This week, the Wildgrass Master Association’s Oil and Gas Committee sent two new documents below to the Broomfield City Council.

1) Broomfield MOU Comparison with Erie and Brighton 1-3-17 - This memo provides a comparative analysis to the Broomfield City Council of the MOU provisions and regulations relative to those of the state COGCC and several nearby jurisdictions: the City of Brighton and the Town of Erie. It provides recommendations of “best management practices” that are being used by operators in other parts of the state that Broomfield should consider adopting.

2) Wildgrass proposed MOU Amendments - 3 - This document includes specific recommendations and feedback for Broomfield to consider in the MOU to better protect the residents in the northern neighborhoods and throughout Broomfield as oil and gas operations continue to be proposed throughout the county.

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Extraction delivered a presentation to investors today. It showed their planned growth into Broomfield. The slides detailed their plans to the investment community for continued, extensive growth south. The presentation includes a variety of financial numbers and projections going forward.  It talks about changing well completion methods and drilling longer horizontal wells for more profits.  There is no mention of using pipelines or any of the other increased costs as they expand large-scale development into residential areas. In fact, Extraction's only intended use of a pipeline appears to its "Robust pipeline of acquisition opportunities".

The screenshots below are from the presentation. The full presentation can be found here: http://ir.extractionog.com/phoenix.zhtml?c=254439&p=irol-presentations

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In the past two years, Extraction has had 16 documented spill incidents. 7 of these spills have been at legacy / inherited sites and had been going on for an indeterminant amount of time.  9 have been at modern operational facilities operated by Extraction that are similar (but smaller) than what's being proposed in north Broomfield.

Extraction documented 6 of those 9 incidents as Human Error, resulting in 200-300 barrels of oil and produced water being spilled.  

Quoting some of the incidents:

• 12/12/14 - “The secondary containment liner failed”
• 1/1/15 - “Due to freezing temperatures, approximately 15-20 bbls of produced water were released from a water truck”
• 3/6/15 - “a valve was left open at the back of a production tank”
• 11/13/15 - “The valve was left open filling the concrete pit and overflowing” (note, this spill went on for 4 days!)
• 7/25/16 - “The load line valve on the north side of the tank farm was left open.”
• 11/18/16 - “5-10 barrels of produced water were released by a 3rd party vendor”

In spite of these human error incidents, Extraction acknowledged no culpability in any of the incident reports. Vendors, freezing temperatures, and other factors were always cited. It was never “we left the valve open”.  Instead it’s “a valve was left open”. 

The spills are summarized here: https://www.dropbox.com/s/p28w5zimqcyexig/Extraction-Spills.xlsx?dl=1 (one other thing of note in these details is that 13 out of the 16 spills escaped secondary containment).

Below are the meeting notes from symposium held on Thursday, November 3, 2016 from 7:00-9:00pm at the Renaissance Boulder Flatiron Hotel.

Slides:

·      Wells and Well-Being: What to Expect When You Live in Colorado’s Oil and Gas Fields

·      Oil and Gas Development: Evaluating the Health Implications 

·      Like Oil and Water: Unconventional Oil and Gas Development, Water Use, and Water Quality

Objectives of Conference:

Provide an overview of potential health effects of larger scale oil and gas production in close proximity to suburban neighborhoods 

Speakers:

·      Mayor of Broomfield, Randy Ahrens

·      Stephanie Malin, PhD, Department of Sociology, Colorado School of Public Health, Colorado State University

·      Lisa M. McKenzie, PhD, MPH, Department of Environmental and Occupational Health, University of Colorado

·      Joe Ryan, PhD, Colorado Water and Energy Research Center, University of Colorado Boulder

·      Ann Byers: Chair of Wildgrass Oil and Gas Committee

·      Linda McKibben, Master of Ceremonies, Wildgrass Homeowner

Summary of Presentations:

Randy Ahrens, Mayor of Broomfield

Mayor of Broomfield Randy Ahrens opened by stating that he started his career in the oil and gas industry as an engineer working in western states on oil production. He also described some of the history of oil and gas development in the Broomfield and events leading up to the Colorado Supreme Court decision against the Broomfield city vote for a fracking moratorium. Mayor Ahrens expressed concern with size of recently proposed oil and gas projects in close proximity of neighborhoods. He also expressed concerns that use of forced pooling may not always be appropriate. Mayor Ahrens says he applies his efforts to ensure a high quality of life in Broomfield with a proper balance of oil and gas development with community life.

Ann Byers, Chair of Wildgrass Oil and Gas Committee

Ann Byers provided an overview of how Wildgrass homeowners came together to understand their rights as mineral owners, and to seek advice on their rights may be better protected and represented in the COGCC oil and gas development approval process. Impacts to the community, such as health concerns, need to be understood. Some argue that oil and gas has no impact to the health of a neighborhood. Others point to certain harm. What is the truth on what are the most likely impacts? With the wide variety of information available, Wildgrass and Anthem need time to look the impacts to their neighborhood before the COGCC approves the proposed oil and gas development.

Stephanie Malin, PhD, Department of Sociology, Colorado School of Public Health, Colorado State University

“Wells and Well-Being: What to Expect When You Live in Colorado’s Oil and Gas Fields”

·      Dr. Malin presented on the Environmental Sociology impacts of living near oil and gas production, specific topics included:

      o   Natural Resource Extraction & Poverty

      o    Environmental Justice & Health

      o    Boom & Bust Cycles

      o    Impacts to Daily Life/Community

·       Dr Malin first started studying environmental sociology in Utah when some of the first fracking activity began to take place.

