The debate over oil and gas drilling in Colorado, balancing mineral rights with homeownership and safety and local control, can sometimes feel as endless as the Eastern Plains.
With that in mind, Gov. John Hickenlooper agreed to sit down with two Coloradans who hold divergent views on these matters, hear their questions and talk things through.
Megan Townsend and her husband own a home outside of Broomfield. Neil Ray, retired from the former Rocky Mountain News, manages his family's mineral rights interests from his home near Littleton. Both were interviewed separately ahead of gathering in the governor's office at the state Capitol for a conversation.
We've briefly profiled of the two below. Interview highlights follow, as well as a transcript.
Homeowner Megan Townsend
Megan Townsend and her family know oil and gas drilling is part of life on the Front Range. Just beyond their backyard chicken coop, they can see a beige storage tank battery from the dining room window of their new home outside Broomfield.
Her family has learned that a new oil development will put multiple wells and well pads within a mile of their home next year. That means a new dirt road and industrial truck traffic.
The city and county of Broomfield has worked for nearly two years with Denver-based Extraction Oil and Gas to finalize a drilling plan that takes residential health and safety into consideration when locating operations. Many local leaders say this is a successful model for local regulation. The plan will even plug and abandon dozens of older wells in the area.
But the Townsend family’s home is right on a government line between Broomfield and Adams County, which wasn’t involved in negotiations over the new drilling project.
“I wouldn’t say we’re necessarily fighting the project. But just trying to see how far away we can keep things,” Megan Townsend said.
Hunter Townsend, her husband, acknowledges the same thing that made their house desirable — open space near an urban corridor — is also what attracts oil companies, and “it was kind of heartbreaking.”
Some of the new wells will be just over 1,002 feet from the Townsend property, twice what the state requires. Extraction Oil and Gas says it’ll work with new technologies to reduce noise and minimize inconvenience for residents.
Mineral Rights Owner Neil Ray
Neil Ray’s connections to Colorado's oil and gas industry goes back 100 years. In the early 1900’s prospectors found oil in the Rangely field in Western Colorado. Not long after that, his wife’s grandfather came to the state to work the field.
He was one of the early drilling pioneers in Colorado, “and did an awful lot of wildcatting and prospecting, and turned what he did into a fairly lucrative business,” Ray said of his relative.
Now Ray, who worked at the Rocky Mountain News printing plant, is retired and manages his family's mineral rights interest. He gets paid when a driller taps into those rights.
He’s genuinely amazed at technological innovations like horizontal drilling. And he takes pride in his family’s history in the oil and gas business — but he admits the political environment has shifted.
“It is very tense,” Ray says. The deadly home explosion in Firestone is part of the reason. There’s also the nuisance factor of drilling: smells, light and noise. “I can tell you that if, right outside my door here, all of a sudden a drilling rig got up, I would be out there trying to make sure that it was as least [of] an influence on my life as I could possibly make it.”
Ray generally supports Colorado’s strict drilling regulations, but he also worries about further regulation based less on science and more on fear. Ray sits on the board of Vital for Colorado, a group backed by the drilling industry that spent big on recent municipal races in Broomfield and Aurora and elsewhere.
He’s also president of Colorado Alliance of Mineral and Royalty Owners, which has lobbyists at the Capitol. And he expects them to be busy this session.
Question And Answer Highlights
On the need to balance homeowner and drilling tensions:
Townsend: “I guess my biggest question, knowing that gas and oil is a big part of our economy, and operators and mineral owners have a right to utilize those minerals, but now that we're getting closer and closer to that urban interface, how do you use your experience and knowledge to mitigate the tension that exists?"
Hickenlooper: “Well that's one of the thorniest issues that I've had since right when I first ran for governor in 2010, right through until today. Because I can see clearly, both sides of the argument. Some people who, I think like yourself, have moved more recently a little further away from the urban cores, as that happens more, and more, and more frequently, more and more property owners, people that in some cases have for generations owned mineral rights, in many cases part of their retirement plans, they become somehow imperiled. And that's the trick.
