Extraction’s New Proposal Reviewed at the Sept 19 Council Study Session: Unacceptable or A Step Forward?

At a four-hour City Council Study Session on Tuesday, September 19, City Council reviewed the new oil and gas development proposal of Extraction Oil and Gas as negotiated by City Staff.  The session included an overview by Staff and comments and questions by Council members.  Study sessions do not allow for citizen comments, but one citizen loudly expressed her frustration after about two hours by stating as she left the room that, “None of this is acceptable.”  In contrast, Council Member Law-Evans referred to the proposal as a “pretty interesting step forward.”

 

QUESTIONS ABOUT WHY THE NEGOTIATIONS WERE GOING FORWARD AND WHAT WOULD BE NEXT

City Attorney William Tuthill and City Manager Charles Ozaki began the Study Session by doing a lengthy review of the history of recent oil and gas development and its attempted regulation in Broomfield.  City Attorney Tuthill reminded Council of both the City’s surface agreement and June 2016 MOU (contract) with Extraction which had resulted in the City being “subject to a court ruling that Extraction’s interests are vested.”  City Manager Ozaki referred to these agreements and the pending State COGCC hearings on October 30 as reasons that the Staff felt compelled to ask Council for direction to begin negotiations with Extraction at the end of the August 29 Oil and Gas Update Committee Chapter presentation to Council.  Council Member Sharon Tessier later commented that nine out of ten Council Members had agreed on August 29 for the negotiations to begin, adding that it would be better for citizens to send Council their questions about the negotiated proposal instead of just expressing their anger that the negotiations had begun in the first place.

Council Member Kevin Kreeger stated that he considered this negotiated proposal “out of order” before the Update Committee completed its work on property values or Council voted on which of the entire Chapter’s recommendations that Council would accept.  In pointing to a part of the ordinance which established the Update Committee, he stated that it was required to set up a separate body to assess any oil and gas development proposal that varied greatly from the Chapter.  He said this was clearly the case with this proposal, as was evident in the current chart prepared by the City staff examining the Extraction proposal.

Council Member Greg Stokes stated that there were “things I don’t like in the proposal” but addressed concerns he heard from citizens in the context of “negotiating a package deal within existing agreements” and “risk management analysis.”  He also referred to threats that Thorton had received from the State due to passed regulations.

The new Extraction proposal sites multi-well pads closer to Adams County residents than before, but many Council Members pointed out that from a broad perspective the new proposal has wells closer to lower density residential developments with higher acreage.  Many Council Members expressed concern that Adams County officials and residents should be brought into the conversation with Extraction.  There were references to a late Tuesday letter from Adams County officials asking to be able to weigh in on negotiations.  Mayor Ahrens referred to Broomfield’s insistence on implementing its own Oil and Gas Update Committee recommendations as providing better protection for Adams County residents than Adams County regulations would.

Council Member Kreeger stated that prompts from citizen emails led him to ask City Manager Ozaki, “Is there a plan to approve this MOU before the election?”  City Manager Ozaki replied that it was conceivable that a revised draft agreement with Extraction could be brought for review and public comment on October 10 and could then be scheduled for a vote on October 24.

QUESTIONS ABOUT THE SITES IN THE NEW PROPOSAL

See the proposed map of the wells here.

Special Counsel Tami Yellico pointed out the advantages of the new Extraction proposal over the earlier 2017 one.  According to the Staff’s usage of the Update Committee’s Setback Matrix, the proposed pads had now been properly sited, with the exception of only 477 feet instead of 500 feet between two of the Interchange Pads.  Special Counsel Yellico also stated that Extraction agreed to have all pipelines in place before any oil, gas or produced water would be removed.  The location of the new pads south of Northwest Parkway would relieve 160th of truck traffic and 43 wells would be plugged and abandoned according to a timeline written into the MOU.

City Manager Ozaki stated that the City’s first point of negotiation was to ask Extraction to look at the Sheridan and Lowell Pads and see what could be done to break those pads into smaller pieces.  Special Counsel Tami Yellico pointed out that the Update Committee’s Alternative Site Analysis Tool was used to find suitable smaller pad locations.  However, Council Member Tessier asked the Staff to talk with Extraction to determine why alternative sites in the new proposal had lower ratings than the United and Huron Pads these sites were meant to replace.  Council Member Tessier also asked the Staff to examine if pads were split to manipulate the setback matrix to Extraction’s advantage.

If the negotiations were meant to greatly reduce the number of wells on each pad, then it was obvious that the Livingston Pad still fell short of that goal.  Phase I of drilling would include 19 wells on the Livingston Pad being directed south towards the City’s proposed water reservoir and Wildgrass.  If by June 2019 the City could not secure the Committee’s recommended site 3b in Boulder County for 15 wells, then those wells would be drilled north during Phase II from the Livingston Pad.  City Council Member Elizabeth Law-Evans requested that the Boulder site be “hard-wired” into the MOU so that Boulder County didn’t have discretion, but no one commented if that could be made legally binding by Broomfield.

Also, many Council members expressed concern that the Livingston Pad was even closer than the previous Lowell Pad to the proposed water reservoir.  Special Counsel Yellico stated that the topography between the site and the proposed reservoir contained a natural ditch which would provide some protection from a spill, along with planned tertiary containment.  However, Council Member Mike Shelton pointed out this would not protect the reservoir from a blowout.

QUESTIONS ABOUT MISSING AGREEMENTS

The 45-page Study Session document presented a “Comparison Chart” which “attempt[ed] to outline most of the differences between the Committee recommendations and what Extraction has verbally agreed to at this time.”  Special Counsel Tami Yellico pointed to some maor differences, including the lack of reporting of chemicals before usage, soil testing not paid for by Extraction, and low insurance coverage.

In response to Council Member Shelton’s question to the Staff, Special Counsel Yellico stated that the City could decide to pay for soil testing itself.  That would be estimated to cost $1200-$1400 per testing event per well.

Extraction had agreed to $25 million worth of insurance coverage, which was higher than the $1 million required by the State but certainly much less than the $100 million recommended by the Oil and Gas Update Committee.  Council Member Kreeger raised the question if Extraction had not agreed to the amount because it would not be able to secure that much.

Council Member Erickson first pointed out that there were frequent Extraction agreements in the chart that included the qualifier “where practicable.”  City Manager Ozaki agreed those agreements were too vague and pledged to remove the “weasel words” in the next draft.

Extraction had pledged to use Tier 4 engines all along, but it was stated in the document that they would now only agree to use Tier 2 engines.  At the Study Session, Extraction Vice President Eric Jacobsen stated that Tier 4 engines were limited for production and use and that Tier 2 engines could meet or exceed EPA standards.   The Oil and Gas Update Committee had stricter recommendations than EPA standards.

Attorney Tuthill seemed unaware that point #55 of the comparison chart stated that Extraction had not yet agreed to not seek variances from the State.  It was pointed out that the MOU was useless if Extraction could run to the State for variances.

On page 4 of the Study Session document, there was a Phasing Chart with a timeline from 2018-2020 which can be found here.

You can find the entire video of the Study Session here.

A Citizen Blog with reaction to the Study Session can be found here.