·      She noted that Weld county may now have the most unconventional oil wells of any county in the nation, which explains why these topics are relevant to Colorado.

·      Contested governance is a primary issue with O&G development. Benefits and costs are unevenly distributed. Land use conflicts result. Who decides zoning and access? Is there procedural justice in the system?

·      Environmental risks and health concerns can produce long term stress

·      The 2005 Energy Policy Act pushed regulation to the states, which resulted in a deregulated Colorado. O&G is exempt from several federal regulations including the Clean Water Act.

·      Colorado’s COGCC is the sole state regulator. It is under funded and has a problematic record (Opsal and Shelley 2014)

·       Based upon a Colorado Supreme Court decision, state control trumps local jurisdictions. This disempowerment in communities with health and environmental concerns leads to community tensions and a decrease in the quality of community life

·      Question from the audience: Are there any communities that are against drilling? Answer from Dr Malin: Ft Collings and Longmont had voted in restrictions on O&G development within city limits, but the COGCC sued these communities and these were then overturned by the State Supreme Court. NY State has banned fracking as has specific areas in Texas

Lisa M. McKenzie, PhD, MPH, Department of Environmental and Occupational Health, University of Colorado

“Oil and Gas Development: Evaluating the Health Implications”

·      Dr. McKenzie introduced the Colorado School of Public Health, which is a cooperative effort among CU Boulder, CSU and the Colorado Department of Public Health

·      Dr, McKenize noted that aspects of potential environmental stressors of oil and gas production include air quality, water quality, traffic, noise, light, vibrations, economic conditions, social conditions, health infrastructure and accidents/malfunction.

·      The scale of exposure is an important factor, but we don’t yet conclusively know how close is too close. How many wells in a given area present problems? These are important questions as 378K people in Colorado live within 1 mile of a well.

·      Conclusions from predictive and descriptive health studies indicate:

      o   People living nearest to the well pads may be at increased risk for neurologic, developmental, endocrine system, and respiratory health effects, as well as cancer and stress.

      o    Risk for exposures and health effects is greatest during the period of short-term, high air emissions that may occur during events such as during well-completions and well unloadings and may be higher at night.

·       Conclusions from ecological studies include:

      o   Cases of childhood central nervous system cancers higher than expected in Pennsylvania shortly after hydraulic fracturing introduced

      o    Cases of childhood leukemia not higher than expected in Pennsylvania shortly after hydraulic fracturing introduced

      o    More cases of bladder and thyroid cancer than expected in Pennsylvania counties with shale gas activity

      o    Cardiology and neurology hospitalizations increase with increasing density of wells in zip code

·      But ecological studies are limited, they do not include cause and effect results. Therefore, they are helpful for constructing hypotheses, but do not provide conclusions in themselves

·      Analytical studies are able to provide more conclusive results. For example, analytical proximity studies account for the distance of a sample from a given well source. Results from analytical studies indicate proximity to UNGD wells/activity associated with increased risk of:

      o    Congenital heart defects and possibly neural tube defects

      o    Low birth weight

      o    Preterm birth and high risk pregnancy

      o    Asthma exacerbations

      o    Nasal and sinus, migraine headache, and fatigue symptoms

·       But analytical studies do not always include baseline data, or definitively indicate what people are exposed to at a given time and location

      o   However, the distance O&G development should be to minimize potential for health effects. There is likely no one “right” answer for this question for a specific scenario

·       Additional studies are underway

·      Please see Dr. McKenzie’s presentation for further details and associated references.

·      Question: How does your age affect your sensitivity? Answer: the very young and very old are most sensitive. The very young were studied since their response times can be faster

·      Question: Do O&G companies disclose chemicals? Answer: Companies disclose main ingredients to fracking fluid, but keep some secret since they are proprietary.

·      Question: can we measure pollutants in the air? Answer: yes, with sensitive and expensive equipment.

·      Question: Do we have baseline data? Answer: we need to do more on baseline data

Joe Ryan, PhD, Colorado Water and Energy Research Center, University of Colorado Boulder

“Like Oil and Water: Unconventional Oil and Gas Development, Water Use, and Water Quality”

·      Dr Ryan explained that the Air Water Gas Sustainability Research Project is a large study funded in part by NSF. A number of agencies in addition to CSU and UC Boulder are involved.

·      The project is making use of data collected by the state of Colorado and other sources. This is relevant as Weld county has about as many unconventional wells any other county in the country.

·      The study addresses potential pathways for water pollution.

      o   How do we best get rid of Oil and Gas production waste, given that between 2-5 million gallons of water are used per well?

      o   The study found 596+ chemicals are used in Colorado. 1000+ are listed by the EPA

·      When studying the potential of water pollution, the study focuses on three aspects of each chemical:  (1) Hazardousness, (2) Persistence and (3) Mobility

      o   41 chemicals are of most concern. Of these 9 of them are used in 20% of the wells. Therefore, addressing these 9 is a good place to start on minimizing the impact of O&G on water pollution

·      A wide spread analysis of water samples from 2000 locations were included in the study

      o   It is determined that 42 samples contained methane from O&G production. The pollution was linked to 32 wells.

      o   There was little evidence of new wells causing water contamination

·      450 spills per year were recorded in 2014, with .17% of these reaching the water supply. Spill frequency has increased significantly in the last few years along with production

·      There is currently little evidence of contamination to municipal water systems.

