County, energy company strike deal on safeguards for shale project in Colo.
March 20, 2013
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DURANGO, Colo. -- A southern Colorado county within the energy-rich San Juan Basin yesterday approved an agreement with an oil and gas company aimed at lessening impacts from a proposed oil shale exploration project.
In a unanimous vote, the three La Plata County commissioners -- two Democrats and one Republican -- adopted the memorandum of understanding, which commits Houston-based Swift Energy Co. to take certain precautions when drilling a pair of proposed test wells in a rural area in the western part of the 1,700-square-mile county.
The memorandum of understanding helps clear the way for the first test wells under the county's jurisdiction to be drilled in the Mancos Shale. (Another company has drilled test wells on the nearby Southern Ute Indian Reservation.) Many in the industry have high hopes that the formation, composed of inky hard rock, will revive energy production in the San Juan Basin in the wake of a precipitous drop in natural gas prices and a rise in oil prices (EnergyWire, March 18).
The agreement, which the company entered into voluntarily, calls for using existing well pads and roads whenever possible; restricting the number of new wells to one per exploratory unit; monitoring water wells on neighboring properties; capturing "fugitive" emissions of methane, a greenhouse gas, instead of flaring or venting it; and using electric motors on equipment to minimize air pollution.
In exchange, the county agrees not to protest Swift's exploratory application to the state, which needs to be approved by the Colorado Oil and Gas Conservation Commission before the project can go forward.
"We're going to go above and beyond what's required to make sure resources are protected," said Bob Redweik, Swift's corporate manager for health, safety and environment, at yesterday's hearing on the MOU.
Swift Energy wants to drill the two wells in two separate exploration units about 30 minutes southwest of Durango. The parcels, which are several miles apart, lie in a rural valley between two mountain ranges. While a few wells dot the area around the western unit, only two of them are active, and in the area where the eastern unit is found, there are no existing wells, according to a map on the county's website.
The approval of the county commission -- which now includes former Oil and Gas Accountability Project director Gwen Lachelt, voted into office last year -- came despite testimony from several residents expressing concerns about the project's potential impacts on air quality, water resources and the area's scenic beauty.
"If you're testing these [water] wells, and your well turns up toxic, then what?" asked resident Leslie Swanson. "Are we just going to be notified, and then it's up to us to fix it?"
Jessica Kopp, who lives on a road near one of the proposed drilling sites, said water wells should be tested over a larger area, and over a longer period of time -- at least 10 years.
"I'm concerned the MOU is not enough," she said.
Bruce Baizel, director of the Oil & Gas Accountability Project, which is based in Durango, expressed concerns about truck traffic, water quality and degradation of the area's rural character.
"You're going into areas you haven't dealt with before," he said. "When you have this traffic in this eastern drilling window, there are no other wells there. So it's a big deal."
May Morley, a rancher who was among the minority who testified in favor of the agreement, said the energy development in the area would be good for the economy and that the company should be trusted to do the right thing.
"Swift has worked in good faith; everyone who has worked with them has said they've been great," said Morley, whose family owns half of the surface area where one of the wells would be drilled.
The commissioners said the MOU adequately addressed most of those concerns raised during the hearing and noted that the public will have another chance to weigh in on the project when the state examines it.
"The MOU is just a small layer of all the other regulations that are going to be imposed on the industry," said Commissioner Robert Lieb (R).
La Plata County, like many other counties across the country, is struggling to find ways to exert some control over expanding energy development, particularly as new technologies allow companies to tap resources that could not be accessed using conventional extraction methods.
But there's only so much counties can do to ensure drilling is done in a responsible way. As La Plata County staffers and commissioners pointed out several times during yesterday's hearing, state law -- like many others around the nation -- grants counties their authority to govern, and state rules trump local rules.
"We are a subdivision of the state," said Bob Weaver, deputy attorney for the county. "When it comes to oil and gas, we have land-use authority. We can't do whatever we want to do. That's not how the state is set up."
The company, for its part, said the county has little to worry about.
"We want to make sure we comply with all the rules," Redweik said. "Everywhere we go, we strive to have good working relationships with everyone, including the counties."
The company already has changed its access route to use a road that will have less of an impact on neighboring landowners, he added.
"I believe the county has done the best it can do right now to try to protect the people who live in this area, but to also allow the energy development to go forward," Commissioner Julie Westendorff said. "We can't stop energy development from going forward, and I can't say it's in our best interest to stop it from going forward."
The day before the county hearing, at a San Juan Basin energy conference an hour south in Farmington, N.M., that explored the promise of Mancos Shale development in the basin, former Colorado Gov. Bill Ritter (D) encouraged the industry to embrace "reasonable" regulations -- including water quality monitoring.
"There's technology where you can do on-site monitoring at not a great cost," said Ritter, who recounted his efforts to establish the state's new oil and gas development rules. "It is important to understand as an industry that in arid states, if the drought is a prolonged one, energy production has some trade-offs, and we're willing to consider those trade-offs -- especially if they involve other important industries," such as agriculture, he added.
Ultimately, approval of the project lies with the state. The Colorado Oil and Gas Conservation Commission is scheduled to consider the company's proposal to explore in the two units March 25. The MOU with the county will be included in it, officials said.
The next step is to submit an application for a permit to drill the two exploration wells to the COGCC, due April 15, and if all hurdles are cleared, drilling will likely begin this summer, Redweik said.