June 1, 2012

A rarity in its field: Mineral Resources

Whether it’s Loveland, Erie, Windsor or Fort Collins, oil companies quickly have learned that trying to drill near these Northern Colorado cities and towns can trigger huge gushers of opposition. Except for in Greeley.

Amid the glut of oil producers, the company benefiting most from Greeley’s attitude – a mindset that so far has embraced rather than resisted Big Oil – is a small yet growing operator, Greeley-based Mineral Resources Inc.

The company owns a working interest in some 90 percent of the wells in Greeley, and while others in the business find themselves in one public relations battle after the next, Mineral Resources is growing fast with seemingly little standing in its way.

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Arlo Richardson, the founder and president of the company, was among the first to drill within city limits, helping to pioneer the oil boom in the Denver-Julesburg Basin, which includes large parts of Weld County.

Today, the company operates 70 wells in Greeley and LaSalle. It has drilled 34 wells on one well pad alone near the densely populated junction of Highways 34 and 85.

A search for extra income

Richardson acknowledges he was somewhat lucky when the first wells he drilled under Greeley in 2004 actually produced oil and natural gas.

Richardson got his start in the oil business long before the current rush was made economically viable by advances in hydraulic fracturing, a technique that involves blasting water, sand and chemicals into shale formations to release oil and gas.

Richardson founded Mineral Resources in 1981 while he was in his early 30s. Shortly after, the son of a slot-machine operator lost a $30,000 investment he made with two partners who were drilling wells in Weld County.

Despite the loss, Richardson learned about raising capital, leasing and drilling and decided to continue in the business. He cut ties with his partners, one a rodeo clown and the other a wheat farmer.

“I figured if they could do it, I could do it,” he said. “I just decided that I could get into business for myself.”

Richardson began acquiring acreage that presented too much of a hassle for other companies: places with land and title issues primarily in LaSalle. He drilled until 1985, when he sold everything during a bust.

At that time, Greeley was far less friendly to exploration companies, banning oil and gas drilling until the Colorado Supreme Court overturned the prohibition in 1992.

For a time, Richardson ran a large food services and vending company, Ideal Services Corp., until restarting Mineral Resources in the early 2000s.

“I just said to myself, ‘The price of oil is now up to $40; maybe we could drill under Greeley,'” he said.

“We never dreamed that we would drill lots of wells under Greeley,” he said. “We just thought we would drill a handful and have some extra income.”

Better yet, as things turned out, Greeley warmed up to oil, much more so than the growing number of municipalities along the Front Range that are wary if not hostile to the industry.

For example, the residents of Erie last year formed a group calling itself Erie Rising, which has railed against fracturing and ultimately influenced Erie leaders to pass a six-month moratorium on oil and gas development. The group recently delivered 21,000 petitions to Encana’s Denver office to urge the natural-gas producer to halt plans to drill near an elementary school.

These oil foes point to studies showing increased emissions associated with oil and gas development.

Richardson insists that drilling is safe.

“We have never had an issue inside the city limits of Greeley of any sort regarding public health, or safety of citizens, or damage to property,” he said.

Richardson describes the anxiety west of the interstate as “paranoia.”

Mineral Resources uses expensive vapor-recovery units on its wells while burning off other emissions before they enter the atmosphere, he said.

That said, Greeley certainly has had its fair share of battles over oil.

Twenty years ago, a “battle royale” played out among operators and residents of Greeley, Weld County Commissioner Sean Conway said.

Over time, those tensions eased as elected officials and producers responded to residents’ questions and concerns about mineral extraction.

Expansion planned

Richardson won’t reveal his company’s revenues. But he noted that the business takes on sizeable investments: about $800,000 to drill a vertical well and $5 million to drill a horizontal one.

The company has an aggressive growth plan, recently announcing its intent to lease 10,000 acres for drilling in Greeley city limits.

It could drill 100 to 200 horizontal wells or as many as 400 vertical wells.

“We’ve been leasing the whole city,” Richardson said. “We’ve developed the expertise and the staff and the systems, the methods to get it done.”

Mineral Resources recently completed its first horizontal well. In the future, it could double its growth every two years through that kind of drilling, he said.

In addition, the company soon will move to a new, 5,900-square-foot building at 5200 20th St., which is double the size of its current headquarters at 3109 35th Ave. It plans to hire additional staffers as part of the expansion.

“We’re the company that can get it done inside Greeley,” Richardson said. “We are getting it done.”

So long, of course, as Greeley stays friendly to oil.

Whether it’s Loveland, Erie, Windsor or Fort Collins, oil companies quickly have learned that trying to drill near these Northern Colorado cities and towns can trigger huge gushers of opposition. Except for in Greeley.

Amid the glut of oil producers, the company benefiting most from Greeley’s attitude – a mindset that so far has embraced rather than resisted Big Oil – is a small yet growing operator, Greeley-based Mineral Resources Inc.

The company owns a working interest in some 90 percent of the wells in Greeley, and while others in the business find themselves in one public relations battle after the next,…

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