·      It should be noted that data from COGCC is not consistent with data from FrackFocus.org. Therefore, data collection methods may need improvement.

·      Question: Do micro-organisms come to the surface with waste water? Answer: this may be possible, but it is not well documented

·      Question: What about the density of wells proposed? Answer: The disposal of waste water should be of concern

·      Question: what about seismic activity? Answer: Waster water injection has been known to cause seismic activity. There have been instances of this in Greeley and Trinidad.

·      Question: how do we know where the wells are located? Answer: see the COGCC website

·      Question: does the activity comprise hazardous materials handling? Yes, but O&G enjoys many exemptions to federal and state law. The fracking fluid composition along enjoys exemptions.

·      Question: Do they use evaporation in Colorado for waster water? Answer: no, not in Colorado.

Please take some time to dig through their project and research initiatives.  Their site is filled with plenty of great information that applies to Wildgrass as well.

http://www.broomfieldcleanairandwater.org/

Additionally, if you know people in Anthem, please tell them about this. We need to help get the word out.

Extraction's presentation began to provide some insight into the design plan of the Sheridan plan. As of now, the proposed plan for the Lowell pad has still not been made public.

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https://www.dropbox.com/s/tsp2ekmhc78sie9/Extraction-BroomfieldRedevelopmentPlan-Oct252016.pdf?dl=1

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The very recent advent of large scale oil and gas production adjacent to residential areas has raised concerns about the effects of increased air pollution on nearby residents. For example, the 2013 yearly average levels of certain air pollutants in populated portions of Weld county with large scale O&G were over 10 times higher than levels in down town Los Angeles and downtown Houston. O&G companies are now applying for large scale O&G development adjacent to neighborhoods in Broomfield.  What may happen to homeowner’s health when this large scale O&G production proliferates in Broomfield neighborhoods?

Therefore, Anthem and Wildgrass homeowners have arranged for internationally recognized and highly published scientists to present on the health questions that may arise in neighborhoods such as ours due to nearby O&G production. Part of their research is funded by a $12Million national grant by the National Institutes Of Health focused on Colorado, one the largest research projects of its kind in the nation. Broomfield homeowners are encouraged to attend. The presentations will be on November 3rd from 7:00pm-9:00pm at the Renaissance Boulder Flatirons Hotel in Broomfield.

Facility Name/Number: Dittmer KE Pad 29-032HN

Location: 447013

This is a 25 well site (to compare, the proposed Lowell pad is to be a 20 well site, the remaining three pads are to be 40 well sites). 

At this site, 9 wells have drilling permits and 13 have location status (perhaps 3 are complete?  We aren't sure why that doesn't add up to 25). Per the COGCC website, the inventory for this site is:

Condensate Tanks: 0

Gas Compressors: 6

Water Tanks: 6

Wells: 25

Separators: 30

Oil Tanks: 36

The attached pictures were taken at this site on 10/06/16. 

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This section will be updated as new WOGc meeting minutes are available

• July 20, 2016

There are more than ninety oil and gas well sites in Broomfield, primarily located north of 136th. During Wildgrass’s recent meeting with Extraction, Extraction described the steps they take to limit the risks to ground water within the wells themselves.  However, what was not addressed in the meeting was the impact due to surface leaks and spills.  That omission got us wondering what the risks were at the surface.  This is particularly important due to our proximity to the Lowell pad and the fact that the pad is directly between the two reservoirs.

Gas Leaks

The first question we looked into was air/gas related leaks.  These air polution related regulations are set by the Colorado Department of Public Health and Environment (CDPHE). Actual inspections are done by the City and County of Broomfield’s Public Health and Environment Division (PHE). This division checks all of the sites with gas storage facilities annually using a FLIR Infrared camera that identifies gas leaks. In addition to the PHE, the COGCC will also inspect gas related leaks when there is a complaint about air related issues.

According to Broomfield PHE, last year they inspected the 38 active sites in Broomfield with storage facilities.  Of those, 22 sites were identified to have an identified leak. As of the June 14, 2016 City Council meeting, PHE reported that 21 out of the 22  leaking sites had been fixed and validated.  With the exception of one well that was plugged and abandoned, they will all be inspected again this year. More details and the information supporting this can be found here: http://www.broomfield.org/DocumentCenter/View/14442

Surface Leaks in Broomfield

Next, we researched ground spills and releases.  These leak reports are managed by the COGCC and are based on reports from the Oil and Gas producers themselves.  Rule 906 defines when a spill must be reported to the COGCC (https://cogcc.state.co.us/Announcements/Hot_Topics/Hydraulic_Fracturing/Rule906.pdf)

Since 2012, seven spills were reported in Broomfield that met the defined criteria.  These spills could be dirty water, condensate, oil, or chemicals. The seven spills can be seen by selecting Broomfield here: http://cogcc.state.co.us/cogis/IncidentSearch.asp . We recommend running that query and reading the reports to better interpret if you that there is a potential impact.  A few notable ones you'll see in that search include:

• Doc #439650 - This well is located in the middle of the Broadlands community. Investigation is still ongoing per my conversation with the COGCC last week.
• Doc #436894 - This one is further northeast of us, but the spill did impact ground and surface water. This remediation is ongoing as well
• Doc #2222764 - This is a 3600 sq ft spill involving 15 barrels of drill mud who’s documented cause was human error during the drilling process.

