HomeMy WebLinkAboutCOUNCIL - COMPLETE AGENDA - 04/23/2013 - COMPLETE AGENDAKaren Weitkunat, Mayor Council Information Center
Gerry Horak, District 6, Mayor Pro Tem City Hall West
Bob Overbeck, District 1 300 LaPorte Avenue
Lisa Poppaw, District 2 Fort Collins, Colorado
Gino Campana, District 3
Wade Troxell, District 4
Ross Cunniff, District 5 Cablecast on City Cable Channel 14
on the Comcast cable system
Darin Atteberry, City Manager
Steve Roy, City Attorney
Wanda Nelson, City Clerk
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**REVISED AGENDA**
WORK SESSION
April 23, 2013
6 p.m.
1. Call Meeting to Order.
2. Foothills Mall Public Financing. (staff: Darin Atteberry, Mike Beckstead)
Objectives/Summary:
a. Community vision and expectation. Over the last 10 years, the consistent
theme of request from citizens has been the revitalization of the mall. While there
were hopes that the previous owner - General Growth Properties - would achieve
that vision, sales tax revenue from the mall has deteriorated each year since the
peak in 2000.
b. Catalytic opportunity in Midtown. City staff believes the redevelopment of the
mall with an underpass that links the area to the Mason BRT system combined
with residential housing will be a catalyst for growth and development within the
Midtown corridor – creating a sense of place and destination for the community.
c. Revenue opportunity. The mall and surrounding area that will be redeveloped
generated approximately $3.1M of sales tax revenue for the City in 2012. It is
anticipated that when the mall opens approximately $1.7M of sales tax revenue
will transfer from other existing retail to the mall for a combined $4.8M of
existing current revenue. By 2018, the third full year of mall operations, it is
anticipated the mall will generate $8.8M of sales tax revenue. Net new revenue is
estimated to be $4.0M.
d. Minimize risk to the City’s balance sheet, credit rating and revenue. All of
the revenue generated to support the public improvement costs and associated
financing are anticipated new revenues to the City through Metro District
Property Tax mills, Develop Public Improvement Fees (PIF), URA Property Tax
Increment and a Sales Tax Pledge and Shareback.
3. Discussion of the Operating Agreement Between the City and Prospect Energy, Inc. and
the Extent to Which Prospect Energy’s Oil and Gas Operations Should Be Exempted
from the Moratorium on Such Activities and the Ban on Hydraulic Fracturing. (Staff:
Laurie Kadrich, Lindsey Ex, Dan Weinheimer; 90 minute discussion)
Council is considering whether to approve on Second Reading, an Ordinance that would
exempt Prospect Energy from a moratorium prohibiting new oil and gas drilling and a
ban on the use of hydraulic fracturing in the drilling process. Second Reading was
scheduled on April 16, 2013. After considerable discussion and public testimony,
Council continued the item to April 23, 2013 to consider the issue during a work session,
followed by continuation of the April 16, 2013 Adjourned Meeting. Council asked staff
to provide more information regarding the inclusion of Undeveloped Acreage (UDA) in
the Operator Agreement and whether Prospect Energy would remove the UDA from the
Operator Agreement. Council also requested the following information:
• How does the Operator Agreement apply to the UDA?
• A summary of current oil and gas legislation,
• A timeline of the moratorium, ban and agreement, and
• Information regarding the existing Fort Collins Field, well locations and
expansion plans.
To be exempt from the hydraulic fracturing ban, there must be a Council-approved
Operator Agreement in place. Council stipulated Operator Agreements must ensure
stringent public health and safety measures are in place and provide strict controls on the
release of methane gases and other volatile organic compounds (VOCs). Council asked
that a comparison table be developed illustrating parts of the Agreement that exceed
federal or state guidelines or regulation.
4. Other Business.
5. Adjournment.
DATE: April 23, 2013
STAFF: Darin Atteberry
Mike Beckstead
Pre-taped staff presentation: none
WORK SESSION ITEM
FORT COLLINS CITY COUNCIL
SUBJECT FOR DISCUSSION
Foothills Redevelopment Public Financing
1. Objectives/Summary:
a. Community vision and expectation. Over the last 10 years, the consistent
theme of request from citizens has been the revitalization of the mall. While there
were hopes that the previous owner - General Growth Properties - would achieve
that vision, sales tax revenue from the mall has deteriorated each year since the
peak in 2000.
