Oil and Gas Standards for Colorado Springs

This document contains a vision for the future of Banning Lewis Ranch, the rules that do not support that vision and recommendations for rules that do protect the value of the land, air and water.

The Banning Lewis Ranch (BLR) extends along the east flank of the City of Colorado Springs and was home to Ruth Banning and Raymond Lewis in the 1920's. Breeding and raising their own Hereford line with land holdings in excess of 30,000 acres, they won a Colorado Soil Conservation Award for good stewardship of the land. The ranch was annexed into the City in 1988. The annexation provided many opportunities for the future of Colorado Springs by adding a fifth to it's land area in the only direction available. In the process of annexing this land, the citizens and leaders of our community envisioned families, parks and businesses adding to our quality of life.

When our City annexed BLR, it set out to create a vision for the future of our community. The desires and intentions written into the Master Plan envisioned a diverse mixed use development on this native land. Families, new businesses, open space, schools and parks were envisioned. The Banning Lewis Ranch represented the last place the City could grow, to the east.

In a way, the community adopted a piece of land with many attributes that could be considered natural and pure. And now pending oil and gas operations threaten to bring legalized pollution to the land, air and water. The prospect of the land becoming an smelly industrial site is contrary to what the community intended.

Throughout the west extractive industries have brought communities instant fame and often short lived wealth. They sometimes leave communities with a destroyed landscape, polluted water and land resulting in decades of economic decline or stagnation.

The community commitment and pursuit of it's responsibility to the Master Plan for BLR includes the financial impact the Southern Delivery System will impose on the ratepayers of Colorado Springs Utilities (CSU). SDS was initiated primarily to provide water for BLR.

Absent that growth potential, the ratepayers of CSU are unduly burdened. The removal of this land area from the economic benefit of the whole community (one that is now geographically constrained) could be a serious blow to our future economic vitality.

The use of BLR for oil and gas development need not be the only and last use of this land. If oil and gas exploration and production (E & P) is undertaken with potential future use and reuse in mind, the land will retain more value to our community. If the vision for the Banning Lewis Ranch is to be achieved, the air, water and land must remain pure.

The standards (regulations) under which oil and gas development occurs will have a significant impact on the ‘curb appeal’ of this property(s) and its reuse in the future. If oil and gas are developed in a manner in which a health care or day care facility can be built anywhere on Banning Lewis Ranch, then the quality of the land will have been retained by our actions today. If an organic farmer found a piece of land next to a well site that met their standards then perhaps we've done a real good job.

We have choices. This can be an 18,000 acre industrial site on the east side of Colorado Springs with tainted soil and continuous toxic air emissions. Or oil and gas exploration and production can be conducted under higher standards so as to preserve the quality of the air, soil and water and the future reuse of this land as part of a flourishing community. What we do now will determine the future.

The vision our community has for the Banning Lewis Ranch is that of healthy families and businesses. To preserve that possibility for the future we need to maintain the purity of the air, water and land. Many of the rules and regulations of the Oil and Gas or Air Quality Control Commissions do not go far enough to assure that protection. The next two pages overview the shortcomings in the rules, the following pages describe in detail both the existing rule and suggested rule.

A. Air Quality - The air quality of the Pikes Peak region has a great reputation, a reputation worthy of maintaining. Our town has been recognized for it's health and healthy lifestyles in various publications.

The air quality of our city impacts not only the current residents but also many visitors coming to the Pikes Peak Region as well. As home to the United States Olympic Training Center and many of the sports association headquarters, the City of Colorado Springs must be ever cognizant of the impact of air quality on the athletes who train in the region and tourists who come here because of our excellent environment.

Air quality is not well regulated if regulation means limiting emissions. The Colorado Department of Health and Environment defers air emission regulation to the Air Quality Control Commission which has limits yet according to the Colorado School for Public Health, there are no studies as to how close a facility can be to 'anything that breathes' and not be overly exposed. Any condensate storage tank can emit up to 20 tons of VOC's per year (AQCC Reg 7 XVII.C.1) Any single compressor station, dehydrator, drip station or gas processing plant can emit up to 15 tons of VOC's per year (AQCC Reg 7 XVII.D)

Individually and cumulatively these are the kind of emissions that will hinder further use of the land. With modern building codes requiring large quantities of ventilation air being brought into the workspace, it's possible no employers would want to locate in an area with these emissions.

