The scheduled Amended Agreement vote on October 24 is extremely important to our future as residents in Broomfield.  If this Amended Agreement is passed, it will grandfather this Amended Agreement with Extraction before many unresolved matters have been finalized, including ordinances resulting from the Task Force work.  This document seeks to identify some of the concerns that I have.  If you agree with some or all of these concerns (or have more of your own), I encourage you to write IN YOUR OWN WORDS to City Council and express your thoughts.

Help concerned residents make an impact by telling City Council that there are many issues to be resolved before a final vote on this Amended Agreement can take place.  You can find the City Council email addresses here.  You can also attend City Council at 6 pm on Tuesday, October 24 and sign up to make a Citizen Comment.  It would be great if you could do both.

My long list of concerns is below, numbered 1 – 25.  Select only those you are concerned with and keep your message succinct.  A few tips:

• We need to make sure we’re covering a wide variety of issues and communicating the immensity of this problem. If you don’t understand the problem, write me at bill@young.us.
• Please don’t just copy and paste my points. City Council wants to hear from you. They don’t want to hear my thoughts through your mouth.
• Please be polite. Council members will shut down and stop reading if they feel that a letter is just insulting or yelling at them.
• Please be concise. My list of concerns is not concise, but your best bet when communicating with Council is to get to the point quickly.
• Consider sending me a copy of your message privately bill@young.us and let me know which of the issues you’re covering so we can make sure remaining items get addressed.
• Don’t go overboard with emotional appeals. Appeal to them and engage in a positive, productive message while expressing your concerns.
• Know your audience. Customize your message. If possible, use past knowledge about what specifically concerns the Council members.
• Pass this along to your friends. We need a LOT of people to cover all the issues and make an impact on City Council!
• Consider asking that your message be included in the packet of email that are printed and provided at the City Council meeting.

Every letter needs to demand that outside council analyze every aspect of this contract, given the issues identified before the Amended Agreement is signed.

Concern Details

1. Extraction’s Past Performance

A review of Extraction’s past performance record leads to a lot of questions about their site accident rate.  This record is problematic for large-scale projects in residential communities.

Excluding legacy well clean-up projects, Extraction has had 17 accidents in the past three years.

In the Staff notes for the Amended Agreement on the October 24 agenda, it states that:

             Extraction notes it has never had a spill outside the berm area.

That does not align at all with reality according to State COGCC reports. 10 of those incidents escaped secondary containment. Given the proximity to our water reservoir of the proposed Livingston Pad, that is extremely alarming. The long-term impacts to the environment, our drinking water, and our property values would be devastating as the result of a spill.

One incident stated:

            The ground surface was scraped, but due to several rain events, the investigation is still pending to determine depth of impact.

Do we have adequate protections in this Amended Agreement to handle spills in rainy conditions?

11 out of the 17 incidents involved human error. Does this Amended Agreement provide adequate regulations to prevent human errors such as these ACTUAL events from Extraction spill incident reports?

• The valve was left open for four days, filling the concrete pit and overflowing.
• Approximately 5-10 barrels of produced water were released by a 3rd party vendor.
• A forklift operator attempted to move a return tote filled with grease and wellbore fluids without a spotter. The forks on the forklift were positioned too high and punctured a hole in the tote, resulting in a spill of approximately 100 gallons.
• A vapor recovery tower drain line valve was accidently left open which overfilled the pit resulting in a spill of approximately 15 bbls of oil.
• The driver forgot to disconnect his hose and drove off causing a spill.

State COGCC requires that operators document remediation steps to ensure that problems don’t happen again. For example, Extraction’s remediation plan on one finding about a valve left open was to state that:

     The drain line valves will be closed and double checked before operators leave the location.  

However, Extraction has had seven incidents involving valves left open. Clearly, expecting them to self-regulate and improve isn’t working. Remediation plans require meaningful process improvements.

2. Chemicals

Two questionable chemicals will still be used in the hydraulic fracturing process.  The task force recommended an ordinance for Broomfield that required compliance with the 2017 Centers for Disease Control Agency for Toxic Substances and Disease Registry.  This requirement was left out of the Amended Agreement.  This CDC registry listed acrylamide and naphthalene as toxic substances, which were also identified by a University of Colorado study used by the Task Force to state that these two chemicals should not be allowed in hydraulic fracturing operations. However, the Amended Agreement allows them to be used by Extraction.

3. Future Pads / Future Wells

The pipelines indicate potential plans to expand to the 3B pad in Boulder County just west of Anthem Ranch later.

Why would City Council give up revenue if additional wells on the 3B pad are still in Extraction’s future plans?

