Second draft of Comprehensive Drilling Plan for Boulder County is posted for comment

The second draft of the Crestone Peak Comprehensive Drilling Plan for its Boulder County assets has been reviewed by the Colorado Oil & Gas Conservation Commission (COGCC) and the commission posted the second draft (preliminary) Monday on its website.

Crestone Peak’s objective is to develop its oil and gas properties on the Boulder County side of the Wattenberg field. Crestone Peak points out that it has “more than 5000 acres of assets in Boulder County that Crestone (and our predecessor) has been prohibited in accessing for more than five years, [and] we feel a CDP is the only way to approach development, particularly in this area.”

Crestone Peak Winding Its Way through Colorado CDP Process in Preparation to Drill Assets on Boulder County Side of the Wattenberg

Source: COGCC/Crestone Peak Resources

The reference to being prohibited from accessing its assets for more than five years is to the five-year-long Boulder County frac moratorium that finally led to a suit against Boulder County by Colorado Attorney General Cynthia Coffman. Subsequently, Boulder County’s frac ban expired and the suit was dropped.  That opened the door to oil and gas development on the Boulder County side of the Wattenberg field, northern Colorado’s most prolific oil and gas producing field, which has enjoyed years of ramping activity, strong oil and gas production and wealth creation on the Weld County side of the line.

Crestone Peak outlined the timeline of its applications and actions taken for the CDP.

“In February 2017, Crestone Peak Resources began the first step in our phased approach of re-entry into Boulder County. We filed a Rule 216 Comprehensive Drilling Plan (CDP) Application with the Colorado Oil and Gas Conservation Commission (COGCC) because we recognize the need for a collaborative, methodical and transparent planning process for responsible oil and gas development.

“Crestone is dedicated to ensuring that all necessary stakeholders are involved in the planning process and believe that the CDP is one of the best ways to make sure this occurs. Those stakeholders include the COGCC; Colorado Department of Health and Environment (CDPHE); Commission of Public Works (CPW); Colorado Department of Transportation (CDOT); Colorado State Land Board (CSLB); Boulder County and affected surface owners.

Crestone Peak Winding Its Way through Colorado CDP Process in Preparation to Drill Assets on Boulder County Side of the Wattenberg

Meeting schedule from Crestone Peak Resources

Through the CDP is a relatively unused option through which operators establish a defined geographic area for where they want to see their future oil and gas development.

The Denver Post reported that Crestone Peak originally filed three applications for “Drilling Spacing Units” within the CDP area, according to the filings. Each application requests approval of up to 72 wells on up to six sites in a 4-square-mile area. Crestone’s CDP application is the first to be filed along Colorado’s Front Range, according to the Denver Post in its story on March 31, 2017.

The COGCC had posted its Crestone Peak CDP pre-hearing application process and timeline here.

In the opposing corner…

The Boulder County Board of Commissioners has been outspoken about its opposition to oil and gas development inside its borders, even sending ‘warning’ emails to residents saying that two oil companies (Crestone Peak and Extraction Oil & Gas subsidiary 8 North LLC) had their eye on Boulder County sites for oil and gas drilling, but that they must obtain Boulder County’s approval and meet its criteria before drilling.

The state law is specific, however, that the only approving body with jurisdiction over oil and gas permitting and regulation is the Colorado Oil & Gas Conservation Commission, to whom all oil and gas drilling applications are submitted and either approved or denied—meaning that obtaining a county’s or city’s approval to drill isn’t a legal requirement in Colorado.

Welcome to the sticky, prickly world of ‘local control’—a concept that legally doesn’t exist in Colorado and has thus far been unsuccessful in landing on the state general election ballots after numerous attempts. The ballot initiatives were heavily supported by national environmental groups and others who oppose the notion of oil and gas drilling and development, and who support the global anti-fossil fuel movement known as ‘keep it in the ground’.

Crestone Peak shifts gears, moving into the ‘second draft’ phase of its CDP

According to the COGCC, the idea for the second draft of the CDP is to incorporate and highlight any plan modifications arising from information obtained during the stakeholder outreach process which was held between Oct. 16 and Nov. 3, 2017.

The COGCC said, “During its first formal stakeholder outreach and engagement period, Crestone was obligated to conduct two public meetings in Boulder County, preferably within the proposed CDP lands. Crestone also committed to meet and confer with Boulder County, the Town of Erie, CDPHE, CPW during this period, unless those agencies decline to participate in writing. Crestone will also schedule meetings at a mutually convenient time with any other state regulatory agency with regulatory responsibility related to the CDP that requests a meeting.”

COGCC analysis posted Nov. 27, 2017

In the tables below, the COGCC staff identified portions of Rule 216.c. that will be necessary for staff to evaluate in order to make a recommendation to the COGCC regarding the variance requested in Crestone Peak’s pending CDP application.

