There’s never been a producing oil or gas well in El Paso County, but that hasn’t stopped drilling plans for Houston-based Ultra Resources, which bought more than 18,000 acres of the failed Banning Lewis Ranch property.
The region’s foray into oil and gas drilling will also be the city and county’s foray into how to regulate and legislate the industry and mitigate its potential environmental harms.
The Banning-Lewis land had been owned by oil companies before developers tried to turn it into the largest multi-use real estate parcels in the region.
Now, it’s back in the hands of an oil company, with new technology called hydrologic fracturing — popularly known as fracking — that could actually produce oil and gas in the county for the first time.
While Banning Lewis Ranch is part of the city, El Paso County commissioners read the writing on the wall and decided to come up with a set of regulations because of the heightened interest from oil and gas companies.
“We keep hearing about property owners who have been approached by oil and gas companies to buy their land or lease the rights,” said Commissioner Sallie Clark. “We decided we’d better be prepared in case there’s a storm of interest.”
County commissioners started a working group earlier this month to come up with oil and gas regulations for El Paso County.
“They don’t really know what they want — yet,” said Jeff Cullers, an associate attorney with Springs-based MacDougall, Woldridge and Worley. “We’ve never had this issue come up, so they are getting started behind some of the other counties.”
Cullers specializes in mineral leases for property owners. Often, the owners of the surface rights aren’t the owners of the mineral rights, and Cullers helps find those owners and negotiate leases with both the surface owners and the owners of the minerals.
“It’s complicated,” he said. “It’s easier to do what Ultra did, and just buy the property outright. That way, you don’t have the possibility of dealing with 100 different property owners and 100 different mineral rights owners.”
Easier for Ultra — but more difficult for the city of Colorado Springs and El Paso County.
“We’re approaching this cautiously, we’re still trying to figure out what we can control, and what the state controls. We don’t want to be too onerous, but we want to protect the land and the water supply,” Clark said.
That’s because hydraulic fracturing — a system of getting to oil and gas deposits caught between rocks — means injecting a lot of water and some chemicals into the rock to break it apart. It’s controversial and considered by some to be harmful to the environment.
Nearly every one of Colorado’s 36,000 wells are fracked, according to the Colorado Oil and Gas Conservation Commission. But so far, people don’t know exactly what’s in the fracking fluid used in Colorado.
This is the year that will change that. Acting on a directive from Gov. John Hickenlooper, Cullers said the commission will rule on exactly how much information companies have to make public. Eight other states have requirements to disclose what’s in the fluid.
Other concerns: what happens to the fracking fluid once it’s used? Is it a threat to groundwater? Where does the tremendous amount of water used in the process come from?
The county can do little to address some of those concerns — except for water. It can control, somewhat, where an oil company gets the 500,000 to 2 million gallons of water per well needed for the fracking process.
“We don’t have any control over what happens below the surface,” she said, “but we want to make sure we have regulations in place for what’s going on at the surface.”
El Paso County can also control things like road development into an oil and gas well, how the structure looks and what surface controls are in place.
“We’re looking at what other counties have done — Garfield County has some extensive regulations — and are developing ours from there. We’re asking other boards how their regulations work, what they wish they had done,” Clark said.
While El Paso County can control what happens at the surface, everything that happens below ground is strictly the purview of the state of Colorado’s Oil and Gas Conservation Commission.
“We feel like we have an extensive, comprehensive set of regulations in place to protect people and the environment,” said Director David Neslin. “We have it covered.”
State regulations include requirements to encase the well in both cement and stainless steel to prevent fluids from leaking into the ground water.
“We want to control the fluid that goes down to break open the rocks, but we also want to control the oil and gas that comes up the pipe. That can damage the aquifer as well,” Neslin said. “That’s why we require both cement and stainless steel.”
The state also has requirements that fracking fluid be recycled and reused, and stored in a double container to prevent leaks at the surface.
While Neslin feels like the state has it covered, he also says he understands fracking to be complicated — and of grave concern — to some people.
“We try to educate people about it, for instance, all the wells currently fracked in Colorado are 5,000 feet below the aquifer,” he said. “That means there’s a mile of solid rock between the wells and the water supply. It reduces the risk.”
Neslin says the state’s myriad regulations are more than adequate to meet the environmental concerns from oil and gas drilling. All of those rules, he said, are available on the department’s web site at http://cogcc.state.co.us/. He also recommends a voluntary fracking site, www.fracfocus.com. Oil and gas companies voluntarily list their fracked wells and some of the chemicals used at that site.
“The department has a staff of hydrologists, geologists, engineers,” he said. “We have enough regulations here. The county doesn’t necessarily have to come up with more.
But for Clark and El Paso County, the state’s assurances aren’t enough.
“We don’t want to be caught unprepared,” Clark said. “If we don’t get actual oil and gas wells, then that’s OK. But if we do, and there are indications that we have a tremendous amount of interest, we’ll be ready.”