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A Peek At Risks

High Country News has a pretty in-depth article online about a couple specific oil/gas fires and explosions in Colorado and just how severe these can be; it includes audio clips from firefighter communications and is built on interviews with workers and firefighters involved. While one event (the exploded Firestone house) got considerable media attention, the other was dismissed as a small, well-controlled fire that injured an employee. See if you agree after reading how it all went down. It is an indictment of the contention of the industry that they are “good neighbors” as the industry is unquestionably a dangerous one for its workers and arguably a significant risk for its neighbors.

Does this potentially influence Colorado voters? We shall see as the politics of industry rights vs. community safety take center stage.

Reap or Sow?

Well, election season is upon us and as sometimes happens, frustration with legislative gridlock has produced initiatives that probably are less than ideal solutions to problems.

Here in Colorado the issue is oil and gas development. Generous forced pooling rules, state control of drilling permits, and limitations on the ability of surface rights holders to prevent drilling have frustrated suburban dwellers who object to the various nuisances and impacts of a booming oil and gas industry. Attempts to limit development in town laws have been struck down by courts, and attempts to pass legislation have also failed. Compounding the insult has been the explosion of a house in Firestone because of a feeder line from a well that wasn’t properly shut off. So opponents have gone to the ballot box with an initiative that would force new oil and gas wells to be a half mile from any occupied dwelling or vulnerable areas like reservoirs and rivers and streams.  There is no opportunity for a surface rights owner to waive the setback, but this would be a statutory change and not a constitutional change.

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The New Land Race

Occasionally stories are written about the conflict between suburbs in Colorado and the oil and gas industry.  What often eludes reporters, especially those from outside the area, is that the battle lines are not static but moving, and that acts to reinforce rather than temper the conflict.

Here’s the deal. One of the hotter oil and gas plays in the U.S. is the Watternberg field, a northeast trending belt of Denver Basin rocks cooked enough to yield both oil and gas. This field stretches from Boulder to the northeast, encompassing rapidly growing communities like Erie and Longmont and on out into the plains near Greeley. When first exploited in the twentieth century, the region was rural; Erie, for instance, was a shrinking coal mining town at that time with a population under 5% of its current population. Oil and gas wells were pretty widely placed but widespread.

What has happened this century has been to put a modern twist on an old conflict.  In the very early days of oil development, forests of oil derricks could be found in cities like Long Beach and Dallas. At that time there was no question that you’d drill for oil wherever it was. But today?

The state of Colorado regulates where operators can drill for oil and gas, but local communities regulate where you can build buildings. Since 2013, oil and gas wells have to be 500′ from an occupied building. Seeing development covering large areas in the southwestern Wattenberg field, companies have wanted to move quickly to drill before available lands are off limits.  This has led to a flurry of permit requests in these rapidly growing areas. Ironically, the efforts residents have made to preserve open space now boomerang as open space lands often offer locations where drilling is feasible; even when the government holds the mineral rights, Colorado pooling laws mean that a single mineral rights holder can force drilling in an area, and once that is approved, surface rights’ owners can not prevent drilling.

There is pressure on the other side, too. Surface land owners in these growing communities want to take advantage of the red-hot housing market in the region; construction is largely limited in the region by the availability of construction workers. Right now many communities allow new buildings to be placed much closer to existing wells–150 feet in the case of Firestone, where a house blew up awhile back. Some communities are considering larger setbacks, though this is typically expressed as an attempt to expand on the state’s rules on where new wells can be sunk rather than a limit on new construction. Nevertheless, developers and landowners don’t want to be caught having to leave open land because of an abundance of wells.

The result is an intense competition along the I-25 corridor north of Denver. You can find drill rigs seemingly a few feet from new houses in Erie, for instance, as the wells are being drilled as the houses are being constructed. As with any such race, the best solutions fall by the wayside. Given the need to move away from fossil fuels, leaving the oil and gas under the southwestern part of the field makes a lot of sense, both for locals and the global environment. Shifting to an emphasis on developing the rural, northeastern part of the field would seem a better outcome for all save the mineral rights holders in the southwestern part of the field.  And the reality is that for most of those folks, those rights are found money–until recently there wasn’t much value to those rights. [Congress never intended for mineral rights to go to homesteaders and the like, but that is another story].