In the past, regulations have centered on an inventory system more than a limitation of emissions. The present and future trends are toward no emissions. For the land to maintain it's value there should be no emissions. Ten or twenty years from now that will be the rule.

The collection and management of all emissions from oil and gas operations is not only possible and practical it is often profitable. Please read the specific regulations and suggestion.

B. Water Quality Water is a scarce and precious resource in the western states. There is growing evidence that droughts and less predictable rainfall will be a common occurrence in the future. The surface waters, streams and bedrock aquifers of this high desert must remain free of contamination and pollution for those here today and for generations to come.

Potential contamination of the surface can come from spills. According to the regulations an operator can spill 200 gallons of chemicals and not have to report it. This could happen every day and there is no reporting of the aggregate of these small spills. Only spills of 220 gallons or more must be reported. In Colorado, in any year there are thousands of reportable spills, often involving thousands of gallons. Who knows the totals of a typical well site absent the reporting of the cumulative small spills.

A chemical spill effects not only the land but also the watershed. The BLR is a watershed for the City of Colorado Springs as the land drains to Williams Creek which will include a terminal reservoir for SDS. Runoff and 'road spreading' can carry this water to our drinking water supply. Spills on the pad site can leach into the soil and eventually the aquifer yet a simple liner can prevent this migration.

The citizens of Colorado Springs own water rights in BLR by means of the annexation agreement which conveyed both surface and ground water rights. Additionally, many neighboring communities including Cimarron Hills and Woodmen Hills rely on well water. It is possible that oil and gas operations could adversely impact these water sources. We feel it is our neighborly obligation to do our best to protect these water sources.

It seems reasonable that we be allowed to protect this water asset either by regulation or by penalty or both. There should be mandatory testing of all aquifers drilled through. There shall be a irrevocable bond posted to ensure oil and gas operations do not adversely effect any water system.

Please read the specific regulations and recommendations in following pages

C. Noise Impact – There is a great deal of noise associated with oil and gas operations. The highest concentration is near the well pad but the most noise comes from the thousands of truck trips involved with delivering materials and water to the site. As the BLR is mostly desolate, homes exist in the northern part. Once the well is completed, the routine becomes much quieter with occasional service trucks frequenting the site and ongoing machinery in the form of pump jacks and compressor stations.

If BLR is going to have future development it will need electricity. If oil is the likely product the 'pump jacks' will require electricity. So why not wire it up properly in the beginning and run as much as possible on quieter electric motors.

D. Land Use - The owner of BLR has made no commitments to the future of BLR after oil and gas has been developed. There is much desire to re-purpose this land in the future and so why not take future possibilities into consideration now.

Truck routes will be required within BLR for E&P so plan these out along with well pads and other facilities in a manner suitable for additional development and subdivision of the land in the future. Make plans or provisions for utilities and drainage systems. Consider how oil and gas development can be placed within the existing Master Plan or with little deviation. Engage developers now so they have a better piece of land to work with in the future.

The visual impact of facilities should be mitigated early on and pad sites re-vegetated as quickly as possible. Having CSU grey water for irrigation would help.

E. Visitor Experience Colorado Springs is a recreational destination for many around the world. Those that fly into town will likely see the BLR and it may be a significant first impression for them. Our reputation for clean air, water and land could be questioned based on that impression. It is critical to our future to maintain these attributes.

Imagine flying into town over BLR and seeing several gas flaring towers, bright burning beacons at night, starkly contrasting our 'clean image' in the day. What thoughts might arise for visitors who see large ponds of colored water? How does that first impression effect our ability to attract new businesses and families.