b. Catalytic opportunity in Midtown. City staff believes the redevelopment of the
mall with an underpass that links the area to the Mason BRT system combined
with residential housing will be a catalyst for growth and development within the
Midtown corridor – creating a sense of place and destination for the community.
c. Revenue opportunity. The mall and surrounding area that will be redeveloped
generated approximately $3.1M of sales tax revenue for the City in 2012. It is
anticipated that when the mall opens approximately $1.7M of sales tax revenue
will transfer from other existing retail to the mall for a combined $4.8M of
existing current revenue. By 2018, the third full year of mall operations, it is
anticipated the mall will generate $8.8M of sales tax revenue. Net new revenue is
estimated to be $4.0M.
d. Minimize risk to the City’s balance sheet, credit rating and revenue. All of
the revenue generated to support the public improvement costs and associated
financing are anticipated new revenues to the City through Metro District
Property Tax mills, Develop Public Improvement Fees (PIF), URA Property Tax
Increment and a Sales Tax Pledge and Shareback. Each of these revenue streams
are described in greater detail below.
The City’s obligation does not include a guarantee of debt and will not negatively
impact the City’s AAA credit rating. The sales tax pledge is strictly a pledge to
share sales tax revenue above a defined base on the City’s core 2.25% tax rate as
necessary to support specific bond payments. It is expected that by 2018, the
other three revenue sources will generate sufficient revenue to support the bond
debt and City will retain all sales tax generated from the project.
In addition, the City retains all revenue associated with the 1.6% dedicated
portion of our sales tax rate (the 3 quarter cents and 2B .85%). Because the City
retains all of the dedicated sales tax and the base on the core sales tax, it is
anticipated the City’s sales tax revenue in the first full year of mall operations
(2015) will slightly exceed the current combined base and transfer revenue -
$4.9M in 2015 vs. $4.8M in 2012.
April 23, 2013 Page 2
2. Project Costs & Assumptions:
a. Project timing assumes groundbreaking in June 2013 with completion of the
majority of the mall by November 2014. The Sears portion of the mall will occur
later given the requirement to build and relocate Sears to a new location. The
residential portion of the project will not begin until 2014 and completion in
2015. There is a possibility the residential will occur in phases with completion
during 2015-2017.
b. Project economics assumes sales per square foot of $350 excluding the major
anchor with 95% occupancy by 2016. Growth in sales is anticipated at 2% a year
and property values are estimated to increase at 1% per year.
c. Total project costs are estimated at $312M with $230M of costs specific to the
Mall and $82M associated with 446 residential units.
3. Eligible Public Improvement Costs:
a. The City/URA has identified $45M of eligible blight and infrastructure costs plus
an additional $8M of public benefit improvement costs for a total of $53M of
eligible Public Improvements.
b. Eligible blight and infrastructure costs include deconstruction and asbestos
abatement of the existing mall; utility work for storm, water, sewer and fire;
relocation of the Larimer ditch running through the property; site work including
fill, streets, lighting, landscape; a parking structure and other costs eligible under
the URA statutes.
c. Eligible public benefit improvements include the cost of a pedestrian underpass at
College Ave to allow connection to the BRT scheduled for completion in May of
2014 and the completion of a new Foothills Activity Center (FAC) on the mall
property to replace the aging Youth Activity Center currently in the southeast
corner of the property.
d. Walton/Alberta will transfer ownership of the FAC to the City upon completion
of the project.
e. Eligible Costs for the Foothills project are approximately 23% of the total Mall
costs of $230M. In comparison, the public percent in the Longmont Twin Peaks
Mall, Streets at Southglenn, Belmar, and Denver Pavilions are 34%, 27%, 14%
and 23% respectively. In comparison to the City’s investment in Front Range
Village, the Foothills project is approximately 30% compared with Front Range
Village (24%) when measured the same way the incentives for Front Range
Village are accounted for.
4. Bond Issue:
a. It is anticipated the Metropolitan District will issue bonds in an amount necessary
to produce net proceeds in the amount of $53M to reimburse Walton/Alberta for
the Eligible Public Improvement costs.
b. It is anticipated the Bond par value will be approximately $73M, of which $10m
will be used for capitalized interest (the bonds will be issued in 2013 and revenue
from the project will not begin flowing until 2015-2017 depending on the revenue
source), $7M for a reserve fund that will be required by the bond holders, and
$3M of issuance costs for a net proceeds of $53M.