If it is not possible for the City to keep its royalties and still secure the desired concessions regarding Livingston Phase 2, then the Amended Agreement needs to be revised to NOT include the pipeline west of Livingston.  It also needs to clearly state what Staff is trying to achieve: that there is a permanent limit of six well pads and 84 wells sited in Broomfield and that Extraction has no further access to minerals in spacing units located in Broomfield.

4. The Financial Implications

In this deal, the City is not securing the income needed to put enforcement measures in place.  Staff notes for the October 24 discussion of the Amended Agreement include that:

     The previously proposed Phase II of Livingston Pad consisting of 15 wells is eliminated, in exchange for a zero percent royalty to Extraction on all unleased Broomfield oil and gas minerals in  the Broomfield spacing units, which represents a total net present value of $8,400,000 for the City’s estimated 552 unleased acres.

However, outside attorney estimates put that closer to $20,000,000 for a space of that size. Not only that, but this doesn’t even seem to be getting rid of the 15 wells. In fact, it is setting up the pipeline for them in the future.

It is a bad deal, and that money is needed for many other costs.  As discussed throughout this document, enforcement is an issue. The City is not prepared to enforce these health and safety mitigations, to hire the outside contractors for the noise complaints, to perform adequate air quality studies, and to repair the roads.  The City needs to keep money and put it in a trust and use it to for testing and enforcement and to pay property damages residents claim. The Property Subcommittee of the Update Committee should weigh in on this piece as that work has not yet been completed.

The vote on the Amended Agreement should be delayed for the city to get its other enforcement measures in place, and to ensure that the financials match the additional enforcement responsibilities that the city is acquiring.  We should not be PAYING this developer to move into the city, and not even be able to afford the protections that were negotiated.

5. Amendment 301

In just over 2 weeks, Broomfield will pass Amendment 301.  The vote on the Amended Agreement should be delayed to avoid having a grandfathered Operator agreement that does not align with protecting the health, safety, and welfare of residents. As detailed in this write-up, there are many Task Force recommendations which do not align with the Amended Agreement. The City needs to analyze these differences and answer how the deviations from task force recommendations align with health and safety.

6. Air Quality

The Air Quality sections in the Amended Agreement are inconsistent and inadequate.  There are two sections in the MOU: An Air Modeling Study and an Air Quality section. The Air Modeling Study proposed by the Task Force was intended to establish baselines at the pad locations. However, in the Amended Agreement, it is listed as nothing more than baseline air quality marketing data about the drilling equipment to be used.  That is not the same thing as a site baseline. Without baselines, enforcement of violations is impossible.

The Amended Agreement also contradicts itself. In the Air Modeling Study section, it says that the modeling consists of equipment measurements. However, in the Air Quality section, it says that modeling was done within 500 feet of the well pads by the City and paid for by the operator.

The problem is that the proposed well locations have been moved, and these Studies were completed at the old locations.  That makes the Amended Agreement incorrect in stating that the studies were completed. Again, this Amended Agreement is not ready.

Finally, the Amended Agreement requires no further air quality monitoring from Extraction beyond standard state requirements. However, the City Council, the Task Force, and residents have always required more. Does the City have their monitoring plan in place prior to signing this Amended Agreement? Does the City have funds allocated for adequate testing? Extraction is offering $20,000 annually for sampling, which is woefully insufficient.  Without a city plan for air quality testing, signing the Amended Agreement is at odds with protecting the health, safety, and welfare of Broomfield residents.

7. Odors

The Erie neighborhoods have been inundated with noise and odor issues, and the project there is much smaller than that proposed for Broomfield. They complain of headaches, nosebleeds, respiratory issues and general noise and odor complaints. Erie has an odor ordinance, but it requires residents to file a complaint with municipal court. They have contacted Colorado Oil and Gas Association and the Colorado Public Health department, only to be told the smells and noise are within acceptable limits and not toxic.  This is precisely why it is so important for City Council to have strong ordinances and regulations with proper limits and enforceability.

In order to protect air quality, the Amended Agreement requires “year-round application of odor requirements pursuant to COGCC and CDPHE regulations.”  Erie’s issues show that COGCC and CDPHE odor protections are not adequate, and residents in Broomfield need additional protections and enforcement through the Amended Agreement.  The Task Force recommended an ordinance that would make odor issues enforceable by the local police and courts.  This has been excluded in the current Amended Agreement and should be a significant concern.

8. Pipeline Timing

The pipeline will not be in place when it needs to be.  The task force required that the pipeline be in place prior to drilling.  However, the Amended Agreement delays that and does not require the pipelines to be in place until production. Even if fresh water is piped in through temporary pipes, that means that all waste water during drilling / completion will have to be removed via trucks.