Below are the Specific Regulations which fail to protect the vision

A. Reducing Air pollution: Colorado Department of Public Health, Air Quality Control Commission, Regulation 7, enables an energy company in El Paso County to emit up to 20 tons of Volatile Organic Compounds (VOC’s) per year per pad without reducing its emissions. (See Section XVII C and D below.

XVII.C.1. Beginning May 1, 2008, owners or operators of all atmospheric condensate storage tanks with uncontrolled actual emissions of volatile organic compounds equal to or greater than 20 tons per year based on a rolling twelve-month total shall operate air pollution control equipment that has an average control efficiency of at least 95% for VOCs on such tanks.

XVII.D. (State Only) Emission reductions from glycol natural gas dehydrators

Beginning May 1, 2008, any still vent and vent from any gas-condensate-glycol (GCG) separator (flash separator or flash tank), if present, on a glycol natural gas dehydrator located at an oil and gas exploration and production operation, natural gas compressor station, drip station or gas-processing plant shall reduce uncontrolled actual emissions of volatile organic compounds by an average of at least 90 percent through the use of air pollution control equipment. This Section XVII.D shall not apply to any single natural gas dehydrator, or several dehydrators at a single oil and gas exploration and production operation/site, natural gas compressor station, drip station or gas-processing plant, with uncontrolled actual emissions of volatile organic compounds of less than 15 tons per year based on a rolling twelve- month total. To determine if a grouping of dehydrators exceeds the 15 tons per year threshold aggregate emissions from all dehydrators on site (contiguous and adjacent). The control requirement in this Section XVII.D. shall apply to each natural gas dehydrator within a grouping that has actual uncontrolled emissions above two tons per year.

Rule 805 out of the COGCC regulations offers special protection for the people of Garfield, Mesa and Rio Blanco Counties by reducing the threshold levels at which emissions must be controlled.

IDEA

If oil is the play and natural gas comes up, rather than flare it off, sell it to us. Near Marksheffle and Constitution is what Colorado Springs Utility calls its Propane Air plant. Here is where we connect to the main natural gas line, our gateway. We inject propane and air into our side of the gateway to supplement the supply during peak load.

On the line side there are standards for the purity of the natural gas in the pipeline. On our side of the gateway we have a lower standard for that gas quality by virtue of adding propane. Although the cost to clean natural gas that is 'dirty' to pipeline standards is high, it might not have to be as clean to inject it into our system and we're long term buyers of natural gas.

B. Water quality Monitoring: It appears depending on where one is in El Paso County, that there are multiple aquifers (Dawson, Denver, Arapahoe, and Laramie-Fox Hills) at varying depths. From a general cross-section map of the Denver Basin Aquifers, developed by the Colorado Geological Survey, it appears that these aquifers are more than 1,000 feet below then surface, again depending on where you are. It stands to reason that all aquifers breeched should be tested if the goal is to assure that contamination has not occurred. We urge you to negotiate for the systematic sampling of all breeched aquifers.

2. Ground water protection. Protecting water quality will result from the confluence of many factors, among them, the quality of the cement work on the wells, the impact of spills and releases, spreading of contaminated E & P fluids on the land, mixing contaminated mud into the soil and/or releasing any contaminants into waters. To protect our multiple aquifers, it is essential to carefully control those activities that may cause contamination. This rule exception below allows aquifers to be penetrated with only the production casing.

1. Casing: Reference COGCC Rule 317 General Drilling Rules, paragraphs d, e, f and g, pages 300-21, 300-22, and 300-23: We have heard time and again that cementing is absolutely critical for preventing contamination. COGCC inspectors and industry have repeated this assertion over and over. Yet 317g, below, provides alternative to a full cementing and no on site inspection is required at this critical phase.