“Public safety's always gonna be our priority. We're gonna do everything we can to make sure that operators recover and extract natural resources as efficiently and safely as humanly possible. We're lucky in Colorado because we do have some of the more responsible natural resource extraction companies, and they are looking at using electric rigs, which are much quieter. They're looking at not working at night. They're close enough to where it would make a difference.”
Ray: “One of the worries that I have is, the issue of counties and municipalities trying to exert a local control, it goes beyond their authority. Most of the time, mineral owners, royalty owners, do not live in the communities that their minerals lie in, and therefore they don't have a vote. But the homeowner living in that community does have a vote. And we're worried whether the state will continue to defend its police powers and its rights to preempt counties and municipalities from passing overarching regulation.”
Hickenlooper: “And those hydrocarbons are somebody's private property, and they're called that in the Constitution. We're not Russia, we're not China. We can't take property away from our citizens without good cause. And certainly not without compensating them. When a local municipality ramps up and says, 'All right, we're gonna ban fracking,' what they're in essence doing, is taking someone's private property.
“And so while I understand, and I am very sympathetic to people that have moved into beautiful housing developments and they have the nice view, the trick here is to recognize that there's a balance. I mean, if more and more people want to have their little five acre homestead, what happens then when someone wants to develop those minerals?”
Townsend: “In this instance, there were better locations, farther from homes. And then it got moved closer to a neighborhood that's frankly been there since the '70's. But I think it's important to take a look probably from a state level, because a lot of news outlets said, 'Oh this is a border war. Municipality against municipality.' And so I think…”
Hickenlooper: “Well what happened here [in Broomfield], I think, where the drilling was going to occur, the county in which it was going to occur, they cut a deal and put the site of those drill rigs much further away from their residences, but pushed them closer to the border with Adams County. So the people who lived in Adams County, and I got calls from Adams County commissioners saying, ‘What can you do about this?’ We don't have power that we can exercise in this domain, but I think it's a legitimate question, and perhaps this session we should look at legislation that compels, when you're on boundaries between two counties, that both counties should be in the discussion and be able to make their case to the oil and gas company and make their case to the Oil and Gas Conservation Commission.”
If mineral rights holders suddenly found oil and gas drilling in their own town:
Ray: “Well, where I live, actually the railroad owns the minerals underneath the entire neighborhood where I live. What would happen if the railroad decided to come and develop in Bow Mar, Colorado and ... starts drilling wells there? The neighborhood would be in an uproar. There would be probably about a third of the neighborhood that would take the attitude of, well, the railroad has the minerals and owns them and they have a right to them and let's figure out some other place for them to drill than rather right in our neighborhood. It would be a mess. But I wouldn't like it. There's no doubt about it that for that six or eight months there's production drilling going on, it is noisy, it is a lot of truck traffic, it is difficult on the roads and it is a reality that there are places where it's not right to drill. And Colorado's court cases talk about reasonable accommodation and reasonable access, and that's alright with me.”
On the need to balance the economy's needs with climate change issues:
Ray: “What's interesting about this hydrocarbon argument is that natural gas seems to have been responsible for fixing an awful lot of things in that regard. … I have every confidence that three generations after me there will still be drilling and natural gas and oil production because the varnish on these walls, the carpet that I'm standing on, the drugs that we take to lower our blood pressure, they all come from there.”
Hickenlooper: “It's hard to measure, and I agree with Neil that there are so many byproducts that the real question is in terms of large scale, what is it going to look like as we get better with batteries. And at some point are we going to start using wind, electricity generated by wind or solar, to drive our vehicles. You know, General Motors is now saying that by 2025 they're going to have a model of every one of their vehicles is going to be electric. It's hard to predict how fast that's going to happen. Whether it's going to be three generations and we're still going to be using some level of crude oil.”
Does the governor foresee a day where oil and gas will be left in the ground?