Surface Leaks at Extraction O&G Sites in Colorado

Finally, the third area we reviewed was Extraction O&G’s spill incidents at their existing wells. This does not include gas leaks as that information is not readily available, and instead only focuses on ground spills and releases. If you go to the COGCC Incident Search and select all of the counties and enter a Operator ID of 10459, you can see Extraction’s 17 documented incidents.  Some notable issues include these two which occured within the past 3 months:

• Doc #401083405 - This most recent issue occurred on July 23 at Facility 446984.  11 barrels were spilled due to human error by an Extraction O&G employee.  All of the oil stayed within a lined area and was cleaned up without impacting the surrounding area.
• Doc #401052095 - The second most recent issue occurred on May 20 at Facility 445802.  10-15 barrels of crude were spilled due to human error by an Extraction O&G employee into the surrounding area.  Their attempt to close this issue was rejected because extraction failed to provide the required confirmation soil samples.

Again, the above is just a sample of the information out there and we encourage everyone to continue to read and look through the incidents occurring around our houses and with the vendor that is planning work in the area.

Matthew Sura,
Oil and Gas Attorney
specializing in representing landowners and mineral owners
(720)563-1866 /  mattsura.law@gmail.com

To drill a well, the oil and gas operator would like to acquire, through purchase, lease, or agreement, the right to extract the oil and gas accessed by the well.  But what if there is one mineral owner in that area who does not want to allow drilling?  Then the operator has the ability to apply to the Colorado Oil and Gas Conservation Commission (COGCC) to “force pool” the reluctant mineral owner – thereby allowing the mineral development to go forward.  The force pooling laws are found in C.R.S. §34-60-116 and COGCC Rule 530.  

Forced pooling is often threatened by landmen to persuade reluctant mineral owners to lease their minerals.  But the threat of forced pooling should not be used to pressure a mineral owner to hastily sign a lease.   Forced pooling is only used as a last resort for operators who have already acquired leases to the vast majority of acreage they are planning to develop.  In 2010, the COGCC received 62 forced pooling applications.  Operators want to avoid the additional time and expense of going through the COGCC process to force pool a mineral owner.   

In negotiating with a landman, it is helpful for a mineral owner to understand the process of forced pooling.  Before an operator can pool an area, the area must be included into a drilling and spacing unit.  This is done through an application with the COGCC.  The COGCC defines a “drilling unit” as the largest amount of acreage that can be efficiently and economically drained by a single well. C.R.S. §34-60-116(2).  Thus, a landowner who only owns a percentage of the minerals under his land may be made part of a drilling unit, regardless of the size of the unit.  Likewise, if a “common source of supply” (i.e. a large reservoir of oil) underlies several parcels of land, all the mineral rights underlying those parcels may become part of a single drilling unit. 

To create a drilling unit, the COGCC defines the boundaries of the “common source of supply” and determines the approximate location of the well in that drilling unit that will efficiently drain the resource.  All of the mineral owners within the proposed drilling unit are given notice (Rule 507(b)) and may require a hearing on the drilling unit by submitting a formal protest to the COGCC. (Rule 509).  However, this is simply a hearing on the underlying geology of the area.  A mineral owner would only be able to object to the size or shape of the drilling unit.  To influence the COGCC decision, the landowner would likely have to offer expert testimony from a geologist.  

Once the drilling unit has been established, an affected mineral owner, who has not leased his minerals, has four different options:  He can choose to sell his minerals, lease his minerals, consent to voluntarily pool his mineral interest with the others and participate (financially) in the drilling operation, or be a “non-consenting” owner and be “force pooled”. 

To “force pool” a non-consenting mineral owner, the industry must apply to the COGCC to get a “force pooling order”.  An unleased mineral owner is considered “non-consenting” if the mineral owner has refused a reasonable offer to lease.  If the order is formally contested by the mineral owner (Rule 509), the COGCC will hold a hearing to determine if the offer to lease was reasonable.  Reasonableness of the offer is determined by comparing the terms offered in the lease to terms accepted by adjacent mineral owners.  Before the hearing, the non-consenting mineral owner should request copies of the operator’s lease agreements with all other mineral owners in the unit.  At the hearing, the non-consenting mineral owner may only present information as to why the lease terms offered were not reasonable (Rule 530(c)) or challenge the operator’s compliance with the rules or statutes.    

If the COGCC issues a force pooling order, there are four consequences for the non-consenting owner;  1) oil and gas operations in that drilling unit are allowed to proceed, 2) the mineral owner will get a 1/8 (12.5%) royalty payment, 3)  the other 7/8 of the mineral interest payments are withheld to pay-off the costs of the well (plus penalties), and 4) if the mineral owner owns 100% of the minerals under a parcel of land, the operator will not be able to locate the well or facilities on that parcel.

A non-consenting mineral owner’s working interest in the well is his proportionate share of mineral rights in the drilling unit.  If the mineral owner had ten (10) acres of mineral rights in a forty-(40) acre drilling unit, his working interest in the well would be 25%.  To obtain a working ownership interest, he would be required to pay 25% of the costs but then would receive 25% of the income. 

