Gov. Hickenlooper, Sen. Udall, et al., urge Secretary Jewell to approve Roan deal

Drilling rig above waterfall Roan Plateau via The Grand Junction Daily Sentinel
Drilling rig above waterfall Roan Plateau via The Grand Junction Daily Sentinel

From The Grand Junction Daily Sentinel (Dennis Webb):

Gov. John Hickenlooper, U.S. Rep. Scott Tipton and both of Colorado’s U.S. senators on Wednesday [October 22] called in a joint letter for federal approval of a proposed settlement to the Roan Plateau drilling dispute, in the latest indication of coalescing support for the deal.

The agreement offers “a unique opportunity” for resolving the controversy, Sens. Mark Udall and Michael Bennet joined Hickenlooper and Tipton in stating in the letter to Interior Secretary Sally Jewell, as they asked her to take prompt action to finalize the deal.

“This proposed settlement would resolve the ongoing lawsuit and end the uncertainty that has plagued the local communities and industry,” they wrote. “This agreement represents the collaboration of the oil and gas industry, environmental organizations, many local governments, the state of Colorado and our respective offices.”

The deal would settle a lawsuit stemming from a Bureau of Land Management decision to lease some 55,000 acres on the plateau outside Rifle in 2008. The status of the leases remains up in the air following a 2012 federal judge’s ruling that found fault with the BLM management plan leading to the lease sale.

The ruling came in a lawsuit brought by conservation groups, and was appealed by Bill Barrett Corp., which owns the leases on the plateau top. The ruling prompted the BLM to launch a supplemental environmental review.

Talks between the Interior Department, Bill Barrett Corp. and conservation groups reportedly would result in the company giving up certain leases on the plateau in return for compensation, while keeping some leases, and would let companies with leases along the base of the plateau proceed with developing them.

Tipton previously had voiced support for the deal as long as no costs associated with it would be borne by local governments that shared some of the proceeds of the Roan Plateau lease sale through federal mineral lease distributions. Hickenlooper’s office subsequently agreed to support holding local governments harmless through state budgetary action by the legislature.

The state received about half of the nearly $114 million from the Roan lease sale. It would likely repay any lease payments related to a settlement through a reduction in future federal mineral lease distributions. The state shares its portion of such distributions with local governments.

The deal anticipates that royalty, severance and other revenue to the federal and state government from drilling on the base of the plateau would more than offset the cost of reimbursement of leases on the top.

“While the settlement requires a temporary drawback of state and federal funds, collaborators and the state of Colorado have committed to ensuring that local governments will not ultimately lose any resources they realized through the initial lease sale that prompted the litigation. With this last important condition, the local governments in question support the proposed agreement,” Wednesday’s letter to Jewell says.

Both Garfield and Mesa counties have voiced support for the deal, as have Ursa Resources and WPX Energy, which own some of the plateau base leases tied up in the litigation.

Garfield Commissioner Tom Jankovsky said Wednesday said the county is behind the deal “100 percent.”

The letter from the Republican Tipton and Hickenlooper, Udall and Bennet, all Democrats, says the land beneath the plateau contains natural gas resources, while the plateau “also contains important habitat for elk, mule deer, and native Colorado cutthroat trout.”

The proposed settlement would “protect the most ecologically sensitive parts of the Roan, while providing for the orderly development of the area’s natural gas resources,” the letter says.

Udall spokesman Mike Saccone said Udall thinks the settlement is a good way to end the long-running controversy. Wednesday’s letter “is just building on some of the recent support for this,” he said.

But he believes it’s significant in that it comes jointly from the governor and from the two U.S. senators and the congressman who all represent the area that includes the Roan Plateau.

Said Duane Zavadil, a senior vice president of Bill Barrett Corp., “We’re gratified to see an expression by the U.S. delegation, by our local governments, by folks in state government, a bipartisan sort of recognition of what’s good for Colorado. It’s gratifying and encouraging to see folks kind of put those politics aside — one of those moments even during election season when people are willing to do the right thing for the state of Colorado and implore the Department of Interior to try to make this thing work.”

He said it’s important to note the deal isn’t complete, but he has “real hope” of it getting accomplished, and the letter’s reason was to “help compel parties to see the benefit in getting this done.”

The BLM hasn’t been commenting on the settlement talks while they continue. The Interior Department couldn’t be reached for comment after the letter’s announcement late Wednesday afternoon. Zavadil said the deal conceivably could be completed “in a matter of weeks.”

Mike Freeman, an attorney with the group Earthjustice who represents conservation organizations in the Roan litigation, said he continues to be unable to discuss negotiations while they’re still ongoing. But he said the conservation groups “really appreciate the support” that’s being expressed for the proposed settlement.

More oil and gas coverage here.

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DeBeque (Kobe) pipeline project will supply oil and gas operations and irrigators #ColoradoRiver

From The Grand Junction Daily Sentinel (Dennis Webb):

A water project that had its beginnings three decades back in connection with possible oil shale development has been revived and repurposed for another kind of energy production involving shale rock.