Hickenlooper: “I think at some point that will happen. I think we'll still have a significant amount of hydrocarbons in the mix, for at least a reasonable amount of time, 10 years, 15 years, 20 years. I do think that we will, one way or another, have much cleaner air in ten years. And we're going to have much less carbon emissions in 10 years. I mean we don’t have to get into a fight about climate change but the greenhouse gas principle, if you look at how greenhouse works and why it heats up so much, it does seem to hold water from a technical application. And therefore I think it's just natural, if it means we get cleaner air, cleaner water, and cleaner environment in the process, who's going to argue with that if we can do it and not cost more money.”
On the value of oil and gas tax revenue to local economies:
Ray: “The economy of the state is a kind of an interesting thing to talk about with oil and gas. With severance tax, the Department of Local Affairs gets quite a bit of money from severance tax. … I wanted to [name] a few of those communities $84 million went out in DoLA grants in 2016. Salida for instance got $775,000 for water treatment improvement. Westcliff $200,000 for drainage improvement. Fraser $31,000 for a broad band study Hinsdale county $375,000 for emergency services and communication improvement. Grants would be nonexistent without severance tax collected.”
Read The Transcript
[Introductions] Megan Townsend: I guess my biggest question, knowing that gas and oil is a big part of our economy, and operators and mineral owners have a right to utilize those minerals, but now that we're getting closer and closer to Gov. John Hickenlooper: Well that's one of the thorniest issues that I've had since right when I first ran for governor in 2010, right through until today. Because I can see clearly, both sides of the argument. Public safety's always gonna be our priority. We're gonna do everything we can to make sure that operators recover and extract natural resources as efficiently and safely as humanly possible. We're lucky Ryan Warner: Any rumblings of that near you, Megan? MT: Yes actually, I was impressed with the work that extraction in Broomfield actually did. RW: Extraction, Oil and Gas is the company here. And you live in Adams County, near the Broomfield County line. MT: Correct. And I was actually impressed by the process in which they went through and tried to make sure they were using the best management practices. The hitch was, suddenly at the very end, the sites RW: This happened pretty close to your closing. MT: It did. RW: On the house. MT: It did. It was a bit of a shock and so it's just taken some time to say, "Okay, I get it." However, we'd really in our neighborhood, just like these to go back to the original sites. RW: The governor mentioned safety and public health. What concerns do you have about your safety or public health? Are those top of mind, or not? MT: Primarily it's a quality of life issue, during drilling. Once things go into production, I'm hopeful things will be the way they were, almost. There is a concern I suppose, from a safety standpoint, in terms RW: And I'll say that, legally, extraction of oil and gas has the right to be 500 feet from you. MT: Sure. RW: They agreed to a thousand. MT: That's great. RW: What can you say Governor, about water in particular? JH: We don't see too often, big spills and when we do, we've increased our fining capability up to $15,000 a day. In terms of casings breaking, we've only found one example where a casing broke. But that doesn't RW: So Neil, the governor mentioned those who have the rights beneath the land, the mineral rights, and that's true for you and your family. You collect royalties for 9,000 wells across the state. What would you Neil Ray: Well one of the worries that I have is, the issue of counties and municipalities trying to exert a local control, it goes beyond their authority. Most of the time, mineral owners, royalty owners, do not live in JH: And those hydrocarbons are somebody's private property, and they're called that in the Constitution. We're not Russia, we're not China. We can't take property away from our citizens without good cause. And And so while I understand, and I am very sympathetic to people that have moved into beautiful housing developments and they have the nice view, the trick here is to recognize that there's a balance. I mean, if RW: And we should note that the trend of urban drilling seems to be increasing. A Denver Post analysis said pending and approved permits showed about twice as many were being taken out near towns than in more MT: In this instance, there were better locations, farther from homes. And then it got moved closer to a neighborhood that's frankly been there since the '70's. But I think it's important to take a look probably JH: This was Adams County again, against Broomfield. MT: Right. And I think it would have been