso County and an exploratory well east of Fountain. It plans to begin exploratory drilling for oil and gas in southeastern El Paso County by early next year.

Contact Rich Laden: 636-0228 Twitter@richladen

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