Because the non-consenting owner has not paid his (25%) share of the costs, he will not receive his working interest income until those costs are paid.  Instead, the non-consenting owner will only get a 1/8 royalty payment from that working interest.  The other 7/8 income is withheld by the operator until the amount collected equals the non-consenting mineral owner’s proportionate costs of operating the well and off-site equipment, and double the proportionate costs of drilling the well.  Once the costs are paid, then the mineral owner gets his 8/8 proportionate share of the well (in our example, the full 25% working interest share).

Here is an (oversimplified) example of how it works using completely fictional numbers:

·       If the force-pooled mineral owner owns 25% of the minerals in the drilling unit, then that owner would get 1/8 (12.5%) of his 25% share of production proceeds as a royalty.

·       The other 7/8 (87.5%) of the force-pooled mineral owner’s proportionate income goes to pay the mineral owner’s proportionate costs of annual operation and off-site equipment (25%), and double the proportionate costs of drilling the well (50%).

·       For the sake of convenience, let’s say the cost of drilling a well is three-million ($3,000,000), off-site equipment is $100,000, and the cost of annual operations are $100,000/year.

·       The costs that must be recouped by the operator before the mineral owner becomes a part-owner of the well are:

             o   50% of $3,000,000 drilling costs = $1,500,000

             o   25% of $100,000 of off-site equipment = $25,000

             o   25% of $100,000/year in operating costs= $25,000/year

·       If the well generates an average of one million ($1,000,000) in revenue a year, the working interest in our example would be 25% of one million= $250,000 (minus costs). 

·       The royalty payment the mineral owner receives is 1/8 (12.5%) of $250,000 = $31,250/year. 

·       The other 7/8 (87.5%) of the mineral owner’s income would go to pay the costs of the well listed above.  7/8 of $250,000 = $218,750

In this scenario, it would take over seven years to pay the proportionate share of the costs that must be recouped before the non-consenting mineral owner gets their 25% ownership share in the well.  At that point, the well production may have substantially declined.  However, many wells are productive for decades. 

This scenario is, of course, based on completely fictional numbers.  Recently, the costs of drilling wells in the Niobrara have been as high as $6 million.  Yet, if the well is a real producer, like the Jake well in Weld County, it would pay-off in less than one year.  Other wells never pay off. 

In summary,

·       Someone who owns all of the minerals on a large acreage probably will not be force pooled. 

·       But force pooling is a real threat to the small landowner or a landowner who does not own 100% of his minerals. 

·       This threat of force pooling is only carried out when the operator has acquired leases to a majority of the acreage it is planning to develop.  During the early leasing phase, an operator will not force pool a mineral owner. 

·       Mineral owners who are forced pooled will still receive a 12.5% royalty interest—then their full proportional mineral interest once well has paid out double the costs of drilling.

·       If you are forced pooled, it is best to get legal representation to ensure your rights are protected. 

Are you a physician, nurse, health tech, psychologist, sociologist, pulmonologist, asthmatic specialty, neurologist, hematologist, chemist, biologist, lab tech, or dermatologist?

Calling all interested health industry members living within Wildgrass! We are looking for industry knowledge to serve our Wildgrass community locally in the health implications of air quality, water quality, health, and social impact.   If you live in Wildgrass and have skills in these disciplines or like disciplines, please consider joining our Wildgrass health team subcommittee!

This is not limited to health professionals only.  If you have any other professional knowledge that may help with the community research, please volunteer to help through the Contact page.

The Colorado Department of Public Health and Environment tracks reported health concerns thorughout the state.  The web site includes a place to report any concerns that you have due to nearby Oil and Gas operations.  Additioanlly there is study information, frequently asked questions, and a map of where reported concerns are occurring.

https://www.colorado.gov/pacific/cdphe/categories/services-and-information/environment/oil-and-gas

All "Interested Parties" on Extraction's Spacing Applications will receive two blue "Notice of Hearing" documents in the mail (attached).  These notices are letting you know that the Spacing Applications we previously received are being set for hearing and that we have until August 15, 2016 to protest the spacing.  If anyone files a protest they will be able to participate in the pre-hearing conference that same week.    

This is only the spacing application, not the drilling permit, and not the force pooling request which have not even been filed yet.  There is a group reviewing this application.

A full copy of these documents can be found here: https://www.dropbox.com/s/f75i8e9xwaep7sh/SpacingApplicationHearing.PDF?dl=1

For those who didn't receive all of these, copies are available here:  

High West Resources Lease (redacted): https://www.dropbox.com/s/b8vww320grg6m55/High%20West%20Letter_Redacted.pdf?dl=1

Extraction Permit Application 1: https://www.dropbox.com/s/73hoc8uigde16yp/Permit%20App%201.pdf?dl=1

Extraction Permit Application 2: https://www.dropbox.com/s/of4b6m6szjv549g/Permit%20App%202.pdf?dl=1

During the meeting with Extraction on Monday, they requested that anyone with questions contact them directly. This included getting answers to many of the questions that were asked during the meeting as well as any questions or concerns that we may have at any point throughout this process.

Hotline Number: 720.282.4582

Email: info@extractionog.com

Please reach out to Extraction with any questions, concerns, or requests for any additional information that you may need.

