Sept. 05–The oil and gas boom could soon make its first mark on northeast Denver — or, rather, beneath it.
Several drilling companies have submitted plans in recent months for operations near Denver International Airport and along the eastern border of Aurora. Pads with dozens of wells would be clustered along the open fields of Adams County, including one proposal about 4,000 feet northeast of Green Valley Ranch.
Oil drillers are racing for opportunities even as the eastern metro booms with new suburban neighborhoods. Axis Exploration, the company that’s proposing some of the wells closest to Denver, wasn’t immediately available for comment.
However, Matt Samelson, an environmental law attorney who works on oil and gas issues for municipal governments, said the industry’s interest will force Denver and its neighbors to face some big questions.
“Right now, all over Commerce City, all over Brighton, all over Thornton, the industry is looking for permits. Part of it is the price of oil has come back, and part of it is recognition that … the suburbs are growing like crazy,” Samelson said.
“The industry is looking to make sure that they can get their permits prior to homes going in, streets going in.”
And that new interest raises a legal irony for Denver: While none of the proposed wellheads would stand in Denver itself, one of the Axis operations could lance 20 bores beneath Denver’s soil. Another operation slightly to the northwest also could send a few wells beneath Denver.
The location matters because oil and gas operations can bring substantial tax money for local governments.
Prior to 2014, Denver could have made millions from some of the operations, according to Samelson’s math. Back then, state law said that property owners had to pay taxes on oil and gas in all the counties affected by a drilling operation — including the site of the above-ground well pad as well as neighboring districts whose minerals are tapped by the wells.
“It required the oil and gas industry to determine what the proportion was and send the right dollars to the (neighboring) county,” Samelson said. That created a “massive, massive headache” as drillers tried to interpret a “jigsaw” of different tax districts.
And it only got more complicated as horizontal drilling allowed drillers to probe out for miles from their drilling sites.
“It’s when the horizontal well came in that it was a little bit more complicated,” said Chris Woodruff, the assessor in Weld County.
So the state legislature passed a new law. Instead of divvying up the money, the county that hosts the wells’ surface facilities gets all the money. At peak production, that could be roughly $67,000 in taxes per year for each well, Samelson estimated, and each pad can host dozens of wells.
The change to the oil-and-gas tax law passed with strong bipartisan support, with only a few votes of opposition. It was already the common practice to pay taxes at the wellhead, according to Woodruff.
“Obviously, Denver not being a big oil and gas producer, I don’t think there was probably a lot of interest at the time,” explained Denver assessor Keith Erffmeyer. The city did not take a position on the change to the law, and the administration has no comment now, according to mayoral spokesperson Amber Miller.
But the industry’s interest in the region is growing, according to state records.
Drillers this year have applied for or received permits ranging along E-470 from Broomfield down to the southeastern edge of Aurora. And Samelson thinks the state legislature should try again to ensure the financial benefits of the boom are shared.
“You’re going to have truck traffic, you’re going to have air emissions,” he said. “The road impacts and the dust and the noise, as well as some of the air quality issues, those things don’t necessarily pay attention to jurisdictional boundaries.”
The well proposals in Broomfield, to the north, have created significant public controversy. The permits near Denver and Aurora haven’t received as much attention. That may be because the southern proposals are farther from residential communities, though one request is about a quarter mile south of the Foxridge Farm mobile home park, according to state records.
In several cases, the proposed wells would run thousands of feet beneath existing residential communities. They can do that if they’ve secured mineral rights to the property — rights that often belong to developers or other parties instead of homeowners.
Extraction Oil and Gas, Conoco Phillips, Bison Exploration, GMT Exploration and Burlington Resources also have expressed interest in the eastern metro.
The Axis proposal for Adams-Denver wells is awaiting approval and some could be decided by the Colorado Oil and Gas Conservation Commission this month, according to state spokesman Mike Leonard.
They will be reviewed for requirements about engineering, aquifer protection, environmental impact and proximity to occupied buildings, among other questions.
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