Given that completions aren’t expected to be done for more than 2 years (if the project stays on time), that means undefined truck traffic that is not accounted for in the Amended Agreement. The Task Force required a traffic study, a requirement with which Extraction never fully complied, and now the data they provided was based on a pipeline being on place.  A relevant traffic study needs to be in place so the City can decide if road supplementation is required and/or further traffic restrictions need to be in place.

9. Adam’s County

Many Adams County Residents that will be directly impacted by the project use well water. Extraction has not said or done anything to assure these residents that their water source will be safe. The industrial haul road that will be built will be filled with diesel trucks.  These fumes are a significant health detriment as many of these residents already are suffering with respiratory issues.

It is difficult to make a left turn out of the Adams County neighborhood onto Huron Road today, yet the Extraction route crosses Huron north of the neighborhoods.  This has not been included in any traffic studies and could create unintended consequences.

Broomfield made a commitment that the open space south of the Northwest Parkway between Zuni and Huron would be preserved as a “buffer” space between the Northwest Parkway and homes along 156th Avenue. Placing oil and gas wells, a pipeline and a service road for industrial traffic in this Broomfield committed “buffer” space constitutes a breach of contract on the part of Broomfield.

Adam’s County and their attorney need to work with Broomfield’s attorney and outside council to review the additional impacts that are being created by the Amended Agreement.

Also, see the noise section for an additional Adams County issue.

10. COGCC Spacing Unit Hearings

State COGCC Spacing Unit Application Hearings should take place on October 30 and 31 before the Amended Agreement is considered.  The City Council is currently filing protests in conjunction with Wildgrass.  Those protests include protecting residents of Broomfield who have not been given adequate due process (no notice and discovery was denied). If the City signs this Amended Agreement on October 24 and withdraws its COGCC protests, it shows that the City is no longer concerning itself with protecting its citizens that are being damaged by this oil and gas development process.  Lack of adequate notice to Broomfield residents is in violation of the proposed Amended Agreement Best Management Practices (BMP).

11. Wildgrass – Mineral Rights

The City is not fulfilling its promise to protect Wildgrass mineral owners.  Extraction stated at the October 17 Study Session that it is their interpretation that liability does not pass through with the lease that they are offering. The attorney for Wildgrass mineral owners says differently.  At the 10/17 Study Session, Attorney Tuthill stated that he would have outside counsel Phillip Barber investigate the issues raised by Wildgrass.  There is no evidence that this has occurred.

Extraction should agree to explicitly exclude liability from the lease to remove any ambiguity going forward.  Additionally, they must remove surface right access to Wildgrass property owners’ land and a requirement that residents warrant their minerals. Further, a 17% royalty is not a market rate return for our minerals.  Extraction admitted that it is currently paying 21% to residents in Adams County, but said that it can’t afford to pay market rate to Wildgrass because the costs of this project are too high. This begs the question, “Is this project going to be profitable?”  Wildgrass was denied discovery by the COGCC so we can’t find out.

12. COGCC Rulemaking

State COGCC Rulemaking should take place before the Amended Agreement moves forward.  In item 11e on the October 24 Council agenda, there is a regional effort that is being proposed by Broomfield to request COGCC rulemaking.  The letter to be sent out states:

     Regardless of whether or not one supports or opposes oil and gas development, there is a large and growing consensus that this intensive industrial activity does not belong in residential        neighborhoods, near schools and hospitals, or in close proximity to drinking water

It is contradictory to sign an Amended Agreement which violates the principles of the rulemaking that Council is proposing.  Broomfield residents have been asking the City to initiate this rulemaking process for months.  We are happy to see action on this finally moving forward on October 24, but it is clear that even the City Council believes that this Rulemaking is needed before this Amended Agreement moves forward.

13. Environmental Liability/Pollution Legal Liability Insurance

Extraction will not carry environmental liability insurance.  In the Staff notes for the Amended Agreement on the October 24 agenda, it states that:

     Extraction also indicates that they are significantly reducing the risk of slow leaks by removing the old legacy sites that are closer to homes.

However, Extraction has had multi-day leaks in the past.  In November 2015, Extraction left a valve open for four days, filling the concrete pit and overflowing into the lined berm area. While that did not escape the berm area, what assurances are there that future valves won’t be open?

