Gas is a booming business in Gunnison
This is part one of a two-part series looking at oil and natural gas development in Gunnison County. The County Planning Commission is currently looking at ways to amend the Temporary Rules for Oil and Gas Development to increase the level of protection provided to the area’s waterways amid a recent surge in development.
Natural gas development isn’t new to Gunnison County, even though it isn’t always evident in the Gunnison Valley. And with one big boom of activity behind them, the Gunnison County Planning Commission wants to make sure that the rules regulating the industry are watertight before the next boom.
Millions, if not tens of millions, of cubic feet of gas have been pumped from wells in the North Fork Valley and elsewhere every year for the past two decades.
Producers operating inside the county were putting out as much as 100,000 million cubic feet (mcf) of gas by the late 1990s, according to data from the Colorado Oil and Gas Conservation Commission (COGCC). County lands had even given up more than 100 barrels of oil in some of those years.
Then between 2004 and 2006, natural gas and oil production in the county went up ten-fold. In 2005, county lands had yielded a little more than 7,000 mcf of gas, which was modest by the standard set in previous years, and 86 barrels of oil. The following year production increased to 550,000 mcf of gas and 2,200 barrels of oil. A year later, gas production was above one million mcf of gas with as many as 30 producing wells.
Just as local gas production began to ramp up, the county sat down to figure out a way to more effectively regulate the growing industry and passed its Temporary Regulations for Oil and Gas Operations in 2003.
As Gunnison Energy Corporation CEO Brad Robinson put it, “The boom really hit in 2000.” The Oxbow Group, which owns the West Elk Coal Mine in the North Fork Valley, formed Gunnison Energy Corporation (GEC) in 2001 and has maintained gas production in excess of 100,000 mcf of gas annually ever since.
Houston-based SG Interests I LTD, has also come out as the other major gas producer in the county, and teamed with GEC in 2004 to build the Bull Mountain Pipeline to transport the two companies’ newfound resources between Gunnison and Garfield counties.
One end of the pipeline is close to the congregation of gas leases in the North Fork Valley above the Piceance Basin, said to be one of the largest natural gas reserves in North America.
A Bureau of Land Management map of the basin shows the boundary extending as far south as Highway 50 and east to the county line. It’s just a small piece of the 6,000-square-mile Piceance Basin and BLM field manager Barb Sharrow told the Gunnison County Planning Commission Friday, September 3 that in the BLM’s land use plan, “almost all of the land in North Fork is still available for lease.”
And the BLM controls all of the federal mineral rights and leases. The Forest Service has regulatory authority over operations that require surface disturbance in the National Forest.
Liane Mattson, who specializes in coal, oil and gas leasing for the Forest Service, pointed out large areas of the National Forest for the commissioners that would still be available for surface development and some areas that weren’t, like the Whetstone Mountain wilderness study area, some Inventoried Roadless Areas and sections along Kebler Pass.
In a report on the potential for oil and gas development in the Grand Mesa, Uncompahgre and Gunnison (GMUG) National Forests, Bureau of Land Management geologist Bruce Fowler and petroleum engineer Pat Gallagher write that the GMUG has historically had only about 11 percent of the drilling done in the region, but point out the area just five miles north of the GMUG is the highest producing region in the state.
Even though leases in Gunnison County haven’t been a big seller at BLM auctions this year, two parcels in the North Fork Valley between Muddy and Thompson Creeks sold to Baseline Minerals of Denver in the most recent auction, August 12.
That sale went on despite an official request by the county commissioners that the two parcels be removed from the sale due to rock fall danger on Highway 133, the visual impacts wells would have on the West Elk Scenic Byway, the potential impacts that wells in the area could have on the water quality in Paonia Reservoir, and the impacts they could have on elk and moose habitat.
The reasons the county gave for its objection to the sale could be applied to just about any lease in the North Fork Valley. But there are still at least a dozen companies holding leases for oil and gas development in the area.
Before the next run on Gunnison County gas happens, the commissioners are looking for ways to strengthen their regulations to protect water and wildlife, which are abundant in the North Fork Valley. Instead of having its say at the point of sale, the county is exerting its authority by taking a maximum amount of control of the leases before they go into production.
As a series of amendments that will force oil and gas companies to take their operations farther from water bodies and better seal off drilling fluids works its way through the Planning Commission, the Board of County Commissioners set a public hearing on a separate set of amendments dealing with fees for October 5.
Next week we’ll look at interest groups trying to stop the spread of gas development in Western Colorado, as well as ways the Gunnison County Planning Commission is tightening its own regulation of the industry. And how one gas company is pushing back.