April 23, 2013 Page 3
5. Public Financing Summary:
a. The bonds will be payable by the Metro District from four sources of revenue that
will be pledged by the Metro District, the URA and the City. All revenue used to
support the debt payment is new revenue created as a result of the Project. The
pledged revenue will be applied in a priority order as outlined below. The Sales
Tax Increment Revenues will only be applied to the payment of debt service on
the Bonds to the extent necessary after applying the first 3 revenue sources.
i. Metro District ad valorem tax in the amount of 50 mills to be imposed on
property in the Project.
ii. A Public Improvement Fee to be imposed by the Developer on
retail sales in the Project in the amount of 1.00%.
iii. Urban Renewal real property tax increment generated by property
taxes on the Project.
iv. Retail sales tax increment generated by the City’s 2.25% general
fund sales tax on retail sales from the Project.
b. It is anticipated that in addition to the reserve fund established from the proceeds
of the bond offering described in 3(b) above, a supplemental reserve fund of an
equal amount will also be establish. The Sales Tax Increment revenues may also
be used to fund this supplemental reserve.
c. When the Property Tax, PIF and Property Tax Increment revenues exceed the
annual debt service cost and the supplemental reserve fund is fully funded, the
retail sales tax increment will no longer be used to fund the debt payments or
reserve. The sales tax increment pledge will remain in effect; however, the sales
tax increment will be returned to the City at the end of each year.
d. When the Property Tax, PIF and Property Tax Increment revenues exceed the
annual debt service cost, the excess revenue from these 3 sources will be applied
first, to reimburse the County for 50% of the County’s share of the residential
Property Tax Increment and second, will flow into a Capital Refresh fund that the
Developer/Metro District will use to repay the debt early, enhance the
maintenance to the mall or add capital additions to keep the mall updated and
fresh.
6. Conditions & Requirements:
a. A Financing Plan will be developed jointly by Walton/Alberta and the City/URA
b. Walton/Alberta will provide proof of leases and tenants prior to the bond issue
that define
i. % of leased space - % to be determined between Walton/Alberta and the
City/URA.
ii. The average sales per square foot of the leases as measured by
national average will exceed a TBD number.
iii. A percentage of the Junior Anchor Tenants will be considered
“first to market” retailers within the Fort Collins area.
c. Various project completion dates will be establish for the various phases of the
project. In the event there is a delay in the completion of the residential units,
Walton/Alberta and the City/URA will share equally in the annual reduction in
revenue associated with the delay.
April 23, 2013 Page 4
d. In the event the assessed value of the project is lower than the current County
“estimate of value”, Walton/Alberta and the City/URA will share equally in any
annual shortfall.
7. Financial Benefits to the City:
a. It is anticipated the Property Tax, PIF and Property Tax Increment will generate
$168M of revenue over a 25 year life of the project. $157M of this revenue will
be used for debt service of the bonds and approximately $11M of this revenue
will be available to support 4(d) designations described above.
b. It is anticipated the Sales Tax revenue from the project will total $252M over a 25
year life of the project. Note, this revenue will continue beyond the 25 years. Of
this $252M of sales tax revenue, it is anticipated that new revenue to the City
(excluding existing revenue from the Mall, base revenue, and the transfer of
revenue from other areas of the City, transfer revenue) will be approximately
$117M of the 25 years modeled.
c. On an annual basis, the mall currently generates approximately $4.8M a year in
sales tax revenue including the base and transfer revenue described above). It is
anticipated the City sales tax revenue above that needed to support the debt
service associated with the bonds will be $4.9M, $5.3M, $5.5M and $8.8M for
the years 2015-2018 respectively. The increase in 2018 to $8.8M reflects the City
capturing all sales tax revenue from the project. While the Sales Tax Pledge
remains in effect, the other 3 revenue sources generate enough revenue to support
100% of the bond payments and the City retains all sales tax revenue (described
in 4c above).
d. Summary Financial Benefits:
i. Stop the erosion of sales tax revenue at the mall that began in 2000.
ii. Public Improvements are all paid for with incremental new
revenue coming directly from and because of the project. This revenue
would not exist without the project.
iii. Sales tax receipts will be greater in the first year of mall operations
than they are today after sharing a portion of the sales tax receipts.
iv. Starting in 2018, the City anticipates $4.0M of new sales tax
revenue each year that will grow at 2% a year thereafter.
v. No credit or balance sheet risk, pledged revenue is limited to
incremental revenue generated by the new mall.
