Broomfield Council to Vote on Renegotiating the MOU with Extraction on Tuesday, December 14th.
An item was placed on the agenda for the Tuesday, December 14th City Council Meeting that surprised even the most engaged residents who closely follow oil and gas issues. Staff presented a renegotiated agreement titled “Conclusion of Operations Agreement with Extraction Oil and Gas” with Civitas (formally known as Extraction Oil and Gas) for the Council to vote on. Here are the key points of this agreement:
Perceived Benefits to Broomfield:
- This agreement would reduce the guaranteed well count from 84 to 65. There are questions around whether decreasing these wells is a concession or if this was a business decision already made by Extraction/ Civitas. Since this project restarted in September, multiple wells have been spudded but not drilled. This agreement puts into writing that the well count is decreasing.
- The current MOU says that Civitas cannot commence drilling operations past December 31st, 2022. However, there is no end date as to when operations need to completely stop. This new agreement attempts to identify a hard end date for all post-drilling operations. However, the negotiated end date comes with five caveats that would add an extension to the agreed-upon date:
- Lack of availability of the Liberty Quiet Fleet
- If the monthly average rate of crude oil falls below $55 per barrel
- If access to pipeline and downstream sales meters are obstructed due to lack of market or disruption to the supply chain
- The Operator does not have access to Capital needed
- Litigation by a 3rd party against the Operator, its permits, or its operations which preclude the Operator from being able to commence the project by the agreed upon date.
Perceived Benefits to Civitas:
- The future regulations clause in the original MOU (paragraph 15) is significantly weakened. Should the City ever need to pass a new ordinance that would apply to all industries, they can’t apply this ordinance to existing operations covered in this MOU without proving the new ordinance is not targeting Civitas.
- The current MOU does not specifically state that the September 2017 Municipal Code applies to the agreement. While the significance of this change is still being researched, residents are wondering if this change would impact new permits requested under the MOU. Currently, existing regulations can be applied to new permits requested. Would changing this language mean that new ordinances passed since September 2017 would not apply to operations covered in the MOU? If the answer to this question is yes, this means all new permits would no longer have to comply with all of the code updates made since 2017, including the 2000 ft setback among many other things.
- In the existing MOU, there is a clearly defined end date as to when Civitas can commence drilling operations (December 31, 2022). The new agreement appears to add an exception that pertains to drilling specifically and creates the possibility that drilling could start past this date. The exemption appears to state that if the Operator is required to perform operations due to outside contractual obligations to royalty owners, joint working interest owners, or similar interest owners, they can commence drilling operations past December 31st, 2022.
Residents are expressing the following concerns over this agreement:
- Rolling back to 2017 Municipal Code: The City Council and Residents have made several updates to the Municipal Code and Charter multiple times since 2017 in order to better protect Broomfield Residents from the impacts of oil and gas development. The passage of 301, the implementation of 2000 foot setbacks for future operations, closing the loophole on using Broomfield Open Space for oil and gas development, and the establishment of reverse setbacks are a few of the major changes that have been enacted since 2017. Residents do not want to lose these protections and object to allowing this MOU to be governed by the 2017 Municipal Code.
- Future Regulations Not Applying to Civitas: The City will no longer be able to easily pass ordinances of a broad nature that apply to Civitas. If Civitas claims an ordinance is targeting their operations, it can’t be applied to their operations. If the City wants the ordinance to apply, they will need to prove they are not targeting Civitas, which means the dispute will end up in court.
- The End Date is not Firm: Civitas can resume operations after the agreed upon date based on several conditions, which makes this date not as firm as anyone would like. The possible exemption that may allow for potential drilling operations to commence after December 31, 2022, is also a concern. It is important to note that this exemption does not exist under the current MOU.
- Legality of Agreeing Not to Apply Future Regulations: Residents are questioning if the City can legally agree to waiving their right to pass ordinances that do not apply to certain developers, as by agreeing to this, they are giving away their ability to protect residents’ health and safety with new laws should it ever be needed.
- Possible Implied Consent: Currently the Operator has violated the noise levels allowed by the MOU at least seven times. This is in addition to violating allowed noise levels several times during operations on the Livingston Site. These operations have been linked to eight instances where benzene levels have been emitted that are above recommended health guidelines. Benzene is a known carcinogen. This agreement does not address these existing violations in any capacity. If Broomfield signs a new agreement as an informed party regarding these violations, does this mean Broomfield is consenting to these issues continuing for the duration of this project?
- The Damage is Done: All community members we spoke to echoed the same sentiment: we’d rather have the operations completed safely and slowly rather than rush the operator to complete by a date that might be unreasonable. What dangers might arise from rushing? What BMPs might be ignored to speed up production? Residents who are living through impacts voiced the opinion that their quality of life and ability to enjoy their homes has already been diminished greatly by these operations. The least we can ask for is the project to be completed safely and correctly.
It is the opinion of our editorial team that this agreement is NOT good for Broomfield, its residents, or the residents of unincorporated areas impacted by Extraction’s/ Civitas’s operations. There are too many ambiguities. It is unclear if this agreement opens the door for future development (including drilling) with fewer protections. We also believe this agreement further ties the Council’s hands in protecting health and safety of Broomfield Residents, which they are obligated to do under 301.
Disclaimer: This article contains summaries of resident remarks and interpretations of this agreement, but we are not lawyers. All claims are based on our best ability to interpret the information we have available to us.
We ask that concerned residents share feedback about this proposed agreement. Please email email@example.com and also plan to attend or call into the City Council meeting on Tuesday, December 14th.
To read the full, proposed agreement, click HERE.
To access the Agenda for the City Council with call-in instructions, click HERE.