Fracking in Colorado: Key Events and Developments

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Below is a summary of key news, events, and regulations affecting the use of hydraulic fracturing for oil and natural gas extraction in Colorado collected and organized by Bo Ollison, HBW Resources’ Senior Policy Director.

Colorado State University announced the launch of a “groundbreaking” study that will track natural gas processing facilities’ methane emissions. Methane leaks from natural gas wells have joined a long list of public and industry concerns around gas extraction. But little to nothing is known about how much of the potent greenhouse gas escapes from Colorado’s hydraulically fractured wells, according to experts who spoke at the university’s two-day Natural Gas Symposium in Fort Collins. The six-month project will study more than 100 oil and gas sites in 12 states, and will cost $1.9 million, paid for by the Environmental Defense Fund and Anadarko Petroleum Corp., among others. For more information, please contact HBW Resources.

Colorado oil and gas regulators are scheduled to take their first enforcement measures against companies for their suspected failure to fully comply with a rule requiring disclosure of chemicals used in hydraulic fracturing. The move follows criticism over a lack of regulatory action since the rule was passed a year and a half ago. The alleged violations against at least 11 companies to date mostly involve a handful of wells, or in some cases a single well, per company. At its meeting at the end of this month, the commission is scheduled to take action against Noble Energy, Bill Barrett Corp., Marathon Oil, ConocoPhillips, Kerr-McGee, Gunnison Energy, Laramie Energy II, McElvain Energy, Synergy Resources Corp. and Orr Energy for cases involving wells in western Colorado and elsewhere. It is expected to take action later against Encana. Commission staff have reached settlement agreements with most of the companies under which they would pay $1,000 fines per each well, rather than the $10,000 fine per well that is possible, if the commission approves the agreements.

Gov. John Hickenlooper said he welcomes the increasing production of natural gas in Colorado while holding the oil and gas industry to “highest standards” to prevent any negative effects of fracking. “I know horizontal drilling works for us, not against us,” said the governor. Hickenlooper made the comments during a two-day forum on shale energy co-hosted by him and Oklahoma Gov. Mary Fallin. Fallin, a Republican, is the chairwoman of the National Governors Association, and Hickenlooper, a Democrat, is NGA vice chairman.

Noble Energy Inc. and Anadarko Petroleum Corp. have closed on an acreage exchange in the greater Wattenberg area of northern Colorado, with each party contributing 50,000 net acres. The consolidation of acreage in key operating areas will improve efficiency with centralized field facilities, streamlined operations, and reduced land work. Anadarko reimbursed Noble $202 million for capital spent to drill and complete wells on the conveyed acreage, partially offsetting other adjustments in determining the $105 million of cash Noble received at closing. Noble said the exchange will lower net production from recent levels by 8,000 boe/d—almost entirely related to the recently drilled wells—but it is expected to be offset by operational efficiencies and cost savings. Noble said its DJ basin volumes are still expected to increase by at least 20% in 2014. For more information, please contact us.