1
• Objectives:
• Realize Community Vision & Expectations
• Launch a Catalytic Opportunity in Midtown
• Realize a Significant Revenue Opportunity
• Minimize Risk to Balance Sheet, Credit Rating & Revenue
• Challenges
• Build a Competitive Design & Create a Sense of Place
• Resolve Tenant Issues without Resorting to Eminent Domain
• Create a Connection with Mason BRT
• Replace the Youth Activity Center
• Resolve County Concerns around URA TIF
Objectives & Challenges
REVISED PRESENTATION ATTACHMENT 1
2
Project Overview
23 April 2013
3
Blight Remediation
4
Unsafe conditions
Poor Screening & Loading
Faulty parking circulation
5
Lack of pedestrian facilities and deteriorating site conditions
6
Proposed Redevelopment
7
New Entry Forecourt &
Shops
8
New Entry
9
Enhanced & Refurbished
Interior Promenade
10
Urban Design Enhancements
Better Site Utilization
11
College Avenue Shops
Sidewalks and Urban Enhancements
12
Foothills (Youth) Activity Center
13
Foothills Activity Center
Underpass Location
Parking Structure
Urban Plaza
College Avenue Shops
New Forecourt & Shops
14
Connectivity
15
Night View From Above
16
Triple Bottom Line Analysis
17
Triple Bottom Line Analysis
(In progress)
Strengths Opportunities
Increased Consumer Choice New Retail Jobs
Youth Activity Center Increased Revenue for City &
County
District Formation for Mid Town Increased Revenue for Open
Space
Limitations Threats
May increase costs to other taxing
entities
Perceived negative impacts from
traffic
May reduce availability of low cost
consumer goods
Perceived threat from County
related to budget for social
services
Social
18
Triple Bottom Line Analysis
(In progress)
Strengths Opportunities
Infill and redevelopment
(fewer veh. Trips Outside of City)
Decreased vehicle miles traveled
regionally
Proximity to transit
(Max, Bus, Trails)
Targeted infill may reduce carbon
emissions
Opportunity to update
performance of buildings
Improved stormwater quality
Limitations Threats
Potential net increase in carbon
emissions
May increase regional miles
traveled by visitors
Increase carbon emissions during
construction
Additional waste generation
without active recycling
Increased resource consumption Increased energy and water
footprint
Environmental
19
Triple Bottom Line Analysis
(In progress)
Strengths Opportunities
Increased consumer opportunities New retail jobs and increased
retail tax base
Construction jobs provide a one
time benefit to economy
Reduce retail leakage
Revitalizes decaying long time city
resource
Catalyst for redevelopment in Mid
Town
Limitations Threats
Public investment risk Financial Risk if Mall fails to
perform
Potential increased local
competition among other retailers
Continuing competition from
outside of City
Higher rent rates may cause
displacement of local merchants
Economic
20
Mall Financing
23 April 2013
21
• Project Costs
• Total Project Costs
• Public Improvement Costs
• Public Improvement Cost Financing
• Metro District
• Property Tax
• Public Improvement Fee (PIF)
• Property Tax Increment
• Sales Tax Pledge & Share / Remittance
Outline
22
Mall Net Taxable Retail Sales History
Net Taxable Sales Have Declined 61% Since 2001
20
40
60
80
100
120
140
160
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sales (Milions)
Mall ‐ Total Net Taxable Retail Sales
Net Taxable Sales
‐4.1%
2.8% ‐.4%
‐4.7%
‐15.6%
‐16.3%
‐17.5%
‐12.7%
‐5.3%
‐10.1% ‐3.2%
23
Project Assumptions
• Project Timing – Assuming May 8 Go Date
• Mall except Sears – Ground breaking June 2013 – Completion Nov 2014
• Sears & Residential – Summer 2015
• Economics:
• Annual Sales per square foot - $350
• Occupancy – 80% 2015, 95% thereafter
• Growth – 2% year sales, 1% year property assessed value
• Project Costs - $312M:
• Mall - $230M
• Residential 446 units - $82M
• Public Improvement Costs - $53M
• Blight Removal & Infrastructure - $45M
• Public Benefits - $8M
Mall Open for 2014 Holidays, Fully Completed by Summer 2015…
Total Cost $312M Including $53M of Public Improvement Costs
24
Public Improvement Costs
Blight Removal & Infrastructure Costs of $45M….