helpful to really look at it from a state level. RW: Governor, what do you say to that? To this notion that one county sort of stands up for itself and gets drilling moved, and then that winds up spilling over perhaps into another? JH: Well what happened here, I think, where the drilling was going to occur, the county in which it was going to occur, they cut a deal and put the site of those drill rigs much further away from their residences RW: Well, on this subject of local governments, I want to point to what happened in Broomfield earlier this month, the passage of what was called Question 301, and it says essentially that oil and gas development JH: It gets down to the language. I know we're looking at it. RW: So you haven't ruled that out? JH: Yeah. As I've said before, the worst position a governor can be in is suing one of your own municipalities or one of your own counties. That's your family. That's who you are. If we can possibly avoid RW: Megan, I'm curious. So you find out just before you close that these wells are going to be closer than you anticipated. Why did you decide to buy the house? Because you could have said, "We're out," right? MT: We could have, but this was the perfect property, and there wasn't anything else anywhere nearby that suited us. We didn't want to move my daughter out of her school. She loves it there. So we just said, RW: Now, Neil, you were saying that folks who own mineral rights often don't live where their mineral rights are but I'd like you to put yourself in the shoes of someone who does live where there are mineral NR: Well, where I live, actually the railroad owns the minerals underneath the entire neighborhood where I live. What would happen if the railroad decided to come and develop in Bow Mar, Colorado and- RW: This is near Littleton, yeah. NR: Yeah, near Littleton, start drilling wells there. The neighborhood would be in an uproar. There would be probably about a third of the neighborhood that would take the attitude of well, the railroad has the RW: I think what surprises me about what I'm hearing here is that the oil and gas debate is so often one side pitted against the other. I have heard you, Megan, say this is an important part of the economy. RT: “The economy of the state is a kind of an interesting thing to talk about with oil and gas. With severance tax, the Department of Local Affairs gets quite a bit of money from severance tax. RW: Which benefits local communities. NR: Yeah, and I just wanted to [name] a few of those communities $84 million went out in DoLA grants in 2016. Salida for instance got $775,000 for water treatment improvement. Westcliff $200,000 for drainage improvement. Fraser $31,000 for a broad band study Hinsdale county $375,000 for emergency services and communication improvement. Grants would be nonexistent without severance tax collected.” RW: Gov. Hickenlooper, is this an intractable issue? At the end of your term, might this still be unresolved? JH: Oh, I think it almost certainly will still be unresolved in terms of a final getting to a solution where everyone feels, "Okay, I'm great with that." RW: Let's wrap up on a bigger picture question about climate change, because we've talked about the intricacies of the law in Colorado, what the constitution says about mineral rights. Meanwhile, we know that fossil fuels burning adds to greenhouse gas and warms the planet. Where should that fit into this NR: What's interesting about this hydrocarbon argument is that natural gas seems to have been responsible for fixing an awful lot of things in that regard. RW: As a replacement for coal, it's often said. NR: And it's going to go further. RW: And yet, there are people who want solar and wind and who, presumably envision a future in which you're not necessarily getting the royalties from your mineral estate. NR: Well, I have every confidence that three generations after me there will still be drilling and natural gas and oil production because the varnish on these walls, the carpet that I'm standing on, the drugs that we RW: Governor, you used to be in the oil and gas industry, but do you see oil and gas as a fuel that gets Colorado to a renewable resource 100% as some in the governor's race are calling for? Or do you see it as JH: It's hard to measure, and I agree with Neil that there are so many byproducts that the real question is in terms of large scale, what is it going to look like as we get better with batteries. And at some point are we RW: Do you foresee a day, when you have to look at Neil, or whoever's in your place, and say, "We're leaving those in the ground." JH: Yeah well I think at some point that will happen. I think we'll still have a significant amount of hydrocarbons in the mix, for at least a reasonable amount of time, ten years, fifteen years, twenty years. I RW: Thank you for being with us. |
CPR's Ben Markus, Grace Hood and Hart Van Denburg contributed to this story.
