Race to build: Energy, home construction on collision course

Homes in Weld County stand almost nose-to-nose with an energy development site. BizWest file photo

Town of Erie Trustee Christiaan van Woudenberg ran for office because he got tired of trying to fight oil and gas development in his town from the outside.

Elected in early April, van Woudenberg said that Erie is on the front lines of the conflict taking place between residential developments, municipalities and the oil and gas developers who own the mineral rights beneath them. In Erie, at least, the town has attempted to put additional restrictions in place to minimize the noise and local neighborhood impact when drilling is taking place.

But as Erie has continued to grow and expand, so, too, have the drilling operations in the area.

Van Woudenberg said that back in 2015, when Erie signed memorandums of understanding with the major oil and gas players in the area, Encana and Anadarko, the largest pads being planned in the area were 10 or 12 wells. The largest was the Woolly Becky Sosa development site with 16 wells.

“Now what we’re seeing with extraction oil and gas drilling, just outside the town limits of Erie, they have planned up to 45 wells on a single pad,” he said. “The applications are coming in for all these other pads, 19, 25, 30, 40 wells. Just the scale of operations we’re seeing is three to five times larger than we have ever seen before. That’s the first fundamental shift.”

It really was brought home to him when a well was being drilled right outside his home. He said that the noise was terrible and the smells were just as bad. For an entire summer, he and his family had to just keep their windows and doors shut and they wouldn’t let their two children play outside because they were worried about the volatile organic compounds being released into the air because of the operation taking place 600 feet from their back door.

In Colorado, oil and gas operations have to stay 500 feet away from any home and 1,000 feet away from any high-occupancy building. Van Woudenberg said he would like to see the setback in Colorado changed to 2,500 feet.

Once oil and gas wells are in their production phase, home developers are allowed to build homes within 150 feet of oil and gas infrastructure.

“That is awfully close,” he said. The previous Erie Board of Trustees passed an ordinance limiting such development within the town of Erie to 350 feet. But, if a project was already approved and in the pipeline before the rules was passed, those builders only have to comply with the 150-foot marker.

“It was quite a surprise to residents. Those wells need maintenance. When a workover rig comes for a period of days or weeks, that is disruptive,” he said.

He is the most vocal of the Erie trustees about this issue, but he said that the residents of Erie are behind him on this issue. He said that in the past election, two pro-oil and gas organizations sunk $75,000 into fighting what they called anti-business candidates. Their chosen candidates lost and not by a small margin, van Woudenberg said.

Scott Prestidge, director of communications and public affairs for the Colorado Oil and Gas Association, said that while the state “is responsible for setting and administering setbacks for the development of new oil and gas development near existing homes (500 feet) and high occupancy buildings (1,000 feet), local governments are responsible for setting and administering setbacks for the construction of new homes and structures near existing oil and natural gas facilities.”

As oil and gas companies invest in new communities, he said they work closely with city and county administrators, planners and elected officials to coordinate plans and permitting.

“In short, there are many opportunities for all stakeholders to work together ahead of new development, either from the energy side, the home construction side, or the town, city or county side of the process,” Prestidge said.

Erie is not the only northern Colorado town struggling with how to handle the increase in oil and gas and residential home development. Longmont, Broomfield, Hudson, Frederick, Firestone and Dacono, have also encountered problems.

These towns sit in the middle of Colorado’s largest oil and gas basin, the Denver-Julesburg Basin. Some might argue that oil and gas has been king in the area much longer than some of these municipalities have existed, but as Denver and Boulder began to burst at the seams and become too expensive for many middle class people to afford, these smaller communities started to grow and expand, increasing the conflicts that arose between the two and pitting the two uses against each other when it came to  any open land.

In Longmont, oil and gas facilities must be at least 750 feet away from residential developments and vice versa.

“Should an oil and gas facility want to locate near residences or residential uses, they would need to meet this setback standard. The same goes for applications to develop residences; the new platted residential lots and associated uses would need to be 750 feet away from any active well site,” said Ian Colby, a planning technician with the city of Longmont.

In Erie, van Woudenberg said there are no vacant properties in the area that don’t have some oil and gas claim on them.

In November 2017, the Dacono City Council approved a six-month moratorium on oil and gas development within the city. The moratorium was established to allow the city to update its regulation and review process regarding oil and gas development, which were last updated in 1996.

Anadarko purchased 500 acres of land in the city of Dacono for oil and gas development under various LLCs.

“While the city of Dacono values a balanced approach to allow oil and gas development, the location, density and use of the land purchased for oil and gas activity is unprecedented,” the city said on its website. “The city is currently negotiating an operator agreement to guarantee that best management practices are fundamental to Anadarko oil and gas operations in Dacono. Because Dacono will feel definite short-term and long-term impacts from the oil and gas operations, including a 16 percent reduction of developable land, our proposed agreement includes provisions that will positively impact our economy and way of life.”

A.J. Euckert, city manager of Dacono, said that the moratorium “was unique in that it allowed for oil and gas development to take place during the moratorium if an operator agreement was approved by the city council. City staff is currently negotiating an agreement with two operators. In addition, city staff is working to update our regulations for oil and gas development. In the coming weeks, our planning commission and city council will review those draft regulations. The plan after that takes place is to distribute those draft regulations to stakeholders for review as well, before adoption by the city.”

Euckert added that Colorado has severed mineral interests, meaning that the surface owners don’t necessarily have the mineral interests below.

“Operators are permitted to access their mineral rights and work with the surface owners to obtain those minerals. Municipalities are limited in their scope of regulating access to those minerals. The Colorado Oil and Gas Conservation Commission regulates the operational aspects of accessing those minerals,” he said.

Todd Hartman, spokesman for the Department of Natural Resources in Colorado, said that these conflicts are not new.

“This has been going on for quite a few years, particularly on the northern Front Range because of population growth,” he said. “There’s been a fair number of conflicts between the desires of home owners and home buyers to live without oil and gas nearby and the desire of oil and gas developers to develop a resource. That gets tough.”

Hartman said that there is a positive side to this.

“There is a lot more work; a lot more communication in the last few years between the industry and local governments. We think it is a good thing. We are the permit providers for oil and gas drilling. We think it is a good thing when operators are communicating with counties and cities about their plans, location and siting,” he said.

He added that both sides are realizing that they might eliminate some of the problems if they can work out some of this stuff on the ground before projects even get to the permitting stage.

Van Woudenberg said that, at least in Erie, the tendency is for oil and gas developers to drill first and then residential communities to come in afterward, but, to his knowledge, no planned oil and gas drilling was ever stopped because residential developers or home owners didn’t want it in their backyards.

“We’ve heard of some developers being very eager. They own the surface or the mineral rights or both. There’s a lot of money to be made for them,” he said. “At best, I think it’s the developer seeing how these oil and gas operators are afforded every single opportunity to drill and they have no choice but to capitulate. I don’t think the way the laws are written that any developer can say no to drilling. They bend over and take the money and then build their homes.”

He added that he hasn’t seen a single home developer even attempt to stand up to an oil and gas operator in Erie.

Courtesy Town of Dacono