Drought complicates efforts at reclamation by oil companies

Companies drilling for oil in Northern Colorado are often failing state inspections aimed at ensuring they leave as little trace as possible after closing down exhausted wells.

Oftentimes, it’s the drought that has hurt their reclamation efforts most.

The Colorado Oil and Gas Conservation Commission performed 154 so-called reclamation inspections between April 2010 and August 2012, the state agency told the Business Report. Only 88 sites passed inspection; the other 66 failed.

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The companies, which must pay the costs of restoring the land, are supposed to remove equipment such as tanks and pipelines, and in some cases, get rid of service roads built so that their vehicles can access drill sites.

They also must restore plant life, a requirement that poses one of the biggest challenges to the companies because of the drought.

In response, the region’s cities are taking steps to protect their lands.

In coming months, officials with the cities of Fort Collins and Loveland expect to outline their own reclamation standards ahead of a drilling boom they believe will expand west from Weld County to Larimer County.

Reclamation represents one of the areas they believe will not upset the state’s overarching authority on oil and gas matters. They have approached other cities and counties to learn how to better deal with returning property to its previous state after a well stops producing oil and gas.

As envisioned, city councils will either adopt stricter regulations or strike individual reclamation agreements with the oil and gas companies.

“A property owner, in this case the city, can always work with whoever the (well) operator is to negotiate what they would like their property to look like afterwards,” said Laurie Kadrich, director of Community Development and Neighborhood Services for the city of Fort Collins.

The notion of tighter regulations has gained traction with Fort Collins Councilman Kelly Ohlson, who said he has reviewed photos of some reclamation sites.

“I can picture one of the photos perfectly in my mind right now,” he said. “I think the moon was more attractive.”

He said he does not believe the state has adequately enforced its reclamation measures.

“I think that the state lacks the resources, and I think they lack the backbone,” he said.

Oil and gas companies must follow two sets of comprehensive reclamation rules: some that apply when a well starts producing oil and gas, and others for when an operator abandons a non-productive well.

Under the law, companies must re-grow 80 percent of the plants that existed at a site before drilling began, said Margaret Ash, manager of the Oil and Gas Conservation Commission’s Field Inspection Unit.

“It takes time to reach the 80 percent of pre-existing level of re-vegetation, especially in drought conditions,” Ash said about the high inspection failure rate.

Reclamation standards require that the entire area be graded, shaped and replanted, she said.

Shane Davis, chairman of the Sierra Club’s Poudre Canyon Group, said the reclamation efforts by some companies have fallen woefully short.

“Some of them are pretty horrific,” said Davis.

Others, however, say the oil and gas companies generally strive to live up to their obligation to reclaim out-of-production well sites.

“For the most part, companies recognize the value in being good stewards of the land,” said Jenna Keller, lead attorney for Feldmann Nagel’s oil and gas practice in Steamboat Springs.

The most common reclamation conflict between landowners and companies involves timing, said Keller, who represents landowners in Northern Colorado.

More specifically, the companies may take their time if an agreement does not include deadlines, frustrating landowners, she said.

Companies pay anywhere from a few hundred to a couple thousand dollars for reclamations performed by Sedalia-based CDI, which has an office in Evans.

The company has seen an increase in business from reclaiming wells on pasture land, said Jamie Salisbury, CDI north branch manager.

CDI, whose customers consist mainly of oil and gas operators, aims to return a well site to its original state, he said.

“Most of the contractors that we work for go above and beyond for stewardship of the land,” he said.

But reclamation can take time: growth of native grasses presents a challenge and can take two or three years, he said. Almost all of CDI’s sites depend on rain for moisture.

If an area sees little growth, the company will return to reseed the site.

“It’s been a tough group of years, because you’re relying on timely rains and moisture,” he said.