317g. Alternate aquifer protection by stage cementing states, “In areas where fresh water aquifers are of such depth as to make it impractical or uneconomical to set the full amount of surface casing necessary to comply fully with the requirement to cover or isolate all fresh water aquifers as required in subparagraph e. and f., the owner may, at its option, comply with this requirement by stage cementing the intermediate and/or production string so as to accomplish the required result. If unanticipated fresh water aquifers are encountered after setting the surface pipe they shall be protected or isolated by stage cementing the intermediate and/or production string with a solid cement plug extending from fifty (50) feet below each fresh water aquifer to fifty (50) feet above said fresh water aquifer or by other methods approved by the Director in each case. In the D–J Basin Fox Hills Protection Area any stage cementing shall occur only in accordance with Rule 317A. If the stage cement is not circulated to surface, a temperature log or cement bond log shall be run to determine the top of the stage cement to ensure aquifers are protected.”

If casing is so critical, there should be no exception to 317 d, e and f. It is recommended that the words “except in El Paso County be inserted as indicated below:

g. Alternate aquifer protection by stage cementing. In areas where fresh water aquifers are of such depth as to make it impractical or uneconomical to set the full amount of surface casing necessary to comply fully with the requirement to cover or isolate all fresh water aquifers as required in subparagraph e. and f., the owner may, at its option, comply with this requirement by stage cementing the intermediate and/or production string so as to accomplish the required result.

This rule exception needs to be removed and all casing cement process must be observed by the COGCC or local inspectors.

3. Surface water protections

COGCC Rule 907: Management of E & P Waste: Rule 907c (2), page 900-8, (Produced Water) allows for the unlimited road spreading of untested produced water with less than 3,500 mg/l TDS outside of sensitive areas. While the rule also says there can be no impact to water, there is no systematic monitoring in place to ensure that waters of the state are not impacted. Nowhere is a produced water analysis required in this section before this waste is road spread or discharged into waters of the state.

COGCC Rule 907 d (2) C.: Drilling Fluids. Under paragraph C, drilling fluids may be disposed of by land treatment or land application at a centralized E & P waste facility, again without testing the drilling fluid first to determine if it contain hazardous chemicals.

Rule 907, d (3), Disposal of water-based bentonite drilling fluids: The land application (paragraph B ii) described does not require any testing of the drilling fluid before spreading it onto the land. The depth is specified as is the total concentrations allowed; however, no testing of the fluid is required either before it is spread or to verify the concentrations after the application.

907, e(1) B: Oily waste can be disposed of as land treatment on site without prior testing or testing of soil for its impact. Same recommendation for pre-testing and approval by the local government recommended.

The disposal of E & P waste over time will have a profound impact on the aquifers. There are no limits on the volume of these wastes that can be spread throughout the county, which may ultimately introduce contamination into the waters of the state. There is also no pre-spreading analysis required so there is no real knowledge of what is in these waste products, and hence no accountability for contamination. There is no post operations testing requirement of the water or soil unless the operator suspects there is contamination.

C. Noise Impact

Cogcc Rule 802 has limits as to the level of sound that can come from a well site of 50-80 decibels depending on the time of day (measured at the pad). There are no regulations regarding noise generation away from the well pad. Truck traffic and engine brakes should be regulated as part of a traffic management plan.

D. Land Use

This is a unique situation in which the community wants and needs this land for it's future economic vitality. Conceivably, requiring oil and gas operations to spend 18 million dollars up front to protect it's value could be fully recovered by later selling large portions of BLR and allowing Colorado Springs to grow into it.

As much as possible the Master Plan should be kept intact with modifications as necessary to accommodate drilling and production processes.

Although the placement of wells and other facilities may require these be placed in certain areas, it is likely that a linear arrangement of facilities can be created allowing an efficient road and infrastructure pattern to emerge. For the purposes of operating long term electrical equipment at 20 or more facilities, electric power shall be installed as soon as possible so that drilling operations can take advantage of the cleaner and cheaper energy provided by Colorado Springs Utilities.

Recommendations to Assure Protection of the Air, Water and Land

A. Recommendations to protect air quality

1. No ponds, only closed loop storage

2. No continuous air emissions allowed. All tanks and equipment shall have collection systems and these gases are collected and conveyed to a facility to treat and package them for transport and sale. Run additional pipes with the oil collection piping to transport gases.

