Twists and Turns in Council MOU Negotiations with Extraction

 

In presenting an “Update on Staff Negotiations with Extraction Oil and Gas, LLC” at the October 10 City Council meeting, City Manager Ozaki announced that he planned to use a “unique negotiating process” where Council Members and Staff could ask Extraction representatives direct questions during the meeting.  What was expected to be an evening with a unique format and many citizen comments had its most unusual twist occur during a citizen comment about land usage restrictions by Adams County Commissioner Charles Tedesco.  In fact, by the end of the meeting, Mayor Ahrens and City Manager Ozaki admitted that outstanding issues on the amended Memorandum of Understanding (MOU) might delay negotiations more than expected, so that the amended MOU might not be able to be voted on at the Oct. 24 Council meeting as tentatively planned.  City Manager Ozaki will report back to Council at the Study Session on Tuesday, Oct. 17 on progress in the negotiations.

 

In the current Extraction plan, the proposed Northwest Pads A and B are each to be drilled with 8 wells south of the Northwest Parkway on the Davis Open Space.  Adams County Commissioner Charles Tedesco referred to the fact that Broomfield purchased the open space land from Adams County and stated that Broomfield “may” need Adams County’s approval as a condition of the purchase agreement to use the land for anything beyond its original purchase intent of being open space.  Broomfield seemed blindsided by this possibility, resulting in the statements at the end of the meeting that this would need further research.  Commissioner Tedesco also objected to the late onset of including Adams County’s input into the negotiations, as they had only been involved in one meeting in the past two weeks.  Approximately four other Adams County residents along with Director of Community Development Cristen Sullivan complained about the proximity to Adams County homes of the new Extraction proposal.

 

The City Manager’s update agenda item began with a presentation by the City Staff outlining how negotiations had included a few more of the Oil and Gas Task Force recommendations: increased liability insurance, increased setbacks from Adams County homes of at least 1,000 feet, an odor requirement, enforceable noise levels, and risk analysis.  However, while Extraction agreed to general liability insurance in the amount of $100,000,000 as long as the well sites were under the control of Extraction, the MOU only required $25,000,000 for the duration of the agreement if there was a change of ownership.  Also, Extraction did not agree to maintain Environmental Impairment Liability (EIL) insurance to cover damage from slow leaks.

 

By Council Member Betty Erickson’s count, 28 citizens spoke against adopting the MOU and 15 citizens spoke for adoption.  Anthem Ranch resident Michel Wyn presented an abbreviated analysis of data on Volatile Organic Chemicals (VOCs) at the Extraction Triple Creek Site. Update Committee Member Patrick Freeman pointed out that the Update Committee air quality monitoring should be redone due to a flawed study at a Greeley site.   Citing a Greeley study which stated that oil and gas in the Wattenberg Basin ends up overseas, Anthem Ranch resident Vince Miller congratulated Broomfield for becoming “an energy colony.”  Wildgrass residents Elizabeth Lario and Jean Lim spoke to encourage the City to demand that Extraction enter into reasonable lease negotiations with Wildgrass mineral owners before the City signs an MOU and drops the City’s protest.  Extraction Landman Jason Ruberg later replied that Extraction “will do another pass” with a lease agreement.  Many of the 15 speakers for MOU adoption also spoke against Ballot Measure 301, stating that its proponents were “outside activists.”  Broomfield Health and Safety First Co-Chair Neil Allaire spoke at the end, saying that he didn’t know that 301 would be brought up during the MOU discussion. However, Neil Allaire wanted to make it clear that 301’s supporters were Broomfield residents and that 301 supported the work of the Update Committee.

 

Dr. Susan Speece, a member of the Update Committee, was the first citizen to object to Extraction’s lack of agreement to ban the use of nineteen chemicals identified by the adopted Committee Chapter as harmful to health and safety.  Extraction’s response was that they were checking with their service contractors and should be able to update the City on possible accommodations within a week.  The Update Committee had also recommended soil testing at each stage of hydraulic fracturing (drilling, flowback, completion), but Extraction would only agree to limited testing. Another technical aspect of the process that Extraction would not comply with was the usage of Tier 4 engines instead of Tier 2 engines.  Council Member Greg Stokes stated that he never viewed the Update Committee Chapter recommendations as a minimum set of requirements for negotiating.  He said that the website www.badmou.org was a well-done comparison but that was not realistic to expect in negotiations.

 

It was obvious during citizen, Council and Staff comments that no one wanted to see 34 wells on the Livingston Pad, a realistic scenario given the question if Boulder County would ever agree to allow fifteen wells during Phase II to be drilled there.  City Manager Ozaki asked Extraction to consider a statement in the MOU that 15 wells would be added to the Livingston Pad during Phase 2 by “mutual agreement,” but Extraction said it didn’t intend to revise the current wording.  Council Member Tessier pressed City Attorney Tuthill to speculate what might happen if “Broomfield just said no to the Livingston Pad.”  Attorney Tuthill replied that in that case Extraction had been clear in its threat to file with its existing MOU to the State (COGCC.)   Council Member Jezerski asked further if the City’s ordinance on not allowing any entity to seize its mineral rights could prevent the Livingston Pad from going forward.  Attorney Tuthill speculated that Extraction would take the City to court and that the standards for getting an injunction would be high.  Extraction Counsel Eric Crist stated that Extraction did not want to sue the communities that it operated in.  Also, Extraction still maintained that they had to drill East to West in order to plug legacy sites efficiently.

 

Council Member Tessier asked why the original United and Huron sites were not being used since they scored so well on the alternative site matrix.  Extraction’s Chandler Newhouse stated that those sites would not fit the setback levels of 1320 feet from homes and the fire station.  He also indicated that they might have to reinstate the old Sheridan Pad if they went back to the original United and Huron Pads.  Council Member Kreeger stated that he would be pursuing the different preferences between the alternative site analysis and setback matrix with Update Committee members.

 

Regarding the continuing investigation of air quality violations by Extraction by the State (Colorado Department of Public Health and Environmental), Extraction contended that they were working closely with the CDPHE to bring acquired legacy wells into compliance.  They also stated that these type of tanks would not be present in the new oil and gas development in Broomfield.

 

The next twist in the continuing efforts to focus on concerns about oil and gas development in Broomfield will be a unique public meeting on Thursday, Oct. 12.   COGCC Commissioners will be in Council Chambers from 6 p.m. to 8 p.m. to hear the concerns of Broomfield residents.

 

Livingston Pad – 19 New Wells during Livingston Phase I

Livingston Pad – 15 New Wells if Livingston Phase II is triggered

Northwest A Pad – 8 New Wells

Northwest B Pad – 8 New Wells

United A Pad – 8 New Wells

United B Pad – 8 New Wells

Interchange A Pad – 16 New Wells

Interchange B Pad – 17 New Wells

 

Potential Schedule

Operations: Q3: 2018 – Q1: 2022

Livingston Pad

Phase 1 – 19 Wells

Phase 2 – 15 Wells

Q3: 2018 Drilling – Completions Q3: 2019

Q4: 2020 Drilling – Completions Q1: 2022

Northwest A & B Pads

2 – 8 Well Pads

Q1: 2019 Drilling – Completions Q1: 2020

United A & B Pads

2 – 8 Well Pads

Q2: 2019 Drilling – Completions Q3: 2020

Interchange Pads

A – 16 Well Pads

B – 17 Well Pads

Q3: 2019 Drilling – Completions Q4: 2020