Treading lightly new mantra of oil giant

Gargi Chakrabarty, Rocky Mountain News

Saturday, November 18, 2006

PARACHUTE - State regulators declared EnCana Oil an environmental hero a couple of months ago when they honored the energy giant for protecting sage grouse habitats and trying to limit its drilling impact on the Western Slope.

It was quite a turnaround from two years ago when those same regulators welcomed EnCana to Colorado by handing out the biggest environmental fine ever for causing a gas leak from a faulty well and contaminating a creek used by residents.

Calgary-based EnCana has emerged as the biggest player in the boom-time rush to reach the gas reserves lying below millions of acres in Colorado.

EnCana, short for Energy Canada, is working hard to make sure its image of environmental concern is the one that rises to the top.

"EnCana certainly is trying to turn their huge corporate ship in the direction of more compassion toward landowners," said Carol Bell, 58, a homeowner in Silt whose 110-acre property houses four EnCana gas wells.

EnCana has drilling rights to more than a million acres in Colorado, by far the largest company punching holes in the ground to reach the state's gas reserves.

There's a great deal at stake. The company owns a boatload of mineral rights on the ultrasensitive and controversial Roan Plateau and is likely to be first in line to snap up the government's stake in the plateau.

Gas drilling is now a way of life in Colorado. But the sting of receiving a drilling notice from EnCana hasn't lessened for Western Slope residents. They understand it. They even accept it. But they don't like it.

For its part, EnCana fully admits it has learned its lessons.

"When we first came here six years ago, there was a learning curve involved in how we operate in this environment," said Doug Jones, EnCana's land team leader in the southern Rockies, which includes Colorado. "We were drilling in an area where people had moved for the scenery and solitude, and we began to have more visible impact like noise, dust and traffic concerns."

Community backlash in the wake of the gas seep, coupled with stricter official supervision, prompted the company to become a better neighbor, EnCana says.

EnCana received only three notices of alleged violation from the oil and gas commission in 2006, compared with seven in 2005 and a staggering 35 in 2004. The commission issues the notices to oil and gas companies when it finds significant violations of state laws.

The company has cut back its drilling in the Piceance Basin, where it is running only nine rigs - fewer than half the number it had in 2005. At its peak, EnCana ran 22.

"Since the (state) assessed the largest penalty the commission has ever imposed, EnCana's ability to operate in a responsible way has improved greatly," said Brian Macke, director of the Colorado Oil and Gas Conservation Commission. "They have moved a large part of their drilling operations away from the populated areas in the Piceance Basin to reduce conflicts."

Gone are most of the adversarial relationships with landowners.

Boxy tanks that collect oil and gas on private properties are painted natural colors to blend with the sky, hay or sagebrush.

Ugly wellheads are hidden behind berms, or heaps of straw and dirt, to protect the views of ranches in the undulating countryside. Trucks are rescheduled to avoid school bus pickup and drop-off times. And snaking pipelines are buried deep in the ground.

"We didn't learn as quickly as I hoped we would," EnCana's Jones said. "We have changed a lot of the methodology and techniques in how we deal with surface owners and communities and small neighborhoods where we are actively drilling."

Landowners are asked to call if they smell odors, deal with too many trucks or breathe dust. And wells are clustered in single locations to reduce footprints on the land.

"The towns have grown tremendously in the past six years," Jones said. "Their businesses are healthy, and real estate is good. We have had a positive impact on the economy. But some people like that better than others."

One of the state's biggest natural gas producers, EnCana leases 1.2 million acres in Colorado, two-thirds in the Piceance Basin, which straddles Garfield and Rio Blanco counties.

EnCana has about 2,000 wells in the area and 250 more on its books for 2007 - about the same number as it drilled this year.

EnCana says it will consider drilling on the Roan Plateau's public lands once the federal government begins leasing them. About 74,000 acres of the plateau, which rises over 9,000 feet, has been off limits. Now the government has decided to open it up.

The 127,000-acre Roan squats on enormous amounts of natural gas - more than 8.9 trillion cubic feet under federal lands alone, which is enough to heat more than 4 million homes for 20 to 30 years. And much of that can be extracted only from the top 35,000 public acres.

Despite its improved track record, the company still has some fences to mend.

"They are coming so hard, so fast, that we can't handle it," said Duke Cox, a home builder in Garfield County and co-chairman of the Grand Valley Citizens Alliance, an activist group in Rifle.