At a minimum, staff needs the information checked as “Conceptual” in the table below. Staff also has identified information in addition to the express requirements for Rule 216 that it believes are necessary to evaluate Crestone Peak’s pending CDP application; these elements appear in red text in the table below. Again, staff believes it is necessary to evaluate the new “conceptual” elements in order for staff to evaluate for the commission the request to “grant a Rule 502.b variance to Rule 303 by placing a temporary hold on accepting any new Form 2, Applications for Permit to Drill, or Form 2As, Oil and Gas Location Assessments for the Application Lands in order to preserve the intent of a Commission Rule 216 Comprehensive Drilling Plan.”

The COGCC staff said it views the CDP application process as iterative: Elements identified as “conceptual” must be provided initially but most likely will be updated throughout the application evaluation process. Staff anticipates that the applicant will provide updated or modified information from the “conceptual” phase at the “preliminary” and “final” stages of the process; similarly, information initially provided during the “preliminary” phase likely will be updated or modified prior the “final” stage.

Crestone Peak Winding Its Way through Colorado CDP Process in Preparation to Drill Assets on Boulder County Side of the Wattenberg

Source: COGCC

Crestone Peak Winding Its Way through Colorado CDP Process in Preparation to Drill Assets on Boulder County Side of the Wattenberg

Source: COGCC

Crestone Peak Winding Its Way through Colorado CDP Process in Preparation to Drill Assets on Boulder County Side of the Wattenberg

Source: COGCC

Download the full document here.

After addressing these issues in its subsequent draft and following a second the public comment phase, the Final CDP is to be posted to the COGCC website on Dec. 18, 2017—in three weeks.

Next steps: moving toward the final

For the 30 days between December 18, 2017 and January 19, 2018, written public comment is accepted addressing the Final CDP.

After the Public Comment period for the Final CDP Package closes on January 19, 2018 and not later than January 26, 2018, if the Director finds the Final CDP satisfies the Final CDP Plan Elements articulated by COGCC Staff and satisfies the intent of a comprehensive plan for oil and gas exploration and development operations within a defined geographic area, the Director will file a hearing application with the Commission requesting the Commission to consider adoption of the CDP at its March 19, 2018 hearing. The COGCC hearing would be held March 19-20, 2018, if the director files the application for the acceptance hearing.

The COGCC said that Crestone Peak will be required to obtain Oil and Gas Location Permits (Form 2A) for each oil and gas location proposed to be located within the CDP area. Each Form 2A application will have a public comment period independent from the CDP comment periods described above. Similarly, all Applications for Permit to Drill (Form 2) within the CDP area will have a separate public comment period. The public comment periods for a Form 2 and a Form 2A commence when the application is deemed complete by COGCC. COGCC Rules 305.b., 305.d.

Local control: is it real?

Boulder County lodges numerous objections to the first draft CDP

Boulder County’s comments filed to the state regarding the first draft of the CDP filed by Crestone Peak include the following:

