City Council Unanimous in Support of Protesting Spacing Unit Applications

UPDATE 8/22:  City Attorney Tuthill confirmed at the 8/22 Study Session that he has been working with Special Counsel Phil Barber to file the City’s protests of Extraction’s spacing unit applications before the 8/28 COGCC deadline.

At the 8/8 City Council Study Session, City Council members were unanimous in their support of protesting the Crestone and Extraction spacing unit applications before the 8/28 protest deadline.  64-page packets of resident emails from 7/10 – 8/8 on the back table of the Council Chambers provided evidence that City Council members were following the sentiment of the people.

In City Council member comments, the reason most frequently stated for support of the protest was that the process of updating the City’s comprehensive plan to address oil and gas should be complete in order to inform the City’s MOU negotiation process with oil and gas companies.  Council members also expressed frustration with the unwillingness of the State COGCC to move the location of the 9/11 hearings from Durango and hoped that filing a protest would in effect cause a delay and change in location.  Although it is standard procedure that if a protest is filed that the COGCC hearing would be delayed one month while the protest is reviewed, City Attorney Tuthill said there is no guarantee of a delay.

City Manager Ozaki began the Study Session with a brief review of events over the past year involving the Extraction oil and gas development proposals and the work of the Oil and Gas Update Committee.  The maps for the spacing unit applications that were filed in July by Extraction were displayed and City Manager Ozaki pointed out the discrepancies with the spacing unit applications filed last year by Extraction as far as location and number of wells.  Although City Manager Ozaki stated that the only way to clear up the discrepancies would be to get written agreements with Extraction, “we would not want to go forward [with negotiations] unless we could incorporate the recommendations of the Oil and Gas Update Committee.”  He added that Extraction had indicated that it was interested in filing the COGCC Form 2 and 2A drilling permits shortly.  “Things need to go in the right sequence” and the only way “to bring certainty to the process” would be for Broomfield to file a protest, according to City Manager Ozaki.

During City Council Member questions, Special Counsel Phil Barber was on the phone for consultation.  He felt strongly that the spacing unit application should be protested in violation of a COGCC rule that calls for only one well to be allowed in an order creating a spacing unit.  Attorney Tuthill said it was obvious that the COGCC had ignored its own rule in approval of previous multi-well spacing unit applications, basically by having the tacit approval of the Colorado Attorney General that the COGCC could ignore that rule in following its other given task to promote efficient energy production.  Attorney Phil Barber estimated it would cost between $50,000 – $100,000 for the City to protest on these grounds, with the case likely to end up in Denver District Court if the City had to sue the COGCC for violation of its own rules.   Council Member David Beacom asked City Attorney Tuthill if a stay would be granted during the appeal of such a case to the Colorado Supreme Court.  City Attorney Tuthill was hesitant to reply in a public forum but he said that he thought there could be a “solid argument made” for a stay with a “realistic possibility of success” based on irreversible depletion of resources if such a stay was not ordered.  Council Member Greg Stokes later said it “made no sense” that this legal discussion was held in a public forum at this point in time.

City Attorney Tuthill also pointed out that the City could protest based on the inconsistencies between the 110 wells requested in the Extraction spacing unit applications and the 99 wells identified by Extraction in public presentations.  Extraction Senior Vice President Eric Jacobsen was present and stated that the 11 extra wells would be drilled from outside Broomfield.  However, the City would need to secure that in writing.

Council Member Mike Shelton said that “since there are big problems in state statutes” that “maybe the money would be worth it [to protest].”  Council Member Kevin Kreeger expressed that Extraction gave the City no choice but to protest since it refused to voluntarily delay its hearings.  Council Member Elizabeth Law-Evans added that another protest reason would be to give the City “leverage in negotiations’ on the MOUs.  Council Members Stan Jezerski, Martha Derda and Sam Taylor also added brief statements of support for protests.  Council Member Bette Erickson wanted to give the COGCC until August 22 to respond to the Mayor’s letter to move the hearing.  Mayor Ahrens stated that the protest should be filed to “persuade the COGCC that it needs to take into account community concerns” and to show that the “paradigm needs to be changed.”

Other possible reasons for City protest were mentioned by City Attorney Tuthill as: concerns that no well pad locations were specified in an application, potential violation of Broomfield’s government-owned property ordinance (which would be violated by forced-pooling) or concerns that the orders from the COGCC would not adequately protect public health, safety and welfare.  Related to the last point, Mayor Ahrens asked City Attorney Tuthill about the status of the Martinez case.  The Colorado Supreme Court has not yet issued a statement if it will hear that case.  The COGCC appealed that case after the Colorado Court of Appeals ruled in favor of Martinez.

Specifically regarding the Crestone application, it was pointed out that one of the added problems beyond timing was that Crestone had not agreed to plug and abandon existing wells in the spacing unit.  Crestone recently told Assistant City Manager Standbridge that they would likely plug some of them but they would not guarantee anything.

There was some discussion of the standard process of a COGCC hearing.  If there is no protest, the application hearing is moved to a consent agenda.  If the City were to protest, the City could offer citizen witnesses whose names would have to be submitted on a list to the COGCC ahead of time.  There would not be any open citizen comments as in City Council proceedings.  Also, Attorney Phil Barber said that each side is usually given about 2 hours to present its case in a protest.

In other oil and gas related items, Mayor Ahrens stated that he has been engaged in conversations with other regional city and county leaders to see what can be done to increase local control of oil and gas development.  City Council Members Shelton and Law-Evans reminded citizens of the continuing Marble/Saine Energy Summits, with the next one moved to Thursday, Aug. 31.