Garfield County is the fastest- growing energy-producing county in Colorado, accounting for nearly one-third of the state's 4,463 drilling permits from Jan. 1 through Oct. 10.

Scores of landowners in Garfield County are fighting the so-called split estate provisions, in which one party owns the surface land and another owns the minerals underneath it. Federal law gives the mineral owners the right to extract the resources, overriding surface owner rights.

A bill aimed at giving more protections to landowners on split estates died in the legislature this year. Proponents now are pushing to put it on the ballot next year.

Landowners also complain that oil and gas companies are not adequately supervised. The owners are unhappy about noise, dust, traffic and odors, and they believe state and county officials don't do much to resolve their problems.

The oil and gas commission has only nine field inspectors to oversee more than 30,000 active wells in the state. It plans to hire one more, although that person will split the time between inspection and paperwork. Garfield County has lost three oil and gas auditors in as many years, the last one in September - underscoring the difficulty of the job.

Residents of Silt, Parachute and Rifle wait in long lines at grocery or fast-food checkout counters because there aren't enough employees: Most quit within weeks to work at rigs.

"I am not against oil and gas companies making money, but the way they are making money," Cox said. "The truth in business is, people who don't pollute, who take time to check the quality of air and water, who control traffic, don't make as much money as (oil and gas companies)."

Drilling on the Roan

County Road 215 abruptly changes ownership at the foot of the imposing Roan Plateau, near north Parachute.

A sign warns that the land beyond the iron gate is private.

It belongs to EnCana.

Bone-dry cottonwood trees and brownish-green sagebrush dot both sides of the winding road as it makes its way up the plateau.

Up the road, EnCana owns surface and mineral rights to 45,000 acres sprawled over deep valleys and snowy cliffs on the western edge of the Roan Plateau. EnCana calls it the North Parachute Ranch.

The U.S. Bureau of Land Management, a federal agency, owns the public portion of Roan - about 74,000 acres.

Oil and gas companies long have lobbied to open up the BLM portion for drilling, much to the dismay of activists. The BLM released a final plan two months ago that allows drilling in a phased approach on top of the Roan.

EnCana will consider drilling on the BLM land. For now, it is focused on North Parachute Ranch.

The ranch originally belonged to Unocal and came to EnCana in 2004 as part of its $2.2 billion acquisition of Denver-based Tom Brown Inc. It has about 100 producing wells. EnCana plans to drill 150 to 180 more next year.

"The concern is to minimize the impact to environment and wildlife in these areas," said EnCana spokesman Doug Hock. "Through technologies and best practices, we have demonstrated an ability to do that in our North Parachute Ranch."

EnCana has changed its drilling methods in the past year.

For starters, it worked with a geologist to identify the wildlife habitats to avoid in its drilling program.

It also began drilling multiple wells from a single pad to reduce its footprints on the land. Currently, it is drilling 16 wells per pad and has plans to go up to 28 next year.

"It would be fantastic if they are successful," said Matt Sura, an environmental activist with the Western Colorado Congress in Grand Junction, who said he's heard EnCana is aiming for 64 wells from a pad.

"Suddenly, that would become the gold standard for drilling, and we all know they have the technology to do it."

Drilling multiple wells from a single pad, called directional drilling, is more costly than a vertical well because the multiple wells snake out in different directions for several miles underground to grab oil and gas trapped between layers of hard rock.

EnCana has five rigs working in the area.

Instead of storing oil and gas in tanks near wellheads, the gas and oil are piped to a centralized plant deep in a valley to separate them.

Pipelines reduce the number of truck trips and the possibility of spills. Water produced at the wells also is pipelined to a storage pond, to be recycled for later use.

The company has revegetated 129 acres of mountain shrubs to improve sage grouse habitats and stopped drilling during the bird's breeding and nesting times.

That's still not enough; the Roan should be left alone, critics say.

Drilling pads interrupt wildlife migration patterns, they say. Pads typically have roads leading to them and truck traffic, which drive away big game such as elk and deer.

"There's not much to hunt since there's no hiding spot left for the game," said Bob Elderkin, a former rodeo bull and saddle bronc rider who frequently goes on hunting trips up the Roan's public land. "Everybody drives in pickups, and hunting becomes more of a road race than anything."

Elderkin also worries about the area's aquifers. Gas wells have cement casings to protect any contamination of underground water found at depths of 200 to 1,000 feet.

Gas in those areas is buried much lower, at 8,000 feet or deeper - reducing the risk of contamination.

