Colorado Springs News, Sports & Business

Gazette Premium Content Second oil company applies for drilling permits in county

ANDREW WINEKE Updated: March 12, 2012 at 12:00 am

Hilcorp Energy Company of Houston, Texas, has applied for four drilling permits for two locations in unincorporated El Paso County, according to Colorado Oil and Gas Conservation Commission records.

The well locations are in eastern El Paso County, one northwest of the intersection of Highway 94 and Peyton Highway, the second about five miles south - northeast of the intersection of Peyton Highway and Book Drive. Hilcorp has taken out 21 mineral rights leases in the county in recent months, according to county records, and El Paso County planning staff say they have held preliminary discussions with Hilcorp, but the company has not applied for county permits yet.

A Hilcorp Energy spokesman could not be reached for comment on Tuesday.

Hilcorp is joining Ultra Resources, another Houston-based company, in pursuing oil and gas deposits in the county. Ultra has six state-approved drilling permits in the county and has applied for four more, including two on Banning Lewis Ranch inside Colorado Springs' city limits. Ultra bought 18,000 acres of Banning Lewis Ranch for $20 million in a bankruptcy auction and company officials say they hold mineral rights leases on more than 100,000 acres in the county.

The city has a moratorium on drilling  through May while a task force considers how to regulate the activity, whereas the county approved new oil and gas regulations in January.

Ultra notified the state on March 2 that it plans to begin drilling its first well on a site near the corner of Curtis and Drennan roads in eastern El Paso County. There is a drilling rig on the site, but it is unclear if drilling has begun.

Hilcorp and Ultra are the only companies that have applied to drill wells in the county, but a number of other companies have taken out more than a thousand mineral rights leases in the county in the last two years.

The rush of activity in recent months comes after decades of quiet since roughly 100 oil and gas wells were drilled in the area in the 1930s. One company did drill a well in 2010 that was subsequently sold to Ultra and has not been put into production.

Experts say that El Paso County is a riskier area for drillers to explore since it is far from the heart of eastern Colorado's oil activity north of Denver.

Both Ultra and Hilcorp plan to drill about 5,000 feet down to reach the Niobrara Shale formation.

 

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