Colorado Springs News, Sports & Business

The key ingredient in oil drilling? Water

ANDREW WINEKE Updated: April 27, 2012 at 12:00 am

They say oil and water don’t mix, but when it comes to oil and gas drilling, water and oil are practically joined at the hip.

It takes millions of gallons of water to drill a well. Water is the “hydraulic” in the hydraulic fracturing process used to release oil and gas deposits. Disposing of wastewater is a costly challenge for drillers. And, at every step along the way, preventing groundwater contamination is the paramount concern for inspectors and regulators.

All of these issues are hitting like a flash flood for Colorado Springs and El Paso County. Oil and gas drillers have been expanding their exploration south in recent years from Weld County, the focus of eastern Colorado’s oil country.

Local governments were caught by surprise when Houston, Texas-based Ultra Resources bought 18,000 acres of Banning Lewis Ranch at a bankruptcy auction last year and then applied for permits to drill both on the ranch and in unincorporated El Paso County. More recently, a second company, Hilcorp Energy, also based in Houston, has applied to drill at two well sites of its own in El Paso County. Other companies have leased the mineral rights under land scattered all over the county.

It may take several years before Ultra and the others know just how much oil and gas is under the county’s plains, but if drilling takes off, it will require water. A lot of water.

A recent Colorado State University study showed that drilling and hydraulically fracturing a vertical well — as Ultra’s initial exploratory wells will be — takes an average of 387,000 gallons of water. Production wells branch off the bottom of a vertical well and run laterally to access sections of oil-bearing rock up to 5,000 feet away. They take an average of 2.8 million gallons of water — 50 times what an average home in Colorado Springs uses in a year.

Where does all that water come from? For now, Ultra appears to be buying water from three private wells near Ellicott, all of which draw on the Laramie-Fox Hills aquifer roughly 800 feet below ground. Drillers are required to use water permitted for industrial uses, but don’t have to disclose where it comes from.

That was enough to get Ultra started at three sites where it’s already started drilling, but it’s unclear if private water sources can meet the demand if Ultra and other companies go forward with large-scale development, even though some of the water can be re-used from site to site. Ultra contacted several of the water districts near its El Paso County wells, including Colorado Springs Utilities, Security Water and Sewer District and Fountain’s water department, but none could supply users outside their district limits without a vote by their boards.

“Ultra contacted me some months back,” said Roy Heald, manager for Security Water and Sewer. “I declined. I don’t think we have sufficient supply to make that commitment and I don’t know anyone here who does.”

Keith Hankins, a board member for Protect Our Wells, a group representing private well owners in the Denver Basin aquifer, said the amount of water needed for drilling is a concern.

“As far as being nervous as far as water consumption goes, I am nervous about that and people should be nervous about that,” Hankins said. “It’s an unbelievable amount of water.”

In other parts of the state, municipal water supplies are a common source for drillers.

In Greeley, where there are about 500 oil wells inside the city limits, drillers hook up to fire hydrants through a meter and pay a special use rate that nets the city a tidy profit on the sale. In 2011, the city sold 491 million gallons of water to oil companies and earned $1.6 million.

The same arrangement would be possible from Colorado Springs Utilities, but only for water used inside the city limits. Utilities officials said oil and gas companies would pay a standard special use tariff of $7.14 per thousand gallons, roughly double the standard residential rate.  

Statewide, the Colorado Oil and Gas Conservation Commission projects that oil and gas drilling will use 5.25 billion gallons of water in 2012. On the one hand, that’s a huge amount of water — that average home in Colorado Springs uses 98,736 gallons a year. However, compared to other large water users in the state, it’s small potatoes. Agriculture is far and away the largest water user, accounting for roughly 4.56 trillion gallons a year, 85 percent of all water use in the state.

Breaking rocks a mile deep

Ultra and Hilcorp are both targeting the Niobrara Shale formation. It’s a bed of oil-bearing, chalk-like rock a mile or more beneath much of eastern Colorado, including El Paso County. To produce oil and gas out of solid rock, drillers hydraulically fracture the rock by pumping a mix of water, sand and chemicals into the formation under huge pressures to fracture the rock and create pathways for the oil and gas to flow into the well and be recovered.

Drillers isolate sections of the well and fracture them one after the other in stages. When oil companies drill a well, it takes only 130,000 gallons for the actual drilling, but 2.7 million gallons to complete the fracking.

Hydraulic fracturing has led to a resurgence in natural gas production in the United States in recent years and now promises to do the same for oil production. Test wells have been drilled in El Paso County on and off since the 1920s, but it’s only in the last few years, as fracking and horizontal drilling have been combined, that the oil locked in the Niobrara can — potentially — be profitably extracted.

Although the technique dates to 1947 and more than a million wells have been fracked worldwide, the safety of hydraulic fracturing is still hotly debated. Environmental groups fear that the chemicals used in the fracking fluid can leach into surrounding aquifers, or that hydrocarbons from the well itself could contaminate nearby water.

The oil and gas industry counters that there’s no evidence that the fracturing process itself has led to groundwater contamination. Where there has been contamination, industry leaders say, it’s come from problems in the layers of cement and steel casing that isolate the well bore from the surrounding rock formations.

Tisha Conoly Schuller, president and CEO of the Colorado Oil and Gas Association, said wells are pressure-tested before hydraulic fracturing begins and that any loss of pressure while fracking is underway, indicating a loss of containment, stops the process immediately.

“The important thing with hydraulic fracturing is making sure that the cementing and casing is properly conducted,” Schuller said.

Still, science on fracking’s safety is unsettled. Several studies, including a 2011 EPA study in Pavillion, Wyo., and a 2011 study in Pennsylvania and New York, showed evidence of contamination in water wells near fracking sites; others, including a 2004 EPA study and a 2011 Texas study, exonerate the technique. The EPA is now conducting a wider review of the safety of the procedure that should be complete in 2014.

Protect Our Wells’ Hankins said he’s unsettled by the potential risk to groundwater from hydraulic fracturing.

“We’re looking at the possibility of polluting fragile aquifers,” he said. “If everything is done correctly, nothing’s going to happen, but there are documented cases of these chemicals leaking out.”

EDITOR'S NOTE: This is the first of a two-part series. You can read the second part of the story here.

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