North Fork gas boom gearing up for summer

More gas-related wells going in this year

Gunnison County’s North Fork Valley has played host to its share of natural gas development in each of the last 10 seasons, with gas producers working toward their stated goal of putting 150 natural gas wells in the area’s 20,000-acre Bull Mountain Unit. And as soon as the ground on the other side of Kebler Pass thaws out for the summer, this year will be no different. At least five new wells are planned to go in the ground this summer.

Last year Gunnison County officials approved Gunnison Energy Corporation’s and SG Interests’ separate applications for a series of flowback pits to hold the various fluids associated with natural gas development. That approval was made over public concerns about the potential for contamination from the increased interface between the fluids and the environment.
County assistant director of Community Development Neal Starkebaum said those pits were now nearing completion and would likely be finished soon and go into use this season. Once operational, the pits will allow the gas developers to store more fluids produced by, and used in, the drilling and extraction processes.
More storage means the companies can employ directional drilling technology in the North Fork, reaching out horizontally underground into natural gas reserves, sometimes to great distances.
According to GEC director of Environmental and Permitting Lee Fyock, winter weather slowed progress on two pits being installed on the Hotchkiss Ranch, across Highway 133 from the Paonia Reservoir, but he said the company is now testing the system.
Once those pits go online, they will be used to hold the fracturing fluid and any flowback water from what Fyock said were two horizontal wells that have already been approved..
Houston-based SG Interests had a similar plan approved last year for a total of four flowback pits that were installed on the company’s private Rock Creek Ranch, in the middle of the Bull Mountain Unit.
Along with completing those pits this year, SG Interests is currently going through a review by the County Planning Commission for two minor impact permit applications to put in two well pads that will be capable of holding several well heads each.
Those would go in the ground along with three others approved by the Planning Commission last fall.
One application being reviewed by the Planning Commission for a minor impact permit is for the Hughes 1190-26 pad that SG has said could eventually support five gas wells, some of which could employ directional drilling technology. The first, however, which is likely to be drilled this summer, will be a vertical coal bed methane well similar to the other wells already dotting the area.
The other application being considered is for SG’s Eck 1291 well, which would support the currently proposed two gas wells along with a wastewater disposal well where wastewater can be injected thousands of feet underground.
According to Bureau of Land Management records, James Cline completed the first gas well in the North Fork in 1953. Since then 116 wells have been put in the ground and more than half have been plugged and abandoned. But a lot has changed since those early days.
Cline’s well was drilled to 435 feet to collect gas seeping from the ground. Now gas developers regularly drill more than a mile underground. And the gas doesn’t move toward the wellhead fast enough anymore, so fresh techniques are being used to “stimulate” the well with high-pressure mixes of chemicals, sand and water. Add the element of horizontal drilling, which extends the underground footprint of the drilling, and regulators are playing catch-up.
At a work session on Tuesday, February 28, the Gunnison Board of County Commissioners returned to the Planning Commission’s recommendations for amending the county’s regulations for oil and gas development. The amendments are the latest attempt by the county to stay abreast of the industry’s technologies and strengthen environmental protection amid public concern.
The recommendations, handed over to the BOCC last June and shelved while work was done to establish a line of communication with state gas regulators, cover a range of topics, from wildlife and water body protections to reporting requirements.
With several topics to address, some being given higher priority than others, the commissioners and county staff set out to find a way to efficiently move forward through the recommendations, starting with the timing and processing of oil and gas applications.
Timing the county’s review of oil and gas applications has caused some trouble for the Planning Commission in the past, landing SG Interests a victory in litigation against the county last year.
“There are some internal deadlines in the [oil and gas regulations] and I think it’s fair to say it’s been an issue,” county attorney David Baumgarten said. “The question becomes, what does one do when a deadline is identified and not adhered to?”
One solution that seemed to get support from the commissioners and staff was to direct that any time either the applicant or the county missed a deadline in the process, the application review would automatically be passed up to the Board of County Commissioners, which could move forward however it chooses to, completing the review themselves or passing it back to the Planning Commission with a new deadline.
The commissioners also addressed concerns about the adequacy of the information being provided by the applicant that may meet the requirements of the application, but didn’t provide the county with a clear picture of the project.
In a memo to the commissioners, county staff suggested requiring a “robust pre-application process” to work out any confusion and make clear the county’s expectations for the review.
The memo also recommended refining the major, minor and no impact classifications to “tailor the level of review to the likely scope and nature of impacts of the proposed operation and to harmonize with the state process.”
One of the most crucial elements of the state’s process for permitting oil and gas operations, as it relates to the county’s regulatory authority, is the Local Governmental Designee (LGD), a person who is the point of contact between the County and the Colorado Oil and Gas Conservation Commission, which administers the state’s regulations.
Part of the county staff’s memo recommends maximizing the LGD process with the state to help the permitting process run more smoothly. It also suggests spending more time early in the process with the applicant to make sure their paperwork is in order and all of the requirements are met.
The commissioners will return to the Planning Commission’s recommendations again March 27 to discuss water body setbacks. Additionally, the Planning Commission will hold a public hearing March 16 on three pending oil and gas applications – SG’s Eck 12-90-1 and Hughes 11-90-26 wells, along with an application for a type of gas development that’s new to the North Fork at the Oxbow #1 well.
Denver-based Vessels Coal Gas is developing Oxbow #1, a shallow well in the mountains four miles above the Elk Creek Mine in Somerset, above the abandoned Sanborn Mine.
Once operational, proponents of the coal mine methane project hope to capture the natural gas escaping from the old Sanborn Mine before it makes it into the atmosphere, where it can have 20 times the heat-trapping capability as carbon dioxide.
Vessels subsidiary “North Fork Energy, LLC is currently developing an electric generation and green house gas destruction project with a potential of 40 Mega Watts and over 3,000 tonnes of Carbon offsets per day,” according to the company’s website.
While coal mine methane capture has been slow to come online because of the varying qualities of the gas being collected there, Vessels Chief Financial Officer Paul Jordan says new technology is making it possible for generators to work on decreasing concentrations of methane. So eventually the company hopes to generate enough power at the wellhead to pump back into the grid.    
County staff has given that application an administrative review, which will go to a public hearing March 16.