A Wattenberg Victory: Extraction Oil & Gas Receives Approval from Broomfield

Extraction went far beyond what state law requires to gain local approval of a well development plan within Broomfield city and county limits

Wattenberg-DJ operator Extraction Oil & Gas, Inc. (NASDAQ:XOG) has received approval for its Operator Agreement with the City and County of Broomfield, Colorado, the company announced today.

The Broomfield City Council approved the company’s development plan after a year-long process. Extraction said this resulted in what is likely to be “one of the most thoughtfully designed oil and gas developments in the country.”

With the approval from Broomfield, Extraction can move toward completing the spacing and permitting process for the remainder of its Broomfield leasehold.

Using quieter electric drilling, erecting sound walls, and working with Liberty Oilfield Services to develop a quiet completions fleet are some of the advanced mitigation techniques and operational best-practices that came forward in its plan that helped the company win Broomfield City Council approval.

Extraction said the approved agreement contains some of the most advanced technology and operational best-practices utilized anywhere in the continental U.S. by an oil and gas developer.

Extraction said each site is evaluated and mitigated differently. “Where there is development scale, electricity and other factors as there is in Broomfield, we are able to produce engineering designs that can serve as a model for onshore development,” Jacobsen said.

Extraction’s long list of voluntary concessions for its Broomfield Development Plan

This plan was approved through a legally binding agreement by the Broomfield City Council in a unanimous vote after public input and participation from the broader community, the company said.

 

“We carefully chose these four locations to be as far as possible from residential housing and to be compatible with surrounding development. Each of the four locations is located as far from neighborhoods as reasonably possible along Northwest Parkway, so that any noise associated with operations will not be noticeable above the ambient noise currently generated by the parkway. This has been conclusively demonstrated by noise-level monitoring tests that we have performed at each site. Thousands of vehicles travel each day on the parkway and third-party traffic studies have additionally confirmed that even at the peak of our temporary construction activity, the increase in traffic resulting from our project is negligible – even during peak activity.

“We also plan to install over three acres of professionally designed landscaping and rolling hills at each site to screen these locations from view before beginning our operations. This landscaping will include rolling earthen berms covered with natural grasses and trees inspired by Colorado’s flowing landscapes and vistas, and our commitment to landscape architecture features at these sites is estimated to cost more than $1 million per location,” the company’s Broomfield Development Plan page says.

Long meeting yields council approval 

The Denver Post reported that Oct. 24’s Broomfield City Council meeting where the city council vote was held amounted to “seven and a half hours of testimony and discussion at a meeting that went into the early morning hours of Wednesday. The close 6-4 vote, giant crowd and marathon meeting were illustrative of what has become a festering issue in this northern suburb.”

“Councilman Mike Shelton said that if Broomfield didn’t approve the agreement with Extraction, the company could decide to forge ahead with its project according to less stringent state rules that provide fewer protections for area residents,” the Post reported from the meeting.

Colorado oil and gas permitting is entirely under the jurisdiction of the Colorado Oil & Gas Conservation Commission—a state entity—but several local municipalities have attempted or put in bans or moratoria on oil and gas development within their city limits.

Broomfield had a moratorium under consideration earlier in the year when Extraction was at an earlier stage in the process of hammering out a development plan for its Broomfield properties, but in March Broomfield postponed indefinitely its vote on the imposition of a drilling moratorium. Other municipalities in the Wattenberg field area have put bans in place, including Boulder, Fort Collins, Lafayette and Longmont, but courts in Colorado have thrown these bans out.

In the year of working back and forth with Broomfield and stakeholders, Extraction made concessions that went well beyond the requirements of the State, in order to gain the approval of the local community, guided by the Broomfield City Council, where its wells will be drilled—taking many actions not required by the state’s oil and gas permitting process.

Extraction agreed to:

• use quieter, state-of-the-art drilling equipment;
• put in pipelines to cut down on truck traffic and limit on-site storage;
• use setbacks that go farther than what state law requires;
• remove old wells and storage tanks in the neighborhoods.

Liberty Oilfield Services’ Quiet Fleet™ – a smart answer to a growing problem that will be faced by more operators in Northern Colorado

Noise generated during 24/7 well completion operations can become a big issue for operators when operating near communities and homeowners. But this hasn’t always been a problem.

Historically much of Northern Colorado consisted of rural farmland where drilling operations might only be noticed by a few deer and the farmer who owns the surface and mineral rights. But in the past 5-10 years, swaths of Northern Colorado have been experiencing explosive growth with the construction of new real estate developments along the Denver-Fort Collins corridor—in the Wattenberg field.

This building boom has put thousands of new homes within close proximity to oil and gas operations. The result has been that drilling and fracing operations have become part of the daily awareness of many residents in suburbs, towns and cities north of Denver. The Extraction Oil & Gas pad location in the City and County of Broomfield is a good example.

But oil industry professionals have come up with a solution. Denver’s Liberty Oilfield Services is a state-of-the-art oilfield service company that has spent two years developing pressure pumping equipment that cuts noise levels at well sites. Liberty has built a proprietary new Quiet Fleet™ design for its pressure pumping fleet which will reduce noise levels by 3X over a conventional fracturing fleet.  The Quiet Fleet™ has lower sound levels at a distance of 500 feet from the center of a frac location than a conventional fleet would have at 1000 feet, the company said on its website.

 

Liberty’s other extraction technologies include:

• Boxed proppant solution – PropX, which helps reduce dust, noise and truck traffic
• Proppant quality assessment, providing an estimate of conductivity against proppant vendor data on all types of proppant pumped in a well, as well as live mesh distribution check on all
• Spirit Fluid System, which allows cost savings through placement of more proppant with less gel in environments where gel is needed
• Vorteq missile, which significantly reduces wear and tear on fluid and is projected to be commercial in 2018

If northern Colorado’s Front Range real estate building boom continues and oil prices remain in the $50-$53 range for the foreseeable future, which is a price range that encourages investment in oil and gas drilling in plays like the Wattenberg, the problem of residential areas bumping up against oil and gas drilling and completion operations will continue to drive the need for additional technologies like Liberty’s that make oil and gas operations more “user friendly” for the local residents.

Extraction in Broomfield – next steps

The Colorado Oil and Gas Conservation Commission is scheduled to hold a hearing on the spacing of Extraction’s proposed wells next week. Extraction said it still hopes to spud its initial Broomfield wells from the Coyote Trails pad before the end of 2017.