Yesterday, realtors in our community and the surrounding area sent the following communication to the Broomfield City Council. We followed this up with our presence at the City Council meeting tonight.  Communication is now active and ongoing between these realtors and we'll add to this post a summary outcome of that effort as it becomes available.

The following is a repost of Matt Sura's article about establishing a protective lease. The original article can be found on his website: http://www.mattsuralaw.com/oil-and-gas-fact-sheets

Essential Elements of a Protective Oil and Gas Lease 

Matthew Sura, Oil and Gas Attorney, specializing in representing landowners and mineral owners
(720)563-1866
mattsura.law@gmail.com

Why you should never sign a standard industry lease

For most landowners, the investment in their home and property is one of the largest investments they have. Yet, far too often, landowners threaten that investment by signing a lease or surface use agreement without consulting an oil and gas attorney.

Like any business deal, both parties signing an oil and gas lease are hoping to receive some benefit from the transaction. The landowner (mineral owner) wants to receive maximum return for the extraction of his minerals, the oil and gas company wants to get access to those minerals as cheaply as possible with the least number of restrictions to drilling and development.

The standard 88 lease is the oil and gas companies’ opening offer. It is the minimum they think they can offer without being insulting to the mineral owner. If you do not negotiate for better terms in the lease, you will be leaving money on the table, as well as possibly jeopardizing the value of your land.

Leverage in Negotiating with the Oil and Gas Industry

What the industry does not want landowners to know is that landowners do have significant leverage in these negotiations. If you own your mineral rights, you have something of value that the oil and gas company wants. You can negotiate the bonus payments, royalties, the protections for your land… nearly EVERYTHING IS NEGOTIABLE.

The ways to increase your leverage are: educating yourself about your rights and how much they should pay to access your minerals, joining together with your neighbors to increase the acreage you have in the negotiations, and obtaining legal counsel.

Working with your Neighbors: Landowners with mineral rights have the ability to negotiate fair compensation and protection of their land. Landowners can increase their leverage by banding together with their neighbors to negotiate better compensation and surface protections for their entire neighborhood. More acreage = more leverage.

Legal Counsel: Landowners often feel overwhelmed or helpless when first approached by the industry. Industry representatives can leave the landowner feeling like they have no option but to give the industry access to their minerals, or permission to drill on their land. To have equal footing in these negotiations, it is often helpful to have the assistance of an oil and gas attorney who has experience representing land and mineral owners.

Oil and gas law is a specialized area of the law. An attorney that has experience representing landowners and mineral owners in oil and gas transactions will have a better sense of what fair compensation is for mineral rights in the area and may be able to “shop around” your lease to a number of oil and gas companies to find the best terms. An oil and gas attorney will also know the clauses of the lease that must be removed, or added, to protect you and your property.

Negotiations as a Land and Mineral Owner

When the oil and gas industry believes that there is oil and gas under a property, the mineral owner for that property may be approached by a landman to sell or lease those mineral rights. Landmen are professionals that research mineral ownership and negotiate the purchase or lease of mineral rights from willing owners. Some landmen work for the oil and gas operators directly, some work for independent subcontractors who will then transfer the leases they negotiate to oil and gas companies for a profit.

Landmen have a code of ethics but experience has shown that it is not always upheld in practice. One questionable tactic that a landman might employ is to attempt to play one mineral owner against another. A landman may tell a mineral owner that the bonus payments and royalty rates they are offering are much higher than they are offering anyone else. A landman may also state that other neighbors have already signed leases. These statements may be untrue and can build mistrust among neighbors. Landmen may also threaten to “force pool” mineral owners who are unwilling to lease or sell their mineral rights. These are often empty threats that are only meant to intimidate mineral owners who do not immediately sign the first lease presented to them.

Selling mineral rights is a dangerous proposition for any landowner. Landowners who sell all of their mineral rights have sold away their ability to be able to place conditions on how the minerals are extracted, and have forfeited their share of any monetary benefit from the resource extraction. A more common approach is to lease the minerals to an oil and gas operator.

The oil and gas landman’s standard industry lease should be rejected outright. The industry’s standard leases and surface use agreements are not specific to the needs of the landowner and are written to protect the industry, not the landowner.

A Protective Lease

A “protective lease” is one that gives 1) fair compensation for access to your minerals, 2) fair lease terms, and 3) protection of your land through a surface use agreement. Below is a list of clauses in a standard lease as well as other clauses that you will want to consider to make your lease a “protective lease”. This is a partial list of issues a landowner should consider when negotiating a lease. Again, it is extremely helpful to have the assistance of an experienced oil and gas attorney when negotiating a lease.

1)   Fair Compensation

Note: The going rate for bonus payments and royalty rates are very dependent on location and market. If there are some very productive wells nearby, the value of your minerals will rise. If the price of oil continues going up, even marginally-producing areas may be attractive. On the other hand, if a well drilled near your property is a dry hole, then the value of your minerals will drop precipitously. The price of gas is so low that even high-producing wells are being shut in.

STANDARD LEASE PROVISIONS

·      Bonus payments for signing the lease - A bonus payment is money paid as an incentive for simply signing the lease. The bonus payment is set to an amount of money per mineral acre. Bonuses in Colorado over the past few years have ranged from $6,000 / acre to $150 / acre – depending on the location, market price, and number of acres being leased. The more acreage that is being leased— the higher the bonus payment. The money is typically paid within 60 to 90 days of signing a lease.