City Foothills Activity Center and College Ave. Underpass $8M
($ millions)
Blight Removal
Infrastructure
City
Infrastructure
Total
Public
Land Acquisition $ 5.5 $ 5.5
Parking Structure 9.6 9.6
Demolition / Abatement 3.9 3.9
Fixture & Amenities 1.4 1.4
Ditch Relocation 2.8 2.8
Site Work 12.9 12.9
Utilities 4.5 4.5
Soft Costs 4.6 4.6
Foothills Activity Center 4.8 4.8
Pedestrian Crossing / Culvert 3.0 3.0
TOTAL $ 45.2 $ 7.8 $ 53.0
25
Bond Details
• Bond Issue Fall of 2013 $73M
less Capitalized Interest 10M
less Reserve Fund 7M
less Issuance Cost 3M
• Net Proceeds $53M
• Additional Supplemental Reserve of $7M from Pledged Revenue
• Senior Lien on Pledged Revenue in order of priority:
• Metro District 50 mills of property tax
• Developer 1% Public Improvement Fee (PIF)
• URA Property Tax Increment
• City Sales Tax Revenue Pledge on 2.25% Core rate
City’s Sales Tax Pledged Revenue is Limited to the Extent
Necessary after Applying Other Pledged Revenue
26
Sales Tax – Pledge vs. Share
Sales Tax Pledge is on the Core 2.25% Increment Only….
Distinction Between Pledge & Share
Core City Sales Tax Rate 2.25%
Dedicated City Sales Tax Rate 1.60%
• Transportation 0.25%
• Natural Areas 0.25%
• Building on Basics 0.25%
• Keep Fort Collins Great 0.85%
Sales Tax Pledge:
• Applies to Core Sales Tax Only – City keeps Dedicated
• Sales Tax increment above base (prior 12 months)
• Base = 2.25% * prior 12 months of District net taxable sales
Sales Tax Share / Remittance:
• City Shares Sales Tax to the extent necessary after all other
sources of debt service have been applied
27
Metro District Funding
• Metro District revenue above that needed to cover debt:
• Releases Sales Tax Share – Pledge remains
• First dollars applied to reimburse County for 50% Residential tax increment
• Remaining excess assigned to a Capital Refresh Fund
Metro District Assigned 3 Revenue Sources….
Property Tax, Public Improvement Fee, Property Tax Increment
Metro District Revenue First Full Year
District Property Tax $ 50.0 $ 2.0
Sales PIF 64.7 2.2
URA Property Tax Increment 53.6 2.2
Metro District Funding $ 168.3 $ 6.4
Today's Value $ 61.9
Cumulative
Funding
Annual
Funding 2017
25 Years
($ millions)
28
Sales Tax Revenue
Total of $252 Sales Tax Revenue Expected over 25 years….
Annual Sales Tax Revenue in the First Full Year of $8.4M
Base = existing revenue from the existing mall
Transfer = revenue from other areas of the city that will transfer to the mall
New = net new revenue associated with the redeveloped mall
City Sales Tax Revenue
Dedicated Base / Transfer / New $ 104.6 $ 3.5
Core Base 44.4 1.8
Core Transfer & New 102.7 3.1
City Sales Tax $ 251.7 $ 8.4
Today's Value $ 94.6
Cumulative
Funding
Annual
Funding 2016
25 Years First Full Year
($ millions)
29
Base Transfer New
Core Tax ‐ 2.25% 1.8 1.0 2.1 $ 4.9
Dedicated Tax 1.6% 1.3 0.7 1.5 $ 3.5
$ 3.1 $ 1.7 $ 3.6 $ 8.4
Base Transfer New
Core Tax ‐ 2.25% 1.8 1.1 2.2 $ 5.1
Dedicated Tax 1.6% 1.3 0.8 1.6 $ 3.7
$ 3.1 $ 1.9 $ 3.8 $ 8.8
Sales Tax in 2016
Sales Tax in 2018
($ millions) Sales Tax Revenue
Illustration of Revenue Retain by the City and Revenue Pledged
Sales Tax Revenue retained by the City
Sales Tax Revenue pledged towards debt service
30
City Sales Tax Revenue – First 5 Years
City Sales Tax Revenue in 2015 Exceeds 2012 Current Revenue….
