All’s not well as drilling takes over bigger chunks of Weld County land

By Laura Frank, Rocky Mountain News (Contact)

Published December 10, 2007 at midnight

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Photo by Matt McClain © The Rocky

A drilling tower looms over Leanne Nakashima's farm near Dacono, where she raises alpacas.

Photo by Graphic by Michael Hall

Crowding the landscape

Photo by Graphic by Michael Hall

Weld County

Mark Nygren steers his tractor down rows of green, leafy sugar beets on his Weld County farm. The blades of his harvester turn over the brown earth to reveal the white roots, healthy and huge this year.

More than a mile under the soil, locked in stone, is one of the nation’s oldest and most productive oil and gas fields. Known as the Denver-Julesburg Basin, it stretches from just north of Denver all the way to Nebraska and Wyoming.

Although the Nygren family owns their land, they don’t own the rights to most of what’s below the surface. As a consequence, about a dozen oil and gas wells dot their fields, and the companies that own the mineral rights are planning to dig 14 more wells this year.

“This land is our nest egg,” said Mark’s wife, Julie, who is worried that their future may be threatened.

The storage tanks, access roads, supply lines and pads for more than two dozen wells will take up such a large chunk of their 460-acre homestead — not to mention create a mountain of bureaucracy — that it could discourage developers who’ve shown interest in their property.

That’s already happened to a neighbor.

In Weld County — heart of the Julesburg Basin and home to the highest concentration of wells in the state — Colorado’s oil and gas boom is colliding with an equally monumental population boom pushing north along Interstate 25 from Denver.

The situation is about to become even more intense as new technology enables companies to ramp up oil and gas production. Already, the part of the Julesburg Basin called the Wattenberg Field produces enough energy in one minute to heat five Colorado homes for a year.

State regulations had limited oil and gas producers here to one well for every 160 acres, or quarter square mile. In 2005, after lobbying from the industry, that was increased to eight wells.

If the land is converted to residential development, each well and its accompanying roads, tanks and supply lines must be set back from the buildings. That can eat up from eight to 12 acres of land for each well, said attorney Lance Astrella, a former oil and gas lawyer who now represents landowners like the Nygrens.

Oil and gas producers are now doing what’s called directional drilling, where four or five wells or more can be drilled from just one pad. But in Weld County, farmers complain that they are being asked to pay for that kind of drilling — up to $100,000 per well — unless there already are five wells within a quarter square mile.

“We don’t have that kind of money,” Julie Nygren said, “and they know it.”

Last year, the family earned $20,000 in royalties in a complex deed arrangement.

As Mark Nygren harvests sugar beets, Long’s Peak stands like a distant sentinel over his shoulder and the rest of the Rocky Mountains stretch in panorama across the western horizon.

A half-mile ahead of him is what used to be Stroh Farm. Today, it’s a sea of houses. The adjacent farms in every direction have either been developed or are for sale.

The Nygrens likely could sell their farm for millions of dollars. But the wells planned for their property could decrease its value considerably.

The owners of the nearly 300-acre farm beyond the old Stroh place may have lost the opportunity to sell it for $5.5 million because the five oil and gas companies with mineral rights to their land failed to iron out an agreement on when and where wells would be dug. The potential developer couldn’t get a loan without the agreement because he couldn’t determine how many houses he could put on the land.

“We probably worked on that for at least a year,” said Realtor Tammy Seader. “We met and met with the companies’ lawyers and land guys. It really slowed us down. Right now, it’s kind of a dead contract.”

Twenty miles south of the Nygren farm is the town of Frederick. Here development is intertwined with the gas boom in a way that can be unsettling to newcomers. But that is the history of Carbon Valley, where energy production has peaked and declined many times since miners began taking out coal in the area a century ago.

Frederick Mayor Eric Doering spreads a map of the area across his conference table. It is covered with dots representing oil and gas wells. “It tells the story,” he said.

Once-tiny Frederick has a whopping 25 wells on every square mile. But that hasn’t stunted its growth. Since 2000, the town’s population has tripled to about 7,400.

Doering knows, however, that the comfortable relationship the area has with oil and gas operations is likely to change when the industry begins drilling older wells deeper and neighbors who have become used to a wellhead pump behind their home are faced with a parade of big trucks and drilling rigs.

“That’s when I’m going to start hearing from the neighbors,” Doering said. “As the next phase happens, as more people come and as more technology means they can dig another well down to the next level (of oil or gas), that’s when it becomes more of an issue.”

Doering steers a town truck through a new subdivision called Wyndham Hill, where developers are trying to mesh the existing wells with the community being built. Wells are fenced in and surrounded by green space. Access roads and supply lines are becoming paths and greenways.

Nearly 10 percent of the land in Wyndham Hill is taken up with oil and gas works, as is the case with many of the new developments popping up all over Frederick. But this is an example, Doering says, of how the co-mingling of energy extraction and residential development can work.

Anadarko Petroleum Corp. owns wells in both Wyndham Hill and on the Nygrens’ farm. Spokesman John Christiansen said the company feels a constant pull between the needs of developers and residents and energy production.

“We’re doing what we can to work together to produce the energy that’s needed and to protect the rights of those who own the land,” he said. “It’s a balancing act.”

But Doering is frustrated with some oil and gas companies that, as he sees it, are not doing their part.

Frederick created an inspection program to make sure wells meet local codes. (Doering said sometimes years lapse between inspections by the state.) The town charges oil and gas companies a $400 fee to pay for the program. Since 1999, however, only one company has paid the fee for just one of its wells. The rest are fighting the charge.

“One company said if they had to pay $400 for every one of their wells in Colorado, it would cost them $2 million,” Doering says. “In my mind, that’s a small price for them to pay.”

Here in Carbon Valley, where the Front Range meets the oil and gas boom, cooperation will be key.

“If the industry abides by the rules and the residents know what to expect, then I think we can coexist,” Doering said.

• December 10, 2007

  3:01 p.m.

  Suggest removal

  ebmfck writes:

  This is another case of people bitching about O&G development because they don't own the minerals. A large chunk of Weld county is in the railroad checkerboard where every other section was granted to the railroad in exchange for the railroad being built. The vast majority of this land was sold off ex-minerals by Rocky Mountain Fuels (Union Pacific). Another loss of minerals was in th Great Depression when the State of Colorado had a program to bail out broke farmers and part of the deal was that they would give up their minerals to the state. So the state owns a bunch and Union Pacific owns a bunch. All the Anadarko stuff is old UP property. If you don't own the minerals, you can't prevent development. I doubt that any of the local (municipal) restrictions are going to stand up in court and the oil companies know it.

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