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Mustang Creek advances plan to explore for oil in El Paso, Elbert counties

July 29, 2013 Updated: July 29, 2013 at 6:20 pm
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Mustang Creek Holdings continues to move forward with plans to drill two exploratory oil wells - one in Elbert County the other on the east side of El Paso County.

Mustang Creek applied for state drilling permits on Thursday. It hopes to apply for the El Paso County permit next week, when county officials return to the office, said Bob Davis, vice president of land for NexGen Oil & Gas, parent company of Mustang Creek.

"We still have to set up a meeting with the local regulators and begin the permitting process," he said. "This is our first application here, and we are not sure how long it will take."

Davis said his company hopes to begin exploratory drilling for oil by the fourth quarter of this year. The company performed seismic mapping earlier this year on about six-square miles of northeastern El Paso County near Judge Orr Road and into Elbert County to determine where to place its first two wells.

If approved, Mustang Creek will drill its El Paso County well just south of the intersection of Judge Orr and North Davenport Road, Davis said. The Elbert County well would be drilled on a private ranch about two miles to the northeast of the El Paso County well, he said. The area is sparsely populated. Davis said his company has about 200,000 total acres under lease in El Paso, Elbert and Lincoln counties on which it can explore for oil. The company is not searching for natural gas, he said.

Denver-based NexGen Oil & Gas will be the third petroleum company to drill an exploratory well in El Paso County, if permits are approved. Ultra Resources and Hilcorp Energy, both Houston-based companies, each drilled at least one well in the county last year. Ultra had permits to drill three wells in the county and also two within the city, though no drilling was done inside Colorado Springs city limits. Hilcorp had two permits to drill within the county. Each company hydraulically fractured one well each. Fracking uses a mixture of water, sand and chemicals at high pressure to create fissures in subsurface rock formations from which oil and natural gas are extracted.

Both companies announced they would halt all exploratory drilling in El Paso County after test results showed the grade of oil extracted was unsuitable for commercial use.

But Davis said Mustang Creek remains undaunted by Ultra's and Hillcorp's results. Mustang Creek plans on drilling more than double the distance the two Houston-based companies explored. Ultra and Hilcorp were hoping to extract oil from the Niobrara formation about 5,000 feet below the earth's surface.

Mustang Creek is targeting the geological areas known as the Pennsylvania and Mississippian, which are at about 9,000 to 11,000 feet below the earth's surface, Davis said. He said his company plans on drilling vertical wells only at this time and would only fracture those wells "if test results warrant it."

"And since it is a vertical test it would be a very small frac," he said.

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Contact Ned Hunter: 636-0275.

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