3. Electricity is installed, drilling and permanent equipment operates from electric power providing cleaner and quieter operation and electrifying the area.

4. When collection lines are dig in, add pipes to carry collected gases and produced water.

5. Use these same piping systems to transfer drill and frac water from pad to pad.

B. Recommendations to protect water quality

1. All aquifers are systematically sampled regardless of depth. If there isn't a sampling well with in a half mile a sampling well will be drilled to each aquifer. All water rights assets of the City are monitored and protected.

2. All drill hole that penetrates aquifers is at least double cased to 100 feet below the lowest aquifer.

3. No ponds or pits

4. All well pads and facilities that could leak or be subjected to spills must be lined with an impervious liner which shall be monitored and pumped if necessary. All sites must have a grading-drainage plan and containment design.

5. It is recommended that no produced water, oily waste or drilling fluid or mud can be land applied until it has been analyzed and the full composition reported, including naturally occurring radioactive material (NORM), to the local government and the COGCC for approval prior to land application in any quantity. In addition, because of the tremendous volumes of produced water, the local government has a right to know the total volume of produced water spread on the land or released into the waters of the state. The location of such releases must be reported to the local government.

C. Noise Impact

1. Require electrification of major stationary equipment that operates quieter and with less pollution.

2. Design the least disruptive traffic routes. Schedule truck traffic to avoid 'drive times'

3. Engine brakes should be regulated as part of a traffic management plan.

D. Land Use

1. As much as possible the Master Plan should be kept intact with modifications as necessary to accommodate drilling and production processes.

2. Electrify the operations for all large stationary equipment and drilling rig.

E. Visitor Experence

1. Pay close attention to the astheitcs inlcuding from overhead.

2. Re-vegetate as soon as possbile, provide grey water to use.

3. No flaring of gas.

4. No ponds or pits

Additional Recommendations

Timely notification of the local jurisdiction on a continuing basis. Local governments are for the most part completely left out of the information loop with respect to oil and gas E & P. Some examples below illustrate the issue. In all cases, the local government has a right to know what is happening that may impact its jurisdiction, its residents and its environment.

2. Rule 205 C, Access to Records: The local government is not given the Chemical Inventory as a routine matter and yet it will be local fire departments and Hazmat teams that will be required to respond to issues.

3. Rule 207, Tests and Surveys: The Commission under this rule is authorized to require tests to determine pollution or the presence of waste, but there is no requirement to inform or provide the local government with that information. Given that future zoning decisions are the responsibility of the local government, it is irresponsible of the State not to routinely provide such information.

4. Rule 216, Comprehensive Drilling Plans, Variances and site-specific approvals. All variances granted from any COGCC or other rules should be provided to the local government. (Many permits have additional conditions that may have been recommendations from the State Engineer-Geologist, Health Departments or through negotiation. All of these previously applied rules should also be available to the City of Colorado Springs.)

5. Rule 301, Reports, Records and General Notices: All changes to previously approved plans and emergency deviations should also be filed with the local government.

6. Rule 303g. Revisions to Form 2 and 2A: When the Application for Permit, Form 2, changes, the local government must have the opportunity to review the proposed change and comment on that change. Add all changes granted by the COGCC should be sent to the local government.

7. Rule 305d, Conditions of approval, Issuance of permit: This paragraph does not require the conditions of the local government be included for the permit and should at least incorporate those conditions by reference.

8. Rule 327 Loss of Well Control: There is no requirement to inform the local government when any oil, gas or water well blows uncontrolled within its jurisdiction and there is no indication the COGCC will inform the local government.

9. Rule 522, a, b and particularly d, Procedures to be followed regarding alleged violations: Local government is not notified of alleged violations, the resolution of violations or cease and desist orders issued by the COGCC against an operator.

10. Rule 906, Spills and Releases: When a Spill/Release Form 19 is filed with the COGCC for a reportable spill, local government is not notified of the spill. Nor is local government notified of the outcome of clean up efforts.