Extraction to Begin Spudding on United Pad on May 20 Despite Financial Decline

Extraction will begin spudding 16 wells on the United Pad on May 20 at 160th and Huron, according to a May 18 announcement from the City and County of Broomfield (CCOB).  In the month since CCOB received Extraction’s required 30-day spudding notice on April 17, Extraction has “hired strategic advisors” and skipped a $14.8 million payment on some senior notes on May 15, moves signaling “restructuring or filing for bankruptcy protection,” according to articles in the 5/13 and 5/15 Denver Business Journal.  

Spudding operations are expected to continue for two to three weeks and involve a shorter rig and drilling to a depth of about 1500 feet.  According to the May 18 CCOB announcement, “Spudding is a water-based drilling process and typically does not result in hydrocarbon emissions, associated with drilling to deeper depths.”  Two Ajax Air Quality Monitoring sensors were placed on the east and west sides of the United Pad at the end of April as CCOB reacted to the April 17 notice from Extraction.  After questions from Council Member Jean Lim this week as to why the United 1 sensor readings are so high before operations begin, CCOB Staff found out from Ajax that it had moved a misaligned sensor from Thunder Vista to United 1.  The issue is still unresolved.       

Residents driving through the area should be on alert as CCOB has allowed Extraction to reroute its trucks from the original approved truck route.  This is due to intersection improvements that  CCOB’s contractor began at 160th and Huron on April 29.  

Extraction began taking sound walls down on the Interchange A & B Pads at the beginning of May and the walls are now almost down on Northwest A & B Pads also.  Meanwhile, flowback operations of 18 wells on the Livingston Pad continue causing noise issues and health impacts for nearby residents.

With Extraction’s financial decline, residents have been inquiring if Extraction will operate safely and if CCOB will be left to clean up or plug wells.  In response, CCOB released the following statement on 5/15: 

“There have been a number of news articles regarding Extraction Oil & Gas, Inc.’s financial difficulties this week. After the article in the Denver Business Journal yesterday, City and County Attorney Shaun Sullivan spoke to the general counsel for Extraction to clarify Extraction’s plans. The General Counsel stated that Extraction still intends to spud the wells on the United Pad later this month. He also confirmed that after the spudding and setting of surface casing at the United Pad, other than production at the Interchange and Livingston well sites, Extraction does not currently have any plans for any development operations in Broomfield for the remainder of 2020. He clarified that this remains subject to change in the future, but at this point Extraction has established its schedule for the remainder of the year.

Broomfield continues to inspect Extraction’s operations (as does the COGCC) to ensure that Extraction complies with the law and the terms of the Operator Agreement in its operations, as it is required to do. The article from today’s Denver Business Journal describes the types of options that Extraction is probably exploring in terms of how it might continue its operations or restructure its debt. Extraction or its successors in interest must comply with the terms of the Operator Agreement unless they negotiate different terms with Broomfield.”

You can write CCOB with any concerns at council@broomfieldcitycouncil.org.