From The Denver Post
The decision could mean well closures and job losses
Anadarko Petroleum Corp., the largest energy driller in the state, is closing a natural gas gathering system in northern Colorado, citing safety considerations.
The system — a network of pipelines known as Third Creek that carries natural gas from wells to processing facilities and then to market — serves dozens of other, smaller energy producers in Adams, Arapahoe, Denver and Elbert counties, providing a crucial link between wells and buyers.
“We recognize this may create hardships for some producers that utilize the system; however, our commitment to safety and the environment must take precedence,” Anadarko spokeswoman Jennifer Brice wrote in a statement.
The move comes just a week after Anadarko reached a settlement with the families of victims and survivors of a home explosion in Firestone. The explosion was blamed on an uncapped flowline operated by the company. However, Brice said the decision to close Third Creek was not connected to the Firestone explosion or to the settlement.
The closure will probasbly cause producers to shut down wells and could, ultimately, cost people their jobs, said Ed Ingve, the owner of Renegade Oil and Gas Company. About three-quarters of Renegade’s wells are connected to Third Creek, he said, and he expects the closure will imperil the jobs of as many as 20 employees and contractors.
Extrapolating outward to all the companies served by the system, Ingve estimated close to 100 jobs could be impacted.
“They are more concerned about the liability boogeyman than they are about saving the wells,” he said.
Last year, Renegade and 11 other producers filed a complaint with Colorado’s Public Utilities Commission over Anadarko’s decision to close Third Creek. The PUC dismissed the complaint, and Renegade is now engaged in a lawsuit with Anadarko over the closure.
In the suit, Renegade argues that Anadarko’s decision will lead to Renegade shutting down wells and losing drilling leases. The suit alleges that Anadarko could then swoop in to buy those leases, something Anadarko describes in court papers as “a preposterous and delusional claim.”
But Anadarko also provides a slightly different explanation in the lawsuit and PUC documents for deciding to shut down Third Creek.
“The gathering system is reaching the end of its usable life, and (the company) does not wish to make the significant upgrades necessary for it to remain in service,” Anadarko wrote in one court filing.
In an email, Brice said Third Creek currently handles “minimal volumes.” The system moves about 6 million cubic feet of natural gas per day, about half of 1 percent of Anadarko’s total gas gathering capacity in the area, she said. About 30 natural gas producers use the system, she said.
But she insisted that safety concerns were paramount in the closure decision, although she did not elaborate on what, specifically, those concerns were.
“The decision to shut in was made based on safety,” she said.
Ingve said he is still skeptical of that argument. Although the company first announced it would be shutting the system down in July, he said Anadarko has only recently raised safety concerns. He said other companies have approached Anadarko about taking over and investing in the gathering system but were rebuffed.
“There were better ways of going about it than what they did,” Ingve said.
So, Ingve said, he is looking at alternatives. It’s possible he could hook some wells up to another system, but he is also looking at flaring natural gas from the wells and moving the oil by truck or even possibly setting up electricity generating stations and selling power to the electrical grid.
