4:00am

Thu December 1, 2011
Business

Oil Boom Creates Opportunities, Consternation Along Colorado's Front Range

Northeastern Colorado is fast becoming the site of one of the country’s next big oil booms as new technologies surrounding hydraulic fracturing are allowing companies to get a piece of the Niobrara Shale.  Previously deemed too expensive to drill, the Niobrara formation that extends from beneath Denver all the way to western Nebraska is thought to hold more than a billion barrels of oil.  The only trouble is much of the land atop it is home to one of the country’s fastest growing regions. 

Drilling Comes to the Suburbs

To get an idea of just how thirsty we’re getting for oil and gas, a good place to start is the cul de sac where Shane Davis lives in the northern Front Range town of Firestone. 

“It’s crazy when you see these derricks that shoot up 150 feet in the air,” Davis says. “They light up like a giant Christmas tree at night time.”

Standing next to his silver Volvo sedan, Davis looks out on a tan-colored well and a pair of storage tanks less than a football field’s length from his and his neighbors’ tract homes built in the 1990s on land that used to be prairie.

A short drive away, Davis points to one well that lies just a dozen or so yards from an empty, but functioning playground. Another is on land surrounding a school, a King Sooper’s Grocery store and even a small hospital. 

“The irony, we’ve got residential areas and yet we’ve got 25 signs that say “danger” or “toxic chemicals” or “highly explosive,” Davis says.

From West to East

It’s not an uncommon sight in Colorado and other energy-rich states these days as new technologies like horizontal drilling are allowing companies to bore underneath homes and whole towns. 

For the past two years in Colorado, the drill rigs have been on a steady march from the rural western slope of the Rockies to the eastern plains where 80% of the state’s population of five million people lives.

“I’ve seen that darn rig number 5 a lot lately, it was over by my house last week,” chuckles Brad Scholl, Longmont’s city planner.

On the edge of town, he stands next to a rig that’s drilling around the clock in a field surrounded by homes and a busy highway. 

“It’s coming on fast,” Scholl says.

State law is murky when it comes to whether or not municipalities like Longmont can stop drilling from within their boundaries. Scholl says that’s not his decision anyway. So he and other officials are focused on trying to mitigate the drilling as best as he can, most recently on the banks of the city’s Union Reservoir, a popular recreation site and local irrigation source where a company has applied to drill on city-owned open space.

“It really becomes a matter of artful negotiation,” Scholl says.

Filling Coffers

Artful negotiation for some, consternation for others.  Counties up and down the Front Range are bracing for the boom by beefing up local zoning regulations. One even banned drilling temporarily. Still many are embracing all this new tax revenue.

“This really is the epicenter of the newest oil and gas boom in the Rocky Mountain region,” says Sean Conway, a Weld County commissioner.

Booming Weld County now has more producing wells than any other in the country, 17,000 in fact, says Conway, and oil and gas revenues now fund half of the county’s budget.

“It is going to provide, at a very challenging time for local and state governments a new source of revenue that will allow them to do some things that they wanted to do but just couldn’t do because of the economic challenges,” he says.

Conway says drilling can peacefully co-exist with other development, if done right.

‘The Mouse that Roared’

But Weld County has seen extensive oil and gas drilling for decades.  Folks there seem a little more used to booms and busts.

Not as much perhaps to the south.

“The oil drilling is so brand new for this area, who would ever thunk,” says Joe’l Lambe. 

Lambe certainly didn’t when she retired from her job as a state environmental regulator and moved to the Ponderosa Hills subdivision in Douglas County south of Denver. 

So last year when the land men came knocking on Lambe and her neighbors’ doors and speculators started buying up lease after lease, she started organizing, driving door to door in her Subaru trying to educate homeowners about what’s coming. 

“We’re feeling a little powerless right now,” says Lambe, who recently formed a local group called L.A.N.D. “We’re hoping to be the mouse that roared.”

Much of the land in and around these neighborhoods has been leased, and with private mineral holdings that date back long before these homes were built, Lambe concedes drilling may be inevitable.  But she says the state doesn’t have to allow it so close to homes and businesses. 

Right now most set-back rules stipulate there has to be a 150 foot buffer between drilling and a structure, written literally so if a rig fell over it doesn’t land on someone’s doorstep.  

“As a retired state regulator, no matter what regulations you look at, they all have holes,” Lambe says. “This is a very big hole.”    

Engage or Regulate?

It’s not clear how much political traction such an effort will gain, especially since bruises are still healing from a bitter battle waged when drilling rules were last tightened to protect wildlife and groundwater in 2008. 

Democratic Governor John Hickenlooper, a former petroleum geologist, has said he’s opposed to tweaking the rules again, for now.

Tisha Schuller is president of the Colorado Oil and Gas Association.

“Our companies have an understanding that it is more difficult to do business in Colorado and we’re willing to do that, but we think the rules are strong,” says Tisha Conoly Schuller, president of the Colorado Oil and Gas Association. “Having the toughest rules in the country is something that Coloradoans can be proud of.”

Leading up to 2008, before Schuller came to her current post, many of COGA’s member companies threatened that they’d leave the state if the new regulations were passed.

“Right, we do have companies coming back,” Schuller says. “The oil and gas industry has adapted very well to the 2008 rules.”   

From Schuller’s office in a high rise in downtown Denver, there’s a stunning view of the Front Range and eastern plains, where she says the Niobrara formation holds big possibilities for the state’s economy. 

But she’s also quick to add that her industry needs to be doing more to engage with and educate homeowners, as drill rigs continue popping up in more and more neighborhoods.