Colorado Springs News, Sports & Business

Second company drops plans to drill for oil in El Paso County

By Ned Hunter Updated: May 31, 2013 at 12:20 pm 0

A second Texas-based petroleum company has abandoned its plans to explore for oil in El Paso County, leaving the county’s oil exploration future to a third company.

Hilcorp Energy Co. has stated it will no longer drill for oil within the county after test results from its Myers well proved as disappointing as tests performed by another Houston-based petroleum company at a separate El Paso County well site this year.

“They (Hilcorp) said the oil was immature, and there was not enough to produce,” said Dale Myers, who owns the land on which Hilcorp was drilling.

Hilcorp representatives did not return calls from The Gazette on Thursday asking about test results. But Diana May, the county’s licensed government designee to the oil and gas industry, confirmed that Hilcorp will no longer pursue exploratory drilling within the county.

“They will not be proceeding forward with any drilling on their state permits,” she said.

Hilcorp had two state-issued permits to drill two wells called Springs and Myers in the unincorporated parts of the county. The test well is off Peyton Highway north of Colorado 94. Hilcorp drilled its Myers well to 6,300 vertical feet and nearly 3,000 feet horizontally at the test site. The company finished taking samples from that well in late December to early January. Those results apparently were poor enough to cause Hilcorp to abandon drilling in El Paso County before it started drilling at its Springs well, May said, which is about 5 miles south of Myers.

Hilcorp’s announcement comes two months after Ultra Resources said test results from one of its three El Paso County wells proved “disappointing” and showed oil was “too immature” for commercial use. Ultra said previously that it would not resume drilling within the county again unless test results from Hilcorp proved “positive.”

An Ultra spokesperson could not be reached Thursday for comment.

Houston-based Ultra Resources owns 18,000 acres of the Banning Lewis Ranch area, which is within the city, and had three state-issued permits to drill within the county. It also has two permits to drill within the city but has not used them.

Now the fate of oil and gas exploration within the county rests on future results from a third exploration company — Mustang Creek holdings, a subsidiary of Denver-based NexGen Oil & Gas. The company expects to begin drilling one or two exploratory wells in Elbert County or El Paso County by early October.

Bob Davis, vice president of land for NexGen, said in April that Ultra’s poor test results were not a concern. Davis stated Thursday that Hilcorp’s decision will not influence his company’s plans. He said Ultra and Hilcorp were targeting the Niobrara shale formation roughly a mile beneath the surface.

Mustang Creek, however, is targeting an area called “The Pennsylvanian Section,” about 4,500 feet deeper than the Niobrara. “It is a totally different petroleum system,” Davis said. “It’s a totally different play.”

Contact Ned Hunter: 636-0275

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