The State Land Board, a lesser known state enterprise with a mission to manage Colorado's millions of acres in land surface and mineral rights for public schools, held an oil and gas auction on February 17.  After a long morning of desultory bids, the Board lined up a five-cherry jackpot from Weld County, generating $10,994,129 in lease revenue from the Denver-Julesburg basin. 

Unfortunately, Park County ginned up only $39,947.50, with many parcels going for the minimum $1.50/acre bid.  Among various inferences, two possible implications arise: either Park County doesn’t have much oil and gas, or a few oil and gas companies are going to hit it big.

Land Board decision to auction Park County parcels controversial

The Board’s decision to auction parcels in Park County for oil and gas leases is controversial.  The headwaters of the South Platte, a major source of Denver’s water supply, carve through the County, ending up in water storage reservoirs such as Spinney Mountain, Antero, and Eleven Mile.

The South Park Coalition and Be the Change, a state-wide organization focusing on economic, health, and environmental issues, objected to the auction of Park County parcels. They assert that the pervasiveness of the County’s uranium, mixed with the fracking and refracking necessary to dislodge the oil and gas stuck in the Niobrara shale rocks from 6800-11,000 feet down, may contaminate the metro area’s water supply and ruin the South Park landscape.  The volume of water needed for fracking may also affect the Frontrange’s current water problems.

In one fell swoop, Park County concentrates three of the biggest issues facing the state and the country: oil and gas development, water quality and quantity, and public school financing.

Park County is metro area entrance to South Park and southern Colorado

From the Denver metro area, Park County is the entry point to central and southern Colorado’s valleys and mountain ranges.  With the Mosquito mountain range to the west, and the backside of the Frontrange to the east, Park County shows off spectacular natural scenery and wildlife.  It contrasts sharply with Weld County’s flat, broad fields of wheat and corn, and its suburban development sprouting around Greeley west toward Longmont, Loveland, and Ft. Collins.

Weld County's Niobrara shale formation stretches into Park County

The Wattenburg oil field, which covers much of Weld County, now holds over 20,000 oil and gas wells.  In 2005 the Colorado Oil and Gas Commission increased allowable wells per 160 acres from five to eight – a 60 percent boost.  The Wattenburg field is about 50 miles x 50 miles. 

The Wattenburg "is a stealth field," said Theo Stein of Resource Media, an environmental communications firm in Boulder, to the Rocky Mountain News in 2008. "It has developed largely out of most people's attention, and a tremendous amount of wells have popped up out of anyone's radar."

Park Co. residents fear under the radar development

Some residents of Park County are afraid that the same “under the radar” impact will occur there. “As a landowner I have concerns about impacts to water and wildlife,” said Eddie Kochman, former state aquatic wildlife manager for Colorado Department of Wildlife and South Park area landowner. “One thing is for sure, there has to be more coordination between local government, state agencies, water providers, and landowners before additional development occurs.”

According to the Royal Gorge Office of the Bureau of Land Management (BLM), Park County contains approximately 207,000 acres of federal mineral lands, with about 51,000 acres already leased.  State lands bring the mineral lands acreage up to about 300,000, with 83,000 sold by lease for oil and gas development, most at the minimum or low price of $1.50-$2/acre.

Land Board bids in Park at minimum, Weld at $3300/acre

Weld county prices at the February land auction went up to $3300/acre, based on directional and horizontal drilling in the Niobrara formation, roughly 5500’ to 7500’ below the Wattenburg field.  Drillers will probably use the same techniques in Park County, including the fracking and refracking necessary to bring up the oil and gas.

Synergy Resources Corporation was a big buyer of the cheap Park County leases in February.  Its March 2011 report says that the company “is at the forefront of applying new technology to improve drilling efficiency, to reduce costs and to maximize well production… New well completion and stimulation techniques can triple the extraction of reserves over the life of the well.”

Oil and Gas companies see big profits from the Niobrara

To highlight the enthusiasm of the oil and gas industry over the Niobrara formation underneath Weld County, Synergy cites Andarko’s plans for 2011: 470-500 vertical wells, 20-30 horizontal wells, and 500+ refracking zones.

Park County is a long way from that kind of development, but the oil and gas opportunity is what draws oil companies to any location, and assessing that potential is now just starting in South Park.  The state and BLM may have jumped the gun by selling those 83,000 acres in leases at a low price without knowing the upside dollar value.

El Paso Oil and Gas testing, may drill 300 wells in Park Co

El Paso Oil and Gas intends to test four formations beneath Park County, not just the Niobrara.  The company hopes that it will increase its drilling and monetary success by expanding its exploration at a time when technology is making more difficult drilling profitable. 

