Colorado’s Boulder County won’t be forced to lease oil and gas located miles below open space purchased with taxpayer dollars after an energy company withdrew the project from consideration by state regulators.
Following a five-year effort to get the proposal approved, Extraction Oil & Gas canceled its application with the Colorado Oil and Gas Conservation Commission for its 32-well “Blue Paintbrush” development on May 2. The proposal encompassed a 2,270-acre area in Boulder and Weld counties, about 30 miles north of downtown Denver.
The company’s decision came just before it reassured investors in a May 3 first-quarter filing that it intended to “vigorously defend” against claims by Boulder County that leases it currently holds for minerals in the project area are invalid.
County officials welcomed the news, yet cautioned that the project might not be dead. “There are many details yet to be worked out,” said Senior Assistant County Attorney Kate Burke in a May 4 statement.
“Extraction has stopped its effort to forcibly develop the county’s property for now, but it’s not clear what will become of the Blue Paintbrush project,” she added. “We will continue our efforts to protect county property and enforce our lease rights.”
Extraction, now part of Civitas Resources Inc., didn’t return phone and email requests for comment.
Conflicts between Coloradans and energy companies are escalating as hydraulic fracturing, or fracking, allows operators to drill a mile or more down before turning the bit horizontally and traveling several thousand feet across to penetrate rock and release oil and gas.
The industrial practice is moving ever closer to fast-growing metro Denver suburbs, where eight of 10 residents don’t own their oil and gas rights — and don’t know who does. Colorado is the nation’s fifth biggest oil producer and eighth largest producer of gas.
Activists statewide called Extraction’s decision to withdraw the Blue Paintbrush project “great news.”
“The fact that Extraction’s oil and gas extraction plans faced huge opposition from the community and local government may have persuaded them to give up their plans,” wrote Colorado Rising, a Boulder-based nonprofit, on its website.
Extraction’s decision came weeks before a May 31 hearing with the state oil and gas agency, or COGCC, on its application to force Boulder County to lease its mineral rights under 552 acres of county open space. The company made the request after the three-member county commission rejected its lease offer in November.
The COGCC postponed a hearing on the matter several times this year due to an ongoing disagreement over whether the company owns at least 45% of the mineral rights, the legal threshold.
A Capital & Main review of documents filed with state regulators found Boulder County claims to own close to 60% of the unleased minerals in the area Extraction proposes to drill. Extraction believes the county’s share is 20%, filings show.
The company’s decision to pull back the Blue Paintbrush project came as an attempt by state legislators to update a 1951 law that allows companies to take private property owners’ mineral rights without their consent failed in the General Assembly.
Lawmakers in the Democratic-controlled state Senate voted to kill a bill aimed at modernizing the law, which allows energy companies to apply with state regulators to “force pool” private property owners in an administrative hearing. The measure attempted to level the playing field between mineral rights owners and the industry. A similar proposal failed in 2017.
“I think there is a lot of good in this bill — I can’t get there on the current version,” said Democratic state Sen. Dylan Roberts, chair of the Senate’s Agriculture & Natural Resources Committee. “I know this is not the end of the road for this issue.”
The committee voted 5 to 2 on April 20 against moving the bill on to the Senate’s Appropriations Committee after its sponsor choked up as she recounted how she ran for office after mineral rights under her Longmont farm were taken without her approval.
“I think this is the first time I’ve ever gotten emotional giving testimony,” said Democratic state Sen. Sonya Jaquez Lewis. “I thought we had a good fix.”
The bill failed to garner enough votes even after Jaquez Lewis and her co-sponsor, Democratic state Sen. Faith Winter, removed large chunks of it to appease colleagues whose constituents live in the state’s most productive oil and gas region, largely centered underneath metro Denver counties. Both sponsors represent communities where scores of residents have had their mineral rights taken without their permission.
The legislation would have required companies to provide regulators with a third-party expert’s title report proving at least 45% of mineral rights owners in a drilling unit have agreed to sell their oil and gas in exchange for royalty payments. Existing law mandates firms submit a statement to the COGCC that they’ve met the legal threshold.
It also would have prohibited operators from taking mineral rights from municipalities, or school districts, and removed penalties for owners who don’t consent to lease their minerals. Today, nonconsenting owners typically receive a 12.5% royalty compared to the 20% rate offered to consenting owners.
Oil companies opposed the measure, particularly a provision that would have required the COGCC to determine if companies can access minerals without disturbing those that belong to an owner who doesn’t wish to lease — which they said they didn’t have the technology to comply with.
Winter told Senate colleagues that she will continue to try to provide constituents with more transparency into the forced pooling process.
“The system isn’t working,” she said. “I promise we will continue to work on this until we get it right.”