The pipeline project in the De Beque area also will provide additional benefits including serving up irrigation water to meet the region’s needs and reducing truck traffic related to getting water to and from energy development operations.

The $8 million project is being paid for by Black Hills Exploration & Production and is part of a large infrastructure project that will aid in the company’s efforts to use horizontal drilling and hydraulic fracturing to produce from the Mancos shale formation. But the water intake facility on the Colorado River and a short portion of a 24-inch-diameter water pipeline now being extended date back to the 1980s.

Getty Oil built the intake for an oil shale project that never came to fruition, said Dave Merritt, a board member of the Colorado River Water Conservation District, which leased the water rights to Getty. The river district continues to hold those rights today.

“It shows the importance of holding on to water rights,” said Merritt, who has been involved with the project since 1985, having had a longtime career for the river district as an engineer.

“It wasn’t until a few years ago that we were able to come up with an agreement to fully implement this project,” he said.

The 1980s saw an end to the region’s last oil shale boom, as companies couldn’t economically mine and heat the vast reserves of kerogen in northwest Colorado’s Green River shale formation to produce oil.

Instead, energy developers largely turned their attention locally to using hydraulic fracturing to produce gas from wells drilled into the Williams Fork sandstone. And now Black Hills and other companies are using fracking and horizontal drilling to explore and produce gas and liquids from the deeper Mancos and Niobrara shales, just as companies have pursued projects to drill and frack in shale across the country.

The De Beque pipeline project, also known as the Kobe project, will help supply the water Black Hills needs for its Mancos fracking via the 24-inch pipeline that will feed water pumped from the Colorado River to eight, 500-barrel tanks at a terminal northwest of De Beque. But only about 5 cubic feet per second of water will go for industrial uses. Fifteen cfs will be used for irrigation, including by the town of De Beque, which will be able to access it via a ditch.

The town has water rights that are senior to a number of ranchers in the area, so providing more water to the town should reduce the need for calls on water that otherwise would go to others.

“This last summer I was pretty well cut off for most of the time,” said Marty Holt, a rancher up Roan Creek.

Holt serves on the board of the Bluestone Water Conservancy District, which is working jointly with the river district on a project that is getting done at no cost to taxpayers due to Black Hills’ involvement.

“Water for energy development is extremely valuable,” Merritt explained. “They’re much more willing to pay for it.”

The larger infrastructure project also involves installation of a 12-inch-diameter gas pipeline that uses the same corridor as the water pipeline and extends farther west to places Black Hills is drilling. In addition, Black Hills will be repurposing an 8-inch-diameter gas pipeline in the corridor for use in transporting produced water from drilling operations. The company will be operating a facility that will let it recycle water from wells and use it to fracture other wells.

That facility will be operated adjacent to a recently constructed Summit Midstream gas processing plant that is supporting drilling in the area and is capable of handling 20 million cubic feet of gas a day. It’s a cryogenic plant that cools the gas to allow liquids to be stripped from it and sold separately. The new 12-inch gas line will tie into that plant.

In a brief statement Black Hills issued in a request for comment on the project, it said work on the pipeline infrastructure began in late July and is expected to be completed by year’s end. It also pointed to various approvals it had to obtain, including from the Bureau of Land Management and Mesa and Garfield counties. The pipeline corridor also crosses private property, much of it owned by Chevron.

The $8 million part of the project pertains only to work associated with installing and putting into operation the plastic water line that also will meet irrigation needs. While the overall project cost hasn’t been made public, it has involved as many as 300 workers during peak periods, said Brock Degeyter, general counsel for Summit Midstream, which is the project’s general contractor.

Due to rugged terrain and the challenges of locating multiple pipelines in a single, narrow right of way, crews have used horizontal boring rather than open trenches to install many pipeline segments. Ray Tenney, deputy chief engineer for the river district, said as many as nine boring crews have been on site, and pipes haves been pulled through bores as long as 1,180 feet.

Degeyter said such techniques aren’t unusual in mountainous areas.

But he added, “We do think it’s a great example of really state-of-the-art construction techniques, for sure.”

He called the project “a coordinated effort.”

“A couple different parties are getting some significant things done that will ultimately help, I think, consumers — consumers of water, gas, etc. — all at the same time, which is obviously a good, efficient use of resources,” Degeyter said.

“I think it is going to wind up being a very successful and efficient project for us,” he said.

The project also could serve other energy companies besides Black Hills, and it is being hailed as a means of reducing truck traffic through the De Beque area, partly through the movement of water via pipeline to the terminal northwest of town. The tanks at the terminal could provide contract deliveries for trucks serving energy development.

Black Hills’ use of the new produced water line also will cut down on traffic. Mesa County Commissioner John Justman, who also serves on the river district board, notes that reducing truck traffic was a big selling point when Black Hills’ water recycling plant went through Mesa County’s permitting process.

He added that in a time of drought, “recycling the water and reusing it is another big deal.”

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