  • First, Crestone has failed to meet the threshold requirement for any of the proposals contained in the CDP: it has not provided proof that it owns any mineral rights in the CDP, much less under any of the proposed sites. Its cursory statement of its percentage ownership is insufficient to demonstrate that it has the right to drill on any surface land in the CDP and what the scope and parameters of those rights are. Moreover, even if Crestone can prove its right to use a given surface to extract the minerals underneath it, it must demonstrate its right to use that surface to install enough wells to drill minerals from hundreds or thousands of additional acres. Crestone’s next draft should not be considered complete without this information.
  • Second, the Plan proposes large-scale and intensive oil and gas development inappropriately located close to residences, valuable agricultural lands, hazard areas, sensitive wildlife and plant habitat, riparian habitat corridors, water bodies, wetlands, and recreational areas. Such sizeable industrial activity is generally not compatible with residential development and those resources. Moreover, the Plan fails to acknowledge that it proposes to initially impact approximately 100 acres of land all together (both county-owned open space and land subject to county conservation easements), which has been purchased directly for the purpose of preservation, is in active agricultural use, or contains sensitive ecological resources. Contrary to Crestone’s statement at page 9 that “much of the CDP is preserved from development to retain the rural character of the CDP,” these lands were purchased not to retain the rural character of the CDP, but to meet the goals of the county and county residents to preserve valuable agricultural land, wildlife habitat, water resources, and other natural resources and protect open space lands from development. Even after the production stage, the proposed pads will effectively take land out of agricultural production and destroy ecological resources for decades beyond the end of the well’s lifespans and resultant impacts will extend well beyond the pad sites.
  • Third, information in the Plan is inadequate on virtually every level and, consequently, impacts cannot be adequately identified. For example, Crestone alludes to important information but has not produced it, including the report of Crestone’s unidentified wildlife consultant and the contents of its consultation with and responses received from state agencies such as Colorado Parks and Wildlife. Numerous statements in the Plan are inconsistent with each other and raise questions and confusion, such as repeated references to tankless plans although numerous tanks are identified in other portions of the Plan. The County notes that the Plan twice refers to the operator as “Extraction,” indicating that the Plan has not been carefully vetted. Specific additional issues are listed below. Given these significant deficiencies in the information provided in the first draft, the COGCC should consider the Plan inadequate for the preliminary stage and require the issues identified in these and other comments to be fully addressed in the next draft.
  • Fourth, the County is particularly concerned about Crestone’s proposed use of fee-owned Boulder County Open Space lands for its drilling sites. These Open Space lands were purchased with county residents’ tax dollars for the purpose of preserving agricultural, environmental and 3 recreational resources. County residents did not vote to tax themselves hundreds of millions of dollars to see the open space values destroyed by large-scale oil and gas development.
  • Fifth, the Plan fails to meet the intent and spirit of a CDP. Crestone’s proposal of six well pads scattered haphazardly throughout the CDP, which fragments the CDP into three areas of development, indicates that it has failed to plan in a way that avoids and minimizes impacts to the CDP area as a whole. For example, if Crestone were to drill in two directions (north and south) from each pad, it could decrease the number of pad sites and therefore the number of areas disturbed. And if those pads were located along major roadways that are already impacted by traffic noise and tend to be farther away from residential development, their overall impacts would be reduced. Additionally, consolidation of pad sites could eliminate excessive and unnecessary pipeline mileage. Because the proposal is for all development within the entire Plan area, Crestone’s incomplete ownership and control of minerals in the CDP area should not be a limiting factor in consideration or establishment of the most efficient and least impactful pad locations.
  • Finally, the County has serious and on-going concerns with Crestone’s interpretation of the CDP development process set forth by the COGCC. As stated in its letter to the COGCC director dated October 10, 2017, the meetings convened by Crestone during the stakeholder engagement period were not public because only landowners within a half-mile of allegedly preliminary proposed well sites were invited to attend the only in-person meeting. Traffic, dust, air quality, noise and light impacts will all extend further than half a mile from the large sites proposed, as noted by numerous members of the public at the meetings held this far. Moreover, the same kinds of impacts of construction for the extensive proposed pipeline system were ignored in this limitation on participants, meaning people foreseeably impacted by pipeline construction were not able to provide feedback or ask questions.
  • Crestone hired security guards to prevent others with interest in the proceedings from attending these meetings. As a result, State elected officials were excluded from the meeting until they were permitted to attend under unspecified criteria. The initial telephone town hall was held the day after the in-person meeting, meaning anyone who was unwell or out of town would miss both meetings.
  • After Boulder County pressured COGCC to require it, Crestone hastily convened a second telephone town hall for all CDP residents to attend, the notice of which was received two days before the meeting, which was inadequate. Crestone’s manner of scheduling and organizing its meetings demonstrated a lack of commitment to public input on its plans and a grave misunderstanding of the expectations and needs of the community in which it seeks to operate. Especially given Crestone’s stated aim of “collaboration with our neighbors,” and to provide adequate due process, COGCC should require Crestone to hold additional meetings fully open to the public, with sufficient notice, in the second scheduled public input period.

Colorado Department of Public Health and Environment speaks out on the first draft

Comments from CDPHE:

Below each topic is explained with recommendations from the Department to minimize the impacts from the oil and gas activities within the CDP area.