·      Royalty payments - Royalty payments are a percentage of the production that comes from a well. A mineral owner who has 10 mineral acres within a 100-acre drilling unit has a 10% interest in that well. The lessor will receive a percentage, in the form of a royalty, of that interest. Thus, if the lessor has negotiated a royalty of 18.75% the amount they will receive will be 18.75 % of their 10% interest in the well... or 1.875% of the profits from that well. The royalties are paid without accounting for the costs of drilling the well or most production costs. The lowest rates in Colorado are 15% (on the eastern plains) but can go as high as 20% (1/5).

MODIFICATIONS TO REQUEST

·      Removal of “post-production costs” clause – Lessors need to be careful about provisions in standard leases that permit royalty payments to be reduced based on post-production costs including treating, processing and transporting the gas taken from their property. This provision can reduce the effective royalty rate by 5%. There is usually no post production costs associated with oil production – just gas.

·      Request Independent Audits – Mineral owners with a lot of acreage should attempt to negotiate the right to have a third party confirm the gas company's actual production figures for each well. The lessor should at least have the right to review the oil and gas company's records related to production and operations under the lease.

·      Request payments for pipelines placed over or under your property – An oil and gas company is allowed to place pipelines on a lessors property for gas produced on that land. But if the oil and gas company is attempting to place pipelines over land that serves other mineral interests on adjacent properties, the landowner should be provided additional compensation.

2)   Fair Lease Terms

·      Length of your lease - The length of time that an oil and gas lease remains in effect can have a significant impact on the lessor's ability to negotiate and receive market-rate compensation. The typical oil and gas leases provide for a primary term and a secondary term. The primary term is the initial fixed term (usually three to five years). This is the period of time during which the industry must drill a well. If a well is not drilled during this time, the lease expires. The mineral owner is then free to negotiate a new lease – including a new bonus payment. The secondary term is the period of time the land is in production. This term lasts as long as the wells on the property are still producing in paying quantities.

·      Renewals of your lease, and rates for renewal - There are a variety of ways for a lessee to extend or renew the primary term, whether automatically or through an option. These provisions in the lease must be read and negotiated carefully. The typical renewal provision is one to two years in length and requires repaying the original bonus amount.

·      Warranty Clause - The warranty clause of the oil and gas lease obligates the lessor to defend title to the mineral property leased if it is questioned. The lessor could incur substantial legal expenses in the event of such title disputes. The oil and gas industry employs legions of landmen to search title records. Mineral owners should avoid legal exposure by removing the language or adding a provision that expressly states the mineral owner gives no warranty of title

3)   Surface Protections

The standard industry lease will contain a provision that give the oil and gas operator the right to, “unimpeded ingress and access to the leased lands, and the right to use so much of the surface, and at such locations, as may be necessary or convenient for lessee's oil and gas operations.” TRANSLATION: under the standard industry lease, the operator may use as much of your surface as they wish. To avoid that, you should consider adding the items in a SURFACE USE AGREEMENT that is attached as part of your lease. Once the lease is signed, you have lost much of your leverage to demand protections of your surface. If the operator is unable or unwilling to negotiate a surface use agreement at the time the lease is signed, a provision should be added that states, “Any entry or location of facilities on the surface property is forbidden without permission granted through a separate surface use agreement.”

Here is a sample of issues a landowner may want to include in a surface use agreement:

·      Location of the well(s) – Does the well have to be on your property? Directional or horizontal drilling technologies allow the drilling rig and well pad to be placed several thousand feet away from the 3 underground target the operator wants to produce. If the well or other oil and gas facility must be located on your property, consider the truck traffic, noise, and odors of the industrial facility. Choose a location that will be least obtrusive to yourself, and your neighbors.

·      Multi-well pads –If there will be multiple wells in the area, operators have the ability to co-locate wells on a single well pad – thereby minimizing the impacts to the surface. However, these facilities are larger, and create more air emissions and nuisance (noise, traffic, light) and longer drilling times. If allowed, multiwell pads should be located far away from homes. I recommend at least 2,000 feet.

·      Location of roads and vehicle access – Can the well be drilled near an existing road? Are there places where you would like the industry to build a road?

·      Transportation plans - It may take over 2,000 round trip truck trips to drill a well. Once the well is drilled, the industry monitors the well at least once a week. In some cases, this monitoring can be accomplished remotely through supervisory control and data acquisition (SCADA) systems.

·      Additional equipment and facilities - Will you allow additional production facilities such as oil and gas processing, compressor engines, or temporary worker housing on your property? Will you allow regional pipelines on your land? You should charge extra for regional facilities to be placed on your land.

·      Limiting surface disturbance –How much acreage will you lose access to? Using an existing surface well site location or access road can avoid the impacts of new construction. Operators may be able to reduce the size of the well pad or to limit the width of the access road.

·      Interim reclamation – What will the land look like when they are done? Operators should prepare a plan to control noxious weeds and undesirable species in disturbed areas. When the drilling is complete, the well site should be reduced to the minimum needed to maintain the well. All other areas should be reclaimed with native species or a seed mix recommended by the landowner. It is a good idea to take pictures of the land before the oil and gas company clears the land and moves in equipment.