Instead the only legal out is to buy your way out, which is what the city of Longmont decided to do. Or cover everything with houses, which seems to be some other cities’ approach….

People’s Power

For those of us concerned about increasing CO2 values in the atmosphere (yes, we are about to crash 410 ppm), the recent decision of the Trump administration to back out of the Paris accord is disheartening. But it is worth looking at what has been going on for awhile to see that there is progress, much of which owes less to government action than to the power of the marketplace.

Let’s start with a recent milestone: 10% of electricity produced in the US in March was from wind + solar energy. That’s produced, not capacity.  Now wind in particular is seasonal, so we’ll drop back down from that high, but compare that to the high from 2007, ten years ago, when it was only 1%.


U.S. Energy Administration, June 2017 “Today in Energy”

This is excluding other non-CO2 sources of electrical power, such as nuclear energy, hydropower, and geothermal.  Of the 97.4 quadrillion BTUs (or peta-BTUS, or PBTUs; equal to 2850 GWh) of primary energy consumed in 2016 (so not just electricity), 18.5 (or just a hair under 20%) came from all carbon-neutral sources of energy.

Going a decade back on primary energy consumed reveals some interesting changes–and lack of change.  Total energy consumption was actually higher at 99.4 PBTUs, but carbon neutral was only 14.9 PBTUs (nearly all nuclear, biomass and hydroelectric, in decreasing order). One of the great accomplishments that goes unnoticed is that GDP in the US in constant 2009 dollars went from $14.5 trillion in Q1 2006 to $16.9 trillion in Q1 2017: a 17% increase while energy consumption overall dropped by 2%. That is huge, because if energy tracked GDP, the increase in renewables would have not even filled in the hole in increased consumption of energy. U.S. energy consumption has been flat or gently declining since 2000.


May 2017 Monthly Energy Review, US Energy Information Administration

Of course you might say that the low-hanging fruit is picked, and there is reason to think that.  Hydropower isn’t going anywhere forward in a big way, and decreased flow in important hydropower rivers like the Colorado bodes ill for the future. Nuclear remains stalled, and the impending retirement of a number of plants suggests the share of power from this source will decline. But there are optimistic trends, too.

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The Great Colorado Oil Blowup

Well, it was the well. In Firestone, Colorado, a house exploded because a cut gas line that should have been abandoned but was still connected leaked gas into the soil five feet from the house.  The odorless gas seeped into the basement of the house and was ignited. This determination is almost certain to ignite another, thankfully figurative, firestorm.

Leaving aside the inevitable lawsuits over that explosion, what does this mean and what should it mean for oil and gas development?

Let’s start with the easy part: what it should mean. Oil companies need to be responsible for the safety of their facilities (that includes being legally liable). New construction near existing oil and gas facilities needs to be aware of oil and gas infrastructure, including these flow lines. Government should enforce inspections of existing oil and gas infrastructure and assure the proper sealing and plugging of wells and flow lines being abandoned. Ideally, government should sponsor means of detecting unusual levels of hydrocarbons leaking at well sites and employ them as a means of recognizing trouble spots (CIRES and NOAA have been working on such tools).

Frankly, if GG lived near a well, he’d be trying to find out about the feeder lines and the history of the well. And quite possibly monitoring gas levels in the basement.

The good news is that the state has ordered oil and gas companies to pressure-test all lines within 1000′ of occupied buildings and to make sure abandoned lines are properly marked and capped. It is unlikely that industry will protest.

Unfortunately, that probably won’t be enough to prevent some future tragedy unless something else changes.

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Precise Opposition

GG has previously been frustrated with the combination of imprecise speech of anti-fracking groups as well as the double speak of industry. The reason you might want to be precise might be well illustrated by a recent home explosion in Colorado.

