There was a large turnout at the community meeting at the Parker, CO library on Mar 15th at 8pm about oil drilling in Douglas County. I would say the turnout was between 100 to 120 people. The meeting lasted only about 1 hour, which was much too short for the amount of information to be covered.
The meeting organizer, a local land and mineral owner, arranged for two speakers. A woman who had organized her neighbors to bargin collectively with the oil companies speak, and a representative from Chesapeake Energy which is committed to exploration in the Niobrara from Southern Wyoming to the Southern parts of the Denver basin in Colorado.
The first speaker was a representative from Chesapeake Energy who provided hand outs about the Niobrara Play to provide educational information. He said the company was very interested in Douglas and Elbert counties because up north in Wyoming the geological constraints of the formation favored North to South horizontal wells and in the southern part of the basin in Douglas and Elbert counties the formation favored both N to S and E to W well orientation. The bi-directional nature of the southern part of the basin indicated that there could be some phenomenal production rates from wells in this area.
The next speaker was a woman who had organized her neighbors to form a collective bargaining unit to negotiate better terms for their leases with the interested companies. These folks apparantly dealt with multiple third parties during the course of their leas negotiations. This woman stressed that mineral owners needed to do their research and be prepared in order to get favorable terms. She also suggested that in her experience that tactics were used to fracture the bargaining unit to make them weaker and get less favorable deals for both surface and royalty agreements. She did not say if the negotiations were with 3rd party land companies, or the oil company itself.
A short question and answer session was held afterward. Many questions were asked and I will highlight just a few important ones which might be good discussion topics here. Anyone else who attended is welcome to add a comment to anything that I missed.
The Chesapeake representative was asked if mineral owners should use 3rd party companies or consultants to form units. It was also stated that mineral owners were approached by multiple companies and that it was very confusing. The representative replied that Chesapeake would rather deal directly with the mineral owner to negotiate leases and that using 3rd parties would result in less income because of the fees (or cut) paid to the third party. He stressed that a mineral owner should not have to pay anyone to get a lease.
The Cheasapeake representative was also asked about forced pooling in Colorado. While he said he did not know the specifics, he stated that it was a decision that is made by the Colorado Oil and Gas Conservation Commission and that it could apply to mineral owners if the COGCC agreed that it was in the best interest of the state and country. He elaborated that it could possibly happen if less than 50% of the mineral owners in a unit were leased and the rest refused to sign. (a Niobrara Unit in Colorado is 640 acres or 1 sq mile) He also mentioned that forced pooling was a bad thing because a forced pool owner while entitled to the standard 1/8 royalty, they would be an interest owner in the well and would have to bear the well costs with the oil company before getting their share of the profits.
When asked about “Fracking” fluids used to complete the wells, the Chesapeake representative said that their company did not even tell them what was used, but that 99.5 percent of the fluids were water and sand.
Another question was asked about where Chesapeake would get the water used to drill and frac a well. I believe the representative said that it took a total of about 3 acre feet for one well that was typically 7000 feet deep with a horizontal leg from 4 to 5 thousand feet in length. Concern was expressed that the aquifer could be depleted. The gentleman stated that they purchased water from commercial well owners and that mineral owner water would not be used. The gentleman also stated that there was no geologic connection between the multiple aquifers in the Denver Basin and that water usage in one would not deplete water in another.
The meeting ended promptly at 9pm.