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Gazette Premium Content Greeley trip shows possibilities, pitfalls of oil and gas development

ANDREW WINEKE Updated: February 29, 2012 at 12:00 am

GREELEY - In a field next to a subdivision and a few blocks from a high school sits an oil and gas well: a pair of tanks and a tangle of steel pipes surrounded by an earthen berm and a chain link fence.

In Greeley, home to 419 oil and gas wells inside the city limits, this is par for the course. Is it the future of Colorado Springs?

For a city committee studying how to manage and regulate oil and gas development in Colorado Springs, a field trip to Greeley on Wednesday offered an idea of what could happen if Ultra Resources’ plans to drill for oil on Banning Lewis Ranch come to fruition. The company has applied for two permits to drill inside city limits and has three approved permits in unincorporated El Paso County. Ultra plans to begin drilling at the first site in the county March 19.

In the 1980s, Greeley was in the same place Colorado Springs is now, said Rebecca Safarik, Greeley’s community development director. The city was caught flat-footed by plans for oil and gas drilling inside the city limits and had no regulations or management plan on the books.

“The questions that you’re asking are the very same ones we asked early on, and they’re critical,” she told the Colorado Springs group.

Greeley took its lumps as it figured out how to manage petroleum development, Safarik said — losing a court case after denying one early permit and paying several hundred thousand dollars in damages. Today, oil and gas development is a major industry in Greeley, with taxes from the industry and indirect impacts paying for 20 percent of the city’s budget, Greeley Mayor Tom Norton said.

In surrounding Weld County, home to more than 18,000 wells, oil and gas pays for 40 percent of the county’s budget. Sean Conway, chair of Weld County’s board of county commissioners, said farmers and oil developers were on the verge of “civil war” in the early 1990s. That has changed, he said.

“Twenty years later, the agricultural community is one of the biggest supporters of the oil and gas industry,” Conway said.

Oil and gas development has meant higher property values and a county government with no debt and a healthy reserve fund, Conway said. The boom shows no signs of slowing down, with 31 oil and gas companies operating in the county and the largest, such as Anadarko Petroleum, planning to invest billions in Weld County the next few years.

Along with the rosy picture came a few words of caution, however. There have been some accidents, including one that left a subdivision just outside city limits wreathed in an invisible cloud of highly flammable methane. There have been a few fires and even small explosions inside city limits, Greeley fire chief Duane McDonald said.

Still, McDonald said, such incidents have been rare. Preparing for an oil well fire, said Jeff Odell, operations chief for the fire department and a former oil company geologist, is really no different than responding to a tanker truck that crashes on the freeway.

“Don’t think it’s all doom and gloom,” Odell said. “There’s a risk, but it’s not like it’s something that’s causing the fire department to fall apart.”

If Colorado Springs asks for one thing in its oil and gas regulations, Norton and Conway agreed, it should be a more aggressive inspection regime. Well inspections are the responsibility of the Colorado Oil and Gas Conservation Commission, but local governments elsewhere in the state have worked out agreements with the commission for more frequent independent inspections. Even some in the industry see more inspections as a good idea.

Collin Richardson, vice president of operations for Mineral Resources Inc., said the company drilled 61 wells in recent years, but only three were inspected during the surface cementing process.

“Really, they should be there every time,” he said of state inspectors.

Don’t worry about hydraulic fracturing, Richardson told the committee, referring to the controversial technique in which drillers force a mixture of water and chemicals into rocks to open up pathways for oil and gas to flow. If there are problems, Richardson said, they’ll come from the steel casing and cement used to seal the well off.

“Hydraulic fracturing is not a risk,” he said. “The risk is casing and cement.”

The final stop on the tour was a 10-acre drill pad owned by Mineral Resources, home to 34 separate wells that branch out deep beneath an adjacent freeway and long rows of separators, where water is removed from oil and gas, and eight big oil tanks, each holding 500 barrels of oil. At one point, the well pad, opened in 2005, was the biggest in the state, Richardson said. It will continue producing oil and gas for another 30 to 40 years.

A pair of stacks at the site release a haze of chemicals — evaporation from the tanks that couldn’t be captured — that leave a petroleum tang in the air.

The Greeley trip gave the committee the chance to see oil and gas operations with their own eyes, said Councilman Val Snider, chair of the committee, and learn from a city that’s been tackling the issue for two decades. It emphasized to him the importance of working closely with other government agencies and with the industry.

Seeing things in person, said Councilwoman Brandy Williams, also a committee member, reinforced the importance of creating adequate setbacks and working with the state to make sure inspections are done.

“For us, it’s day one. For them, it’s year 20,” Williams said of Greeley. “It was great to see it first-hand.”

GOVERNOR WEIGHS IN ON LOCAL REGULATION OF DRILLING

DENVER (AP) — Colorado Gov. John Hickenlooper is stepping into a dispute between local governments and the oil and gas industry over drilling.

The Democratic governor announced a task force Wednesday made up of energy industry executives, city and county officials, environmental groups and lawmakers. The goal is to settle whether local jurisdictions can put limits on drilling, or whether the state alone has such power.

Hickenlooper, a former geologist, has said that each Colorado county cannot have its own rules about drilling. But the governor has not backed a piece of legislation to clarify whether local governments can set drilling rules that go farther than state regulation.

The drilling conflict is pressing because technological advances have drawn energy producers to more-populous areas.

Hickenlooper’s task force has an April 18 deadline.

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