City Retains all Sales Tax Revenue by 2018 and Grows to $8.8M
Remitted Sales Tax Revenue = $8.8M
YEAR
2012 ‐ 4.8
2015 2.0 2.5 4.5 ‐ 4.9 4.9
2016 2.3 3.1 5.4 ‐ 5.3 5.3
2017 6.4 3.2 9.6 ‐ 5.5 5.5
2018 6.5 3.3 6.0 3.3 5.5 8.8
2019 6.6 3.4 5.7 3.4 5.6 9.0
City Sales
Tax
Revenue
Metro
District
Revenue
Pledged
Sales Tax
Increment
Bond
Payments
& Reserve
Sales Tax
Returned
to City
Base &
Dedicated
Sales Tax
+
+
=
=
($ millions)
31
New and Pledged Sales Tax Revenue
$149M of Sales Tax Revenue Retained by the City
Base Transfer New
Core Tax ‐ 2.25% 44 35 68 $ 147
Dedicated Tax 1.6% 32 24 49 $ 105
$ 76 $ 59 $ 117 $ 252
Sales Tax over 25 years
Sales Tax Revenue retained by the City = $149
Sales Tax Revenue pledged towards debt service = $103
($ millions)
32
New and Pledged Sales Tax Revenue
$117M of New Sales Tax Revenue Anticipated
Base Transfer New
Core Tax ‐ 2.25% 44 35 68 $ 147
Dedicated Tax 1.6% 32 24 49 $ 105
$ 76 $ 59 $ 117 $ 252
Sales Tax over 25 years
New
Revenue:
$117M
Sales Tax Revenue retained by the City = $149
Sales Tax Revenue pledged towards debt service = $103
($ millions)
33
New and Pledged Sales Tax Revenue
$103M of Sales Tax Revenue Pledged by the City
Base Transfer New
Core Tax ‐ 2.25% 44 35 68 $ 147
Dedicated Tax 1.6% 32 24 49 $ 105
$ 76 $ 59 $ 117 $ 252
Sales Tax over 25 years
New
Revenue:
$117M
Pledged
Revenue:
$103M
Sales Tax Revenue retained by the City = $149
Sales Tax Revenue pledged towards debt service = $103
($ millions)
34
New and Pledged Sales Tax Revenue
$108M of Net New Sales Tax Revenue Anticipated
Base Transfer New
Core Tax ‐ 2.25% 44 35 68 $ 147
Dedicated Tax 1.6% 32 24 49 $ 105
$ 76 $ 59 $ 117 $ 252
Sales Tax over 25 years
New
Revenue:
$117M
Pledged
Revenue:
$103M
Remitted
Revenue:
$ 9M
New After
Remitted
Sales Tax Revenue retained by the City = $149 $108M
Sales Tax Revenue pledged towards debt service = $103
($ millions)
35
Risk Analysis
A 10% & 20% Reduction in Both Sales & Property Values Reduces
Net New City Revenue by $24M and $58M Respectively…..
Net New Revenue is $50M with a 20% Reduction
Assumptions
Sales per square foot $350 Sq Ft $315 Sq Ft $280 Sq Ft
Property Tax Estimate Value Base less 10% Base less 20%
Cum Bond Payments $ 165 $ 165 $ 165
Risk Sensitivity
Metro Revenue 168 149 129
Remitted Sales Tax Revenue 9 16 34
Net New City Revenue $ 108 $ 84 $ 50
Base Case
10%
Reduction
20%
Reduction
($ millions)
36
Benefits
• Critical Community Project that will be Catalyst for Midtown
Revitalization
• Stop the Erosion of Lost Sales Tax Revenue
• Financed Entirely from New Revenue Generated by the Project
• First Full Year Tax Receipts Greater than Current Tax Receipts
• Significant New Sales Tax Revenue Beginning in 2018
• No Credit or Balance Sheet Risk, Pledged Revenue is limited
to Incremental Revenue Generated by the New Mall
DATE: April 23, 2013
STAFF: Laurie Kadrich, Lindsay Ex,
Dan Weinheimer
Pre-taped staff presentation: none
WORK SESSION ITEM
FORT COLLINS CITY COUNCIL
SUBJECT FOR DISCUSSION
Discussion of the Operator Agreement between the City and Prospect Energy, Inc. and the Extent
to Which Prospect Energy’s Oil and Gas Operations Should Be Exempted from the Moratorium on
Such Activities and the Ban on Hydraulic Fracturing.
EXECUTIVE SUMMARY
Council is considering whether to approve on Second Reading, an Ordinance that would exempt
Prospect Energy from a moratorium prohibiting new oil and gas drilling and a ban on the use of
hydraulic fracturing in the drilling process. Second Reading was scheduled on April 16, 2013.