El Paso’s prospectus for one unit in Park County, the Bald Hill Unit, indicates that full development will take about 30 years, and this unit represents less than half of what already has been leased in the Park.

If El Paso finds success in the Bald Hill Unit, it intends to drill 300 wells, according to David Wheeler, El Paso's Rocky Mountain Business Manager at a permit hearing in Park County.  “The water requirements for first-stage fracking of these wells will be approximately 46,000 acre feet – 20 fracks x 2.5 million gallons of water per frack x 300 wells.  These numbers produce 1500 acre feet of water used annually, enough for the domestic needs of 15,000 people,” says Phil Doe, Be the Change member and retired policy manager at the federal Bureau of Reclamation.

Second tier drillers will jump in after testing

Synergy plans on “leaving the Niobrara potential behind pipe until the best practices are vetted out by the larger players.”  This strategy means that sometime over the next 30 years, secondary players will jump into development, placing additional demand on water resources while, at the same time, affecting wildlife and landscape in South Park.

Fracking needs lots of water, maybe 100,000 people's worth

Doe believes that overlapping development in the remaining leased land in the area might double water requirements for first-stage fracking.  But the shale requires multiple fracking to retrieve maximum resources, and with wells working for 20 to 30 years, and fracking occurring every 3 to 4 years per well, overall water requirements may be as high as “500,000 acre feet, or a minimum annual depletion equal to the domestic needs of over 100,000 people.”

Finally the issue of water quality arises as the 500,000 acre feet used for fracking has to go somewhere.  Much of that water comes back up the pipe to the surface, rather like the acid reflux of heartburn.  This water is known as “product” and has to be disposed of, as it is contaminated with the chemicals used in fracking and by the ancillary minerals in the shale formations knocked about as a consequence of the drilling.

Park Co water may sparkle, from uranium

Since South Park has mineable uranium all about, it is likely that the wastewater will contain uranium, while, according to Denver Water’s chief engineer’s testimony at the state legislature in 2010, the city has no way, at the present time, of treating water for uranium contamination. 
The drilling may not just turn Park County into Weld County, but also into Rocky Flats, with wastewater contaminated by uranium stored in place, then hauled away to public treatment facilities that have yet to be built to treat this type of contaminated water.

Hudak's SB11-029 brings legislature's Ed committees to the problem

The Land Board, among other state and federal agencies, has to decide how it will continue to approach their oil and gas leases in South Park while meeting its mission to build financial resources for school districts.  State Senator Evie Hudak is sponsoring SB11-029, the State Land Board Annual Report bill, to require the Board to report its work to the House and Senate Education Committees as well as the Agriculture committees. 

The bill will enable the Education Committees to see how the Land Board has maximized funds for schools, but in today’s environment, an equally serious issue is at what cost.  The Land Board, in its multitudinous responsibilities, will have some tough weighing and measuring to do. 

Land Board sees experts argue over evidence

If the Board’s meeting before the February auction is any indication, it receives contradictory advice and information from many sources – public, civic, corporate, and personal.  Members of the Board are appointed based on their background as leading citizens, not for their knowledge of geology, physics, chemistry, water quality, or hydrology. Similarly, legislators lack the specific science knowledge that these complicated drilling activities require.

School funding evidence clear: not enough money!

The Governor in his 2011-12 budget has reduced school funding an additional $332 million, causing havoc across districts in the state.  Staff will be laid off, salaries cut, programs dropped, and class sizes increased. 

Meanwhile, oil and gas exploration and drilling to meet the country’s voracious energy needs will grow as fast as possible, with its corollary costs to the environment.  Niobrara oil and gas drilling requires massive use of water resources here in Colorado, the semi-arid state, and can contaminate those waters, requiring technology that has yet to be created to clean up the mess.

Post columnist Carroll weighs in, citing one well in Las Animas Co

Denver Post columnist Vince Carroll, in a recent Saturday essay, cited an employee of the state, a Ph.D. in chemistry, for his excellent work in testing a well in Las Animas County for contamination from oil and gas drilling.  The test results showed the well was not contaminated by the drilling, exulted Carroll. 

Carroll's research drills down 1 inch, leaving 7000+ feet unexplored

Left completely unexplored by the columnist are the larger implications of fracking and refracking – and the fact that the state will need many more Ph.D’s in chemistry, chemical engineering, geology, physics, hydrology, wildlife and hazardous waste management, among other fields, to keep up with the increasingly sophisticated technologies used to pull up that oil and gas. 

Carroll also did not address the cost to the state of adding the staff to do this work, or whether state employees, whom he calls “drones,” will have the necessary resources to manage this vast enterprise.  He also doesn’t address whether any young chemists will ever enter state employment as salaries have steadily declined due to income cuts and furlough days.   PEN  3 8 11

This post was published on March 8, 2011. Permalink »