Niobrara Boom: A City and an Oil Company Clash

April 19, 2012

This week Colorado Public Radio is reporting on the Niobrara oil formation -- a strech of deep oil-rich rock spanning the Front Range.  An oil company has set its sights on the last big undeveloped parcel in Colorado Springs, aiming to tap the Niobrara field.  Ultra Resources bought about 20-thousand acres in bankruptcy court, and wants the city to ditch it’s plan for housing on the site so drilling can proceed.  CPR’s Ben Markus has the story.

Other installments in the series:

Part 1: Weld County Windfall

Part 2: Front Range Officials Struggle to Have a Say



Reporter Ben Markus On a remote parcel of land east of Colorado Springs, Ultra Resources is drilling an exploratory well.  A rig lowers pipe a mile deep into the well named Brutus.  Lauren Kjorstad is the site’s superintendent. 

Lauren Kjorstad: I don’t know who named ‘em. We have Olive Oyl and Brutus and Spinach. 

Reporter: If Ultra gets its way, wells like this could dot Banning Lewis Ranch.  But there’s one huge problem: the city of Colorado Springs annexed the land 24 years ago and zoned it for homes, fire stations, and schools.  

Video: Banning Lewis Ranch is a master planned community like nothing Colorado Springs has seen before -- situated on the eastern edge of the city...

Reporter: This is a promotional video for a small housing development at the northern tip of the property.  But most of the land is still empty -- the largest developers went bankrupt.  And last year Ultra surprised everyone when it bought the land -- and announced plans to drill instead.  The company says the ranch should be stripped from the city and the zoning dumped.  After all, developers tried and failed for decades to fill it with houses. 

Chris Melcher: That’s one of the arguments Ultra’s made: it’s been 20 years and there hasn’t been any activity, so they should be relieved of this obligation. [breath]

Reporter: Chris Melcher is the city attorney for Colorado Springs.

Melcher: Our argument, of course, is that it was a master planned community, that when the market conditions are correct that that planned community can move forward.

Reporter: The two sides are fighting it out in court. In the meantime, Ultra found itself in front of the city’s newly formed oil and gas committee to explain why they bought the ranch.  Doug Selvius VP of Exploration trains a laser pointer on a map which he says shows the thickness of oil-bearing rock -- a big red blotch covers the eastern side of the city.

Doug Selvius: Banning Lewis Ranch is right there, can you guys see why I like Banning Lewis Ranch I mean it’s a bulls eye.

Reporter: Ultra’s betting that this could be a smaller version of what’s happening in Weld County more than 100 miles north.  But, they’re stuck drilling out in the county for now.

Selvius: And it’s breaking my heart guys that I can’t drill those wells right now 

Reporter: He can’t drill there, partly, because the city has a moratorium on drilling while the committee hammers out regulations.  City Councilman Val Snider is chair of the oil and gas committee.  He says there haven’t been oil or gas wells in this part of the state for generations.  

Val Snider: They used to run the street lights, I’m told, you know back in the turn of the century with gas. And they would literally pound in the ground and hook it to a street light, didn’t have the EPA back then. 

Reporter: Technologies like horizontal drilling and fracking have opened up oil and gas formations previously unthinkable. There’s never been a poll of residents to gauge how they feel about this new industry. But there’s no doubt about Jeff Cahill’s feelings.  He and his wife built their home near Banning Lewis Ranch in El Paso county 15 years ago.  The view of Pikes Peak from his living room is to die for.  

Jeff Cahill: So we figure that’s a million dollar view.

Reporter: As much as he and his wife love the place, they’ll soon be moving to their new home in Woodland Park.  Cahill has a respiratory condition he’s afraid will worsen when the drill rigs show up.

Cahill: Because I don’t want to do chemicals, because I don’t want to do drugs, I want to stay in an environment that’s clean, we need to get out of Dodge.

Reporter: He’s had to put retirement plans on hold to afford the second house, because he’s not sure he’ll be able to sell this one.

Cahill: Any oil company people listening, this place will be for rent.

Reporter: Barry Noreen is a longtime reporter and columnist for the Colorado Springs Gazette.  He hopes drilling never happens in the city.  And he’s sure most of his neighbors agree -- that they’d choose more homes over oil wells.

Barry Noreen: “Growth is good,” is still a bumper sticker, that if, you know, if they had it most people would have it on their cars rather than the other.

Reporter: If all the homes in Banning Lewis Ranch were built, Colorado Springs would be the biggest city in the state.  And Noreen says that adds an interesting wrinkle to the story.  Right now, a multi-billion dollar water pipeline from Pueblo is under construction.  He says it was planned to supply homes.

Noreen: If there’s a big energy play in the Banning Lewis Ranch, we’re in the process of building a 2.3 billion dollar water pipeline to nowhere.

Reporter: Not if the city gets its way.  A bankruptcy court’s decision on the fate of Banning Lewis Ranch is expected as early as this Summer.

[Photo: Ben Markus]

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