14. Risk Assessment

An adequate risk assessment requirement has not been included.  The Task Force proposed an ordinance requiring that operators:

   Require a site-specific detailed quantitative and qualitative risk management plan from Operators, prior to drilling, and subject to approval by Broomfield that includes, but is not limited to:

• Risk Identification
• Qualitative and quantitative risk assessment
• Methods of risk avoidance and control that implement techniques to prevent accident/loss and reduce the impact or cost of a loss after it occurs; and
• Risk transfer through contract, insurance, bonding, etc. 

However, the Amended Agreement only requires that:

     As part of the Operator’s application to the City, Operator agrees to provide a risk management plan, which will include identification of potential risks, methods of risk avoidance, and controls     that implement techniques to prevent accidents and losses and reduce the impact or cost after the occurrence of identified potential events.

Both statements include risk identification and risk avoidance. However, the Amended Agreement does not require the qualitative and comprehensive risk assessment, or the risk transfer requirements.  A complete and detailed risk assessment is critical, particularly as a project of this size and scale has never been performed in this dense residential community and around water reservoirs.  The risk assessment should not be limited in the Amended Agreement.  The Amended Agreement needs to be revised to require the complete and comprehensive Risk Assessment.

15. Road Repairs

The Amended Agreement currently puts the burden of road repairs on the City.  It requires that the City pass new road repair rules if it wants to enforce anything and ensure that those road repair requirements apply to everyone.

Given that there is nothing in place now, and the fact that there was never a relevant traffic study, that means that

1. All road repairs become the responsibility of Broomfield, and
2. We have no idea how large this will be.

The City Council needs to either remove this responsibility from the Amended Agreement, or have road remediation rules completed prior to this Amended Agreement being adopted, or minimally complete a detailed analysis of what signing this will cost taxpayers.

16. Enforcement

The Amended Agreement needs a complete review from an Oil and Gas attorney to address the enforceability of this agreement, prior to its signature.

For example, the Plugging and Abandoning Best Management Practices (BMP) list contains critical items that need to be addressed such as identifying previous wells in the area and notifying the City and COGCC of the results.  However, that list is proceeded with the language “This may include:”, which completely negates the requirement that these critical tasks be completed.

That is only one of MANY issues that create enforceability problems. There are many other places where mandates are required, but there is no requirement that proof be provided and no way for the City to determine if the processes are occurring otherwise (or very lax proof requirements on very delayed timelines). That makes this Amended Agreement impossible to audit and impossible to enforce.

Every BMP clause in this document needs to be reviewed by a specialized Oil and Gas attorney to identify any areas that are missing or too loosely worded.  Because even as a layman, it is clear that the current language allows for wide latitude.

Finally, Staff states in the notes for the October 24 meeting that:

      It is anticipated that any remaining items from the adopted Oil and Gas Comprehensive Plan Chapter will be addressed during administrative review and approval of plans required from          Extraction under the Operator Agreement.

That is not adequate as seen here. This is the legally binding document and it must be in place and correct from day one. We cannot fix this later, once they have an overly broad document that “may include” requirements. We have one chance to make sure that this is enforceable.

17. Penalties

Penalties for violations need to be defined now.  In the Staff notes for the Amended Agreement on the October 24 agenda, it states that:

     The Committee recommended that the City review and strengthen its penalty provisions for violations. The City Council is expected to discuss this recommendation in early 2018.

The penalties need to be evaluated and resolved prior to signature of the Amended Agreement. Once it is signed, the council can’t discuss and change these later.  $1000 is not an adequate fine as an incentive to protect resident health, safety and welfare.  This fee must increase as the time of the violation increases, and should also increase due to excessive multiple violations.

18. The City’s Plan / Capabilities

Prior to entering an Amended Agreement, the City needs its own detailed plan in parallel to the Amended Agreement to protect the health, safety and welfare of its residents.  That includes how it is going to enforce all of these provisions, how it is going to pay for road repairs, how it is going to manage air quality testing, and a wide variety of other issues.  Signing this Amended Agreement pushes the responsibility for these issues, and a myriad of others, onto the City. They come with extensive cost to the City and taxpayers.  That plan needs to be in place at time of signing.

We have a right to know how third-party contractors are going to measure potential noise violations. We have a right to know how the air quality monitoring will be done and what additional funds will be put in place beyond the $20,000 provided by Extraction. We have a responsibility to know how the City is staffing to manage the extensive management and enforcement that will be required by this Amended Agreement.

We spent $300,000 on the Task Force. Now we are facing extensive costs. Meanwhile, we are giving Extraction back royalties, but still opening up the possibility that they may drill additional wells later according to planned pipeline easements. Much more detailed financials are needed here prior to the signature of this Amended Agreement.