·      Pits – Will you allow waste or production pits on your property? All pits eventually leak into ground water and should be avoided if at all possible. The best operators have gone to “pitless drilling” systems that use holding tanks rather than pits to hold drilling fluids and flow-back from fracking or produced water.

·      Waste disposal – How will liquid and solid waste be disposed of? Will you allow waste pits or require closed-loop systems? Some operators try to convince landowners to allow them to “land farm” their drilling muds. This is generally a bad idea because even drilling muds approved from such use come out of the hole with naturally occurring petroleum and other drilling products that are toxic to soil.

·      Ground water impacts – Are you on a water well? Collecting and analyzing water and gas samples from existing water wells or springs before and after drilling is now required in most cases.

·      Noise impacts - Will the facility create noise? Most noise can be reduced through the use of electric motors, mufflers, locating or orienting motors or compressors to reduce noise, or installing insulated buildings or sound barriers.

·      Dust impacts –Industry is usually willing to water roads to control dust during drilling operations.

·      Visual impacts – Are there views you would like to protect? Would you prefer that the well is screened behind a berm? Will there be lights during drilling and after the well is drilled?

·      Water rights - Will the operator be using water taken from the property?

·      Fencing –Installing security fencing around wellheads and production equipment can help protect residents or livestock and contain surface impacts to a limited area.

·      Damages – How will the landowner be compensated for damage to the property?

·      Timing – Will the timing of the operations disrupt agricultural uses for the property? Is the area used by wildlife during certain times of the year?

·      Current use – Are there current or future uses of the land that must be accommodated by the operator?

·      Other requirements – Absolutely anything can be added in a surface use agreement. What makes your land special to you? 

For more information: Matt Sura Esq. – mattsura.law @gmail.com / 720-563-1866

Email template letters have been composed to send to our local city council members to ask for an open session to determine the use of the mineral interests held by the City for open space and parks. Please consider sending this letter prior to the city council meeting scheduled for the evening of July 26th.

Ward 3: 
Sam Taylor - staylor@broomfieldcitycouncil.org - 303.931.6477
Bette Erickson - berickson@broomfieldcitycouncil.org - 303.466.3255

• Letter - Email Template to Ward 3 Broomfield Council Members
• Ward 3 Map - ward3.png

Ward 4:
Kevin Kreeger - kkreeger@broomfieldcitycouncil.org - 720.982.3751
Greg Stokes - gstokes@broomfieldcitycouncil.org - 303.466.6710

• Letter - Email Template to Ward 4 Broomfield Council Members
• Ward 4 Map - ward4.png

Drilling vs. The American Dream: Fracking Impacts on Property Rights and Home Values
http://www.resource-media.org/drilling-vs-the-american-dr…/…

Drilling and The American Dream: Your Perfect Home in a Colorado Gas Patch
http://www.coloradoindependent.com/…/drilling-and-the-ameri…

Analysis: U.S. Drilling Boom Leaves Some Homeowners in a Big Hole
http://www.reuters.com/…/us-fracking-homeowners-analysis-id…

The Endocrine Disruption Exchange catalogues chemicals found in fracking fluid and produced a 45 minute informational video on fracking in Western Colorado
http://endocrinedisruption.org/chemicals-in-natural-gas-operations/introduction

Researchers Retract Findings Regarding The Health Risks Of Fracking: 
http://breakingenergy.com/…/researchers-retract-findings-r…/

The Use of Health Impact Assessment for a Community Undergoing Natural Gas Development
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3698738/

Human health risk assessment of air emissions from development of unconventional natural gas resources
http://www.bouldercounty.org/doc/landuse/mckenzie2012study.pdf

Ballot Initiatives 75 and 78: 
https://yesforhealthandsafety.org/initiatives/
http://dontfrackthornton.com/

Facebook group:
North Metro Neighbors for Safe Energy Development

Renewable EnergyColorado is 42nd in the nation in use of renewable energy sources, between PA and OK
http://energy.gov/maps/renewable-energy-production-state
We only get 3.11% of our energy from renewables and we are in the top 5 of sunniest states. Renewable sources provide 3.11% of Colorado's energy production, totaling 77,156 billion BTUs. This is 1.02% of total U.S. renewable energy production.

CDOT Study Re Gas and Oil Effect on Transportation
https://www.codot.gov/…/…/april-2015/14-information-only.pdf

Revenue Refund Owed to one oil and gas company
http://denver.cbslocal.com/…/colorado-loses-state-supreme-…/

Colorado has continued to have economy boom in the last year even though the rig count for drilling in Colorado is the lowest in 16 years:
http://www.denverpost.com/…/colorado-rig-count-drops-to-lo…/

Oil and Gas Industry Economic and Fiscal Contributions in Colorado by County, 2014
http://www.denverpost.com/2016/05/06/colorado-rig-count-drops-to-lowest-in-nearly-16-years/

Fracking Safety Exemptions -
https://www.eastcoastriskmanagement.com/…/Process-Safety-Ma…
http://www.louisianalawblog.com/…/awaiting-the-arrival-of-…/
https://www.osha.gov/pls/oshaweb/owadisp.show_document…

Public Health Concerns of Shale Gas Development
http://www.psr.org/…/public-health-concerns-of-shale-gas-de…