  • Location of well sites: Many citizens have commented on the preliminary location of the well sites requesting that Crestone use the Highway 52 corridor for the oil and gas locations. The Department asked about this issue and discussed the constraints with Crestone representatives. One change that will alleviate some of the resident’s concerns would be using the Extraction lease location just west of the reservoir located in 2 North 69 West, Section 35. Relocating the proposed well site located in 1 North 69 West, Section 11 to the Extraction lease site just to the west of the reservoir would consolidate three well sites to the Highway 52 corridor. The Department recommends that COGCC staff and the Commission, if necessary, become involved in the surface use/lease discussions between Crestone and Extraction to overcome this issue and locate the majority of the proposed well sites to the Highway 52 corridor.
  • Installation of pipelines: The Department requested pipelines be installed prior to beginning drilling operations. This practice ensures the operator will utilize green completions to the fullest extent possible during flowback operations reducing emissions from the well sites.
  • Electrical equipment for drilling activities: Crestone Peak representatives have stated in public meetings that they intend to use electrical equipment for drilling activities. The Department supports this practice and recommends the use of electrical equipment for drilling and completions to reduce noise and emissions from the well sites.
  • Remote fracing operations: Crestone representatives explained that remote fracing operations are used when residents are within 1000 feet of the well site. The Department recommends using remote fracing operations to minimize impacts to the nearby residents. The CDP currently includes six well sites where Crestone would conduct fracing operations; however, the Department recommends that two central locations be used for fracing operations, assuming the Extraction lease can be used, one at Highway 52 and one in the northern part of 2N 69W. Moving these operations as far as possible from residents will reduce the impacts from noise, odors and truck traffic.
  • Odors from drilling and completion activities: There have been numerous odor complaints from Crestone operations in Erie; however, Crestone has worked to reduce odors by using chillers and chemicals to mask the hydrocarbon odors emulating from the drilling mud. During our meeting, Crestone representatives discussed additional measures to reduce odors including a squeegee to remove the drilling fluids from the drilling pipe as it is coming out the wellbore and using covered containers to store the drilling mud on the well site. In addition, Crestone is also investigating chemicals that neutralize the odors from the drilling muds. The Department recommends that Crestone to continue pursuing methods and practices to reduce odors throughout the life of this CDP.
  • Use of infrared cameras on the well sites: During the public meeting held in Boulder on October 18, 2017 Crestone representatives stated infrared cameras would be used on the well sites to look for leaks. This issue was confirmed during the CDP meeting with Crestone representatives stating that infrared cameras would be used at the wellsite during drilling, completion and production activities. The Department recommends that these leak detection activities become part of the CDP.
  • Plug and abandonment of vertical wells: Within the CDP area there are 95 vertical wells. With the drilling of horizontal wells a number of these vertical wells will become unprofitable for the larger oil and gas companies to continue to operate. In the past, these wells have reverted to smaller oil and gas operators some who may not have the financial resources to comply with COGCC rules over the long term resulting in enforcement actions and fines. Too many times these operators abandon these marginal wells leaving the State of Colorado to pay for the plugging, abandonment and reclamation of these well sites. This CDP provides an opportunity to take a close look at marginal oil and gas wells within the CDP area and require the plugging, abandonment and reclamation of those well sites before they become a burden on the state. COGCC rule 216 states, “Comprehensive Drilling Plans are intended to identify foreseeable oil and gas activities in a defined geographic area, facilitate discussions about potential impacts, and identify measures to minimize adverse impacts to public health, safety, welfare, and the environment, including wildlife resources, from such activities.” Plugging and abandoning marginal wells within the CDP area will minimize the potential for impacts to environment and wildlife resources while reducing the likelihood of the state expending resources needed for other cleanup efforts. The Department recommends that COGCC staff and the Commission address the issue of plugging and abandoning marginal wells as part of the Crestone CDP process.
  • Conclusion: The Department has reviewed the preliminary CDP from Crestone and provided comments and recommendations; however, as the CDP matures additional comments and recommendations may be forthcoming to minimize the impacts from oil and gas operations on nearby residents. Two potentially contentious issues deal with surface use/lease negotiations between two operators and the plugging of marginal wells within the CDP area. The Department understands the legal and institutional challenges of these issues; however, the CDP process is designed to overcome these challenges and facilitate solutions for all parties.

The Town of Erie chimes in: requests relocating a planned well pad and pipelines

The Town of Erie Planning & Development department (portions of the Town of Erie are included in Crestone Peak’s proposed CDP area), sent its comments to COGCC Director Matt Lepore on Nov. 10, 2017.

Erie specifically requested that Crestone Peak relocate the proposed Section 11 well pad to the State Highway 52 corridor. Erie also requested moving proposed pipelines: “In an effort to reduce any impacts to existing Town of Erie residential neighborhoods, the proposed pipelines through the Kenosha Farm and Erie Village subdivisions should be relocated to the North 119th Street and Kenosha Road right-of-ways.”

Erie also specific requests regarding noise mitigation, saying among other requests, that Crestone Peak shall ensure that the noise levels from operations (including the use of a drilling rig, completion rig, and/or stimulation) are reduced at least 10% below the maximum level permitted by certain existing COGCC regulations.

In addition, Erie submitted comments/requests as to well leak detection and repair, drilling and hydraulic fracturing fluids, water supply, access/traffic, and road repairs. Read the full text of the letter from the Town of Erie here.

Crestone’s CDP second draft: addressing comments from first draft

Crestone Peak discussed the overall plan, in part, as follows: “At the current time, Crestone is proposing six potential oil and gas locations within the CDP area. Crestone however, is currently conducting an in-depth review and analysis of the potential oil and gas locations as a result of numerous comments requesting such locations to be located adjacent to Highway 52. Crestone will update the attachments accordingly if locations adjacent to Highway 52 are feasible from a surface and operational perspective. Regardless of the number of potential oil and gas locations in a Final CDP plan, all such locations will be ‘tankless’… Crestone will transport by pipeline all liquids produced from the wells on these well pads to the Hub, located at the intersection of CR 6 and CR 7, in Weld County.”

Read the full second draft CDP document here.

Legal Notice