19. Tier 2 Fracking Equipment

The Amended Agreement allows Extraction to use Tier 2 engines instead of the Tier 4 engines recommended by the Task Force.  Extraction states they cannot use a Tier 4 Hydraulic Fracturing Pump because it is not generally available. The Amended Agreement states, “However, if Tier 4 engines become generally available, they become obligated to use them.” “Generally available” needs to be defined much more specifically before this Amended Agreement is signed. Does that mean when a Tier 4 pump is being produced?  Does it have to be cheap before it’s considered generally available? Is a 3-month delivery schedule adequate to be considered generally available?  If Tier 4 engines are available at all, it must be clearly defined that they must be used.

Additionally, if Tier 2 equipment is to be used, all of the noise issues that are occurring in Erie need to be evaluated here, because those noise issues are currently happening while the Tier 2 Hydraulic Fracturing Equipment is currently in use.

20. Noise

Noise issues are not properly addressed in the Amended Agreement.  In the Staff notes for the Amended Agreement on the October 24 agenda, it states that:

     Noise control, including maximum, not to exceed decibel levels, mufflers on equipment, and sound walls.

However, in the actual Amended Agreement, all specific, measurable noise limits have been removed. Again, Staff is over-promising the merits of the Amended Agreement.  State noise regulations are not even remotely adequate as shown by the drilling in Erie.  These regulations need to be explicitly defined in the Amended Agreement.

Additionally, enforcement requires a third-party consultant to respond and this is not being paid for by Extraction, according to the Amended Agreement.  Is the city prepared with the resources to measure / enforce / respond to complaints?  This is another cost that taxpayers will have to bear.

Also, there is an Amended Agreement discrepancy that needs to be addressed.  This is particularly important for the resident of Adams County.  Based on the current proposal, houses are 1000 feet from well locations.  However, noise enforcement is defined in this Amended Agreement as being measured 1000 feet from sound walls. Sound walls would be closer to residents than the wells.  That means that those people 1000 feet from the well won’t be adequately covered in the Amended Agreement noise enforcement because they won’t be 1000 feet from the sound wall.

Finally, the noise section of the Amended Agreement says the City and Operator have conducted an ambient noise survey for each site at baseline. Was this done by both the City and Operator since proposed well locations have been moved?  If not, then the Amended Agreement is incorrect.

21. Water Testing

The Amended Agreement does not include all water tests.  In the Staff notes for the Amended Agreement on the October 24 agenda, it states that:

     Post-stimulation samples of available water sources shall be collected and tested pursuant to the following time frame:

1. One sample within six (6) months after commencement of the Production Phase;
2. One sample twelve (12) months after commencement of the Production Phase;
3. One sample approximately three (3) years after commencement of the Production Phase; and
4. One sample approximately six (6) years after commencement of the Production Phase.

However, the actual Amended Agreement only requires three out of these four tests.

22. Road Damage

The road damage plan has been removed from the current Amended Agreement.  In the current proposal, the City can implement a plan for road repairs that would apply to all businesses in Broomfield and Extraction agrees it will abide by it.  Until that plan is in place, taxpayers will be responsible for road damage costs.  Reasonable charges that will be planned later will be fought by all businesses in Broomfield.  This needs to be resolved prior to the Amended Agreement signature.

23. Residential Trailers

The Amended Agreement allows residential trailers onsite for personnel and subcontractors. There is nothing to prevent transient workers from sleeping at these locations. Given the temporary workforce that is expected for this project, this is not appropriate for a drilling operation in and around residential communities. The Amended Agreement needs to be revised to explicitly prevent trailers being used as temporary sleeping quarters.

24. Negotiating under Threat

It appears to many in the community that this Amended Agreement is being rushed even though it is clear from this analysis that it is not ready.  Is the City negotiating under threat?  There is a rumor that Extraction will withdraw from the negotiating table if this Amended Agreement is not signed and the City’s spacing unit protest isn’t removed before the October 30 and 31 COGCC hearing.

That is exactly why we can’t rush this.  It is that kind of pressure that makes it clear who we’re working with and what they will do to ensure that they operate in the manner that they want.  This contract must be rock solid, enforceable, and have no wiggle room in the areas that have been agreed upon.  There is much work left to be done.

25. Outside Legal Council

Given all of the complexities, the areas of enforceability and soft language in the Amended Agreement, this contract needs to be reviewed in detail by a specialized oil and gas attorney that will know if certain things are missing or worded to allow wiggle room.  There is no option to fix this later.  This must be fully enforceable and the Best Management Practices (BMP) must align with the intent of the Task Force’s ordinance recommendations and the expectations of the City Council as they seek to protect our health, safety, and welfare.