The exploding house killed two men working on a hot water heater in the basement; usually when you hear these things, it turns out there is a gas leak or something like that in play. The startling news has been the move by Anadarko Petroleum Corp. to shut down 3000 wells they are operating while the wells are checked out (that is more than 5% of the active wells in the state). The exploded house was 170 feet from a 1993 well reactivated this past January. Although a new well can not be drilled there, houses can be built that close to existing wells (these houses are only a couple years old).

Oil companies are loathe to shut down operations (see opposition to claims of induced earthquakes, for instance). Shutting down this number of wells even as investigators are saying that they still don’t know what happened strongly suggests something may have gone wrong. Given that the oil company feels that shutting down wells is likely to reduce a risk, they are presumably not thinking that any gas leaked up around a bad casing job in the well but instead are concerned there might be leaks in the underground lines connecting wells to pipelines or storage facilities.

And here’s the thing.  This is not a modern, horizontally-drilled heavily fracked well. This is one of those older-style vertical wells. So when anti-fracking groups say they don’t want to stop oil and gas development but do want to stop fracking (as was the case in Longmont, Colorado a couple years back), this is the kind of well they think is OK. So once again a reminder: fracking is very rarely a cause of problems, but all the other stuff with oil and gas development is the real problem people are complaining about.

The irony might well be that if Anadarko’s infrastructure was the cause of the blast, there is likely to be enough of an outcry to allow far more stringent rules on any new oil and gas development–even though a blast caused by a leak of a subdivision gas supply line would probably not shut down the use of natural gas in houses. So “anti-fracking” groups might get their wish not because of fracking problems per se but because houses were built in the vicinity of active oil and gas operations.

(Equally ironic is the request from the Boulder County Board of Supervisors for companies to shut down all their vertical wells in the county–apparently unaware that it is the near-surface infrastructure that could be the problem, which can exist at both directional and vertical well pads).

It should be interesting to see what happens. Almost certainly it points to a need to check up on the older oil and gas infrastructure in the state. Whether it changes the politics of new oil and gas operations remains to be seen.

Capture and Release?

Petroleum has been one of the most peculiar “minerals” (in a legal sense) owing to its existence as a fluid; only groundwater faces similarly bizarre legal contortions. (If you want all the details, read Finders, Keepers by Terence Daintith.) The development of laws that were forward looking for conventional oil and gas development are now causing heartburn in unconventional development.

Recall that originally, you could drill straight down and hit an oil pool and oil might come out all on its own. The oil that came up could be coming from neighboring lands. Courts decided, using (of all things) the common law pertaining to capture of wild animals, to decide that this was OK.  If you “captured” that wild oil, it was yours to keep; hence, this is called the rule (or law) of capture.  This was utterly different than the decisions reached on other mineral rights that didn’t move around.

The result of the rule of capture was an insane style of production.  Each landowner wanted to get the most oil, and they wanted to preserve the oil under their land.  So they would drill as close to the land’s boundaries as possible and go as fast as possible in the hopes of extracting resources from neighboring lands and preventing loss of their own reserves. The result overall was a decrease in the total production from many oil fields as reservoir pressures decreased rapidly while at the same time maximizing surface damage.  The pictures of forests of derricks at, say Spindletop in Texas or Signal Hill in Southern California arose from this.


The rules were largely left to states, many of which started to introduce unitization laws that tried to remove the incentive to extract everything in the craziest manner possible. Colorado, for instance, has such a law. The basic idea is that if a field starts to be produced, all the mineral rights holders will gain from the extraction in some proportion. For this to work, some rights holders can’t stop the proceedings: if one mineral rights holder’s objections would prevent drilling and production, then all the other rights holders would be losing their mineral rights to some degree. So there is some measure usually applied.  Here in Colorado, all it takes is one rights holder to say they want to produce to trigger the unitization process, thus leading this to also be called “forced pooling”–you might not have wanted your oil and gas to be extracted, but you are forced into the pool so that others can get theirs.

Unhappily, this makes no sense with the latest unconventional resources.

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