After considerable discussion and public testimony, Council continued the item to April 23, 2013
to consider the issue during a work session, followed by continuation of the April 16, 2013
Adjourned Meeting. Council asked staff to provide more information regarding the inclusion of
Undeveloped Acreage (UDA) in the Operator Agreement and whether Prospect Energy would
remove the UDA from the Operator Agreement. Council also requested the following information:
• How does the Operator Agreement apply to the UDA?
• A summary of current oil and gas legislation,
• A timeline of the moratorium, ban and agreement, and
• Information regarding the existing Fort Collins Field, well locations and expansion
plans.
To be exempt from the hydraulic fracturing ban, there must be a Council-approved Operator
Agreement in place. Council stipulated Operator Agreements must ensure stringent public health
and safety measures are in place and provide strict controls on the release of methane gases and
other volatile organic compounds (VOCs). Council asked that a comparison table be developed
illustrating parts of the Agreement that exceed federal or state guidelines or regulation.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. How does the inclusion of the Undeveloped Acreage (UDA) affect whether Council should
consider exemption Prospect Energy from the moratorium and/or the hydraulic fracturing
ban?
Option #1: If Council considers exempting Prospect Energy on Second Reading (with
the UDA) should Council act to amend the Operator Agreement to:
• Include greater set-back requirements in the UDA, and
• Prohibit any re-entry into plugged and abandoned wells in the Fort Collins
Field?
April 23, 2013 Page 2
Option #2: Should the UDA be removed from the Agreement and exemption from the
moratorium and the ban limited to the Fort Collins Field?
• If so, should the Agreement be amended to prohibit re-entry into plugged and
abandoned wells?
2. Would Council consider moving forward Land Use Code (LUC) amendments to address
reciprocal set-backs and requirement’s to identify plugged and abandoned wells prior to land
development?
3. Should staff continue with general LUC development requirements now that the ban is in
place and requires and Operator Agreement?
BACKGROUND / DISCUSSION
Oil and gas production is currently limited to the Fort Collins Field, located in the northeast portion
of the city. The Fort Collins Field is regulated by the Colorado Oil and Gas Conservation
Commission (COGCC) and has been in production since 1924. Prospect Energy has been operating
the field since 2009. In City limits, the field consists of seven oil producing wells and seven
injecting wells, all of which are managed by one operator, Prospect Energy. Prior to May 2012
Larimer County and City regulations (LUC Section 3.8.14) reference pre-emption by the COGCC
rules as the criteria for any oil and gas development within the city or county. Prospect Energy is
unable to drill new wells since Ordinance No. 145, 2012 (Moratorium) was approved December
18, 2012. In addition, the company is no longer able to utilize hydraulic fracturing since the
adoption of Ordinance No. 032, 2013. Prospect Energy also holds certain leasehold interests within
the city, described as the UDA. Absent actions taken by Council, Prospect Energy would be able
to expand operations in the Fort Collins Field and other holdings in the City and use hydraulic
fracturing under the guidelines of the COGCC.
In addition to Prospect Energy, there are 143 mineral royalty owners who are affected by whether
Prospect Energy continues oil and gas development within the city. Council allowed for exemptions
from Ordinance No. 032, 2013, provided a Council-approved operator agreement was in place that
includes strict controls on methane release and adequately protects the public health, safety and
welfare of the city. The recommended agreement with Prospect Energy contains such provisions.
A summary of those provisions follows with more detailed information contained in Attachment 5.
ANSWERS TO QUESTIONS RAISED BY COUNCIL
Would Prospect Energy remove the UDA from the Operator Agreement?
According to representatives of Prospect Energy, the company is not willing to remove the UDA
from the Operator Agreement because of the financial investment made in obtaining the lease and
the potential for significant future return on investment.
How does the Operator Agreement apply to the UDA?
All aspects of the Operator Agreement apply in the UDA, as well as those sections written
specifically for the UDA, since it is unknown what resources may be developed. Staff’s approach
April 23, 2013 Page 3
was to require Best Practices for either oil or gas production be included in the operator agreement,
especially for air and water quality, in the event that either resource is produced. For example, if
saleable amounts of gas are produced in the UDA, they must construct a sales line rather than
venting. Currently, there are no quantities of saleable gas produced in the Fort Collins Field.