"Nothing lasts forever, and who knows how long those cement plugs will stay in place," Elderkin said. "I've heard people say (the cement will last) 25 years or longer, but what will happen after that?

"If the cement breaks down and punctures the aquifers, water will drain away and fall in the well and dry up aquifers," Elderkin added. "But nobody at the moment is raising the issue, partly because nobody lives in those areas."

Owens Drive

Orlyn Bell knew what the letter from EnCana would say even before he opened it.

The company owned oil and gas under his land, and it was only a matter of time before it would roll in its drilling rigs.

Bell had purchased 110 acres of fertile land on Owens Drive, a small community in Silt, 26 years ago. He didn't want his view of the faraway Maroon Bells, the Hog Back and the Book Cliffs marred by derricks.

He even traveled to Denver with his wife, Carol, hoping to persuade the company's top executives not to drill on their land - to no avail.

"Negotiations fell apart, and they sent us a letter saying they had posted a small bond with the state and would begin drilling," Bell, 61, said, recalling the incident three years ago. "At that point, seeing we had no chips to negotiate with, we took another tactic and decided to get involved."

The Bells, along with several other landowners, began discussions with EnCana.

"That was the genesis of EnCana's moving forward with their humane side of drilling," added Carol Bell.

Although talks dragged on for more than a year, the outcome made Owens Drive an example of socially conscious energy development in residential areas.

EnCana built a temporary wall around its rig to muffle the sound of continuous drilling. It focused the rig lights downward to minimize light pollution.

It built a new metal and wooden fence along the two-mile-long Owens Drive road and clustered the mailboxes of the eight ranchers who live up the road in one location - a small plot at the beginning of the road donated by the Bells.

EnCana also reduced and rescheduled its trucks to avoid school bus pickups and drop-offs.

Once drilling was completed and wells were dug, EnCana asked the landowners - including the Bells - to choose a color for the gas tanks on their properties.

The Bells chose cream to blend with the fields of straw.

Sara Cox chose grey to match the skies. The gas tanks are barely 200 yards from her backdoor.

"She was so happy with the color, although it was only the primer," recalled Kathy Friesen, EnCana's community liaison in the area. "We left it like that."

Cox doesn't care about the new fence or the painted tanks. Nor does she care about EnCana.

"I tolerate it, for I have no choice," Cox, 47, said. "That doesn't mean I am happy with their presence."

Dee Hoffmeister, 69, who lives near Owens Drive off County Road 331, said she could smell the fumes from her front porch when EnCana began drilling in the area about two years ago.

She and her husband Harold, 70, bought the ranch in 1994 to enjoy their retirement. That changed in the past year. The couple's land virtually is surrounded by rigs and they have a view of wells on their neighbor's property.

"The rig lights were so bright, this place looked like downtown Las Vegas," Hoffmeister said.

Hoffmeister said one of her neighbors sold their property a year earlier, and the property has been sold twice since then.

"People are trying to sell, but nobody is willing to buy," Hoffmeister said, walking in her yard as two brightly lit rigs glowed in the background.

Cox's main concern is her property value, which she estimates has dropped $50,000 to $70,000 in recent years. But Cox admitted EnCana did stop drilling for two days last year when she had family visiting from Montana.

"I suppose they are trying to get along with the neighborhood," Cox added, "and learning to be a community (member)."

It's not enough

Carol Bell gets letters from EnCana, telling her when a rig will pull in, where it will sit and how many days it will stick around.

But that's not enough.

"They say they keep us informed," Bell said. "But they don't ask us, 'What are your concerns, what do you want from us?' "

"The process needs to be collaborative, and not EnCana saying, 'We call the shots, we have the power, but because you're pursuing us, we will do something.' "

Bell and others members of the Grand Valley Citizens Alliance are hoping to rectify the power imbalance by getting EnCana to sign a community development plan - a tall order.

Such a plan would give landowners a say in drilling plans and also outline the process for individual land-use agreements, although it is not legally binding.

Only one company, Antero Resources, has signed on the dotted line. Antero has agreed to put in no more than one drilling pad per 160 acres and to monitor well and irrigation water quality.

EnCana won't sign such a plan, Hock said. Instead, the company wants to work with the neighborhood group to improve communications - similar to what it's doing with a group near DeBeque.

"Every plan is different," Hock added, "and there is no cookie cutter."

chakrabartyg@RockyMountainNews.com or 303-954-2976