Mineral Resources Inc. has received initial approval from the state of Colorado to set up drilling operations about 750 feet from Frontier Academy Elementary School. In Greeley – which sits at the heart of Colorado's richest oil and gas play – wells and tanks sprout in parks, golf courses, residential developments and school grounds. As drilling gets closer to Front Range communities, this northern Colorado city is seemingly being held out as a model of coexistence or a vision of what uncontrolled drilling will bring.
One response from some cities and counties has been to enact or consider drilling bans and moratoriums. It was Greeley that first tried to ban drilling in 1985. The 1992 Colorado Supreme Court decision against the city is now cited by the state as the reason local governments cannot regulate oil and gas operations. Greeley enacted detailed oil and gas land-use rules, and the city, the school district and the University of Northern Colorado have all leased their mineral rights to drillers. In 2012, Greeley received $1.1 million in local taxes and lease and royalty payments.
Still, even Greeley has felt the change as the pace of drilling in the past three years has picked up – spurred by new techniques in horizontal drilling and fracking. The horizontal wells, some 6,000 feet underground, can extend as far as 2 miles. The new techniques have vastly expanded the scope and size of oil operations in Colorado. There are nearly 700 active and inactive wells in the city and plans for at least 250 more in the vicinity.
The reason for the increased activity in the city is that Greeley is "the hole in the doughnut" of the oil-rich Niobrara shale formation. Large operators such as Anadarko Petroleum and Noble Energy have locked up the acreage in surrounding Weld County, so Mineral Resources is focusing on small, city patches. The company has drilled in industrial areas, residential areas and commercial areas in the city and is one of seven operators active in Greeley, according to state data. The company has obtained about 800 mineral leases from area homeowners, and all those residents will, through royalties, share in the 500 barrels of oil being produced daily.
Some of the issues will be addressed in new oil and gas regulations that go into effect in August that require additional steps – such as noise abatement and green completions that capture more of the fumes and wastes – in settled areas. One of the August regulations will increase setbacks for drilling – 500 feet for homes and 1,000 feet for schools.