More specific information is contained in the Operator Agreement regarding development of the
Fort Collins Field since there is a publicly available Surface Use Agreement in place with the
Landowner and Prospect Energy. It is important for the community that the existing Surface Use
Agreement (SUA) for the Fort Collins Field limits future development to existing well pads. There
are development limits within the SUA and Prospect Energy for the UDA; at this time only general
information is public. Prospect Energy proposes a one-thousand (1,000) foot set-back in the UDA
along the west and southern sides of the UDA in order to increase the set-back from existing and
future, potential residential development in this area. This one-thousand (1,000) foot set-back
exceeds COGCC requirements and will help further mitigate any negative impacts of development
beyond what the current Operator Agreement requires. Prospect Energy indicates that there are five
(5) potential well pads within the UDA.
Summary of current oil and gas legislation
Prospect Energy would be required to follow any current oil and gas legislation that may be enacted,
if it is more restrictive than what is already in the agreement or if it is required by law for them to
follow and not addressed in the agreement. See Attachment 2 for more information on the specific
bills.
Timeline: Moratorium, Ban and Agreement & financial impacts to Prospect Energy
According to representatives of Prospect Energy, the company was proceeding to sell the Fort
Collins Field in May 2012 when the Council on First Reading passed a moratorium against any new
oil and gas drilling. According to the company, this action resulted in a change in the regulatory
environment rating moving from “stable” to “uncertain” for the Fort Collins Field and the sale
subsequently failed. Prospect Energy has been unable to develop proved reserves in the Fort Collins
Field since a moratorium was adopted by Council. Prospect Energy reports that this change in
regulatory rating was further reduced to “unfavorable” by the adoption of a ban on hydraulic
fracturing. The combination of these actions led to a “write down of proved reserves due to
regulatory uncertainty by the Securities and Exchange Commission (SEC)” during the year end third
party evaluation. The write down reduces the amount of available capital that Prospect Energy
would have had previous to any regulations adopted by the City. See Attachment 1.
What are the environmental impacts of hydraulic fracturing? What opportunities are there to
mitigate the environmental impacts and what (mitigation approaches) are included in the
Operating Agreement?
Staff provided information to Council for consideration during the February 19, 2013 meeting as
follows:
April 23, 2013 Page 4
ENVIRONMENTAL IMPACTS
Air Quality
Several current studies pertinent to the Front Range or Rocky Mountain region were reviewed to
support the following conclusions:
• Measurable emissions of several pollutants attributable to drilling, construction, material
storage and treatment, production, and transmission activities from oil and gas operations
have been detected, including the following:
N Nitrogen oxides (NOx) and volatile organic compounds (VOCs) which are ozone
precursors
N Hazardous Air Pollutants (HAPS) including several carcinogens (primarily benzene
and formaldehyde) and other air toxics associated with chronic and sub-chronic
health effects (respiratory and neurologic disease and head, throat, and eye irritation)
N Particulate matter including dust and aerosols
N Odors (hydrogen sulfide and odiferous hydrocarbons)
N Nitrogen and sulfur compounds that contribute to visibility impairment (haze) and
atmospheric deposition
N (acid rain)
N Methane, a potent greenhouse gas and ozone precursor.
• Oil and gas development activities can emit raw (non-combusted) natural gas which has a
unique signature that can be differentiated from motor vehicle emissions and other industrial
or combustion sources. Elevated levels of volatile organic compounds associated with
natural gas operations (drilling and venting) were found in the Front Range area.
• Hydrocarbons emitted from oil and gas activities along the Front Range (primarily propane
and other alkanes) comprise some of the highly reactive precursors important in the complex
atmospheric chemistry responsible for winter ozone formation. Winter ozone formation is
a recently discovered phenomenon that has clearly been attributed to emissions from oil and
gas development and production activities in the Green River Basin (Wyoming) and Uintah
Basin (Utah).
• Associated impacts to human health including excess cancer risk and chronic non-cancer
health impacts have been measured at locations within 0.5 miles of active well pad sites.
Additional studies, many of which are currently ongoing, will help to define the potential
risk to human health, effectiveness of air emission control strategies, and potential impacts
to air quality from oil and gas development activities.
Water Quality Environmental and Health Concerns
• While there is no scientific consensus and studies are few, there is some indication of a
potential link between high-pressure underground injection (i.e., underground injection wells
for wastewater) and gas migration near the well (movement of methane into groundwater.)
The associated risk to humans is that methane that is found in drinking water sources could
potentially build up in confined spaces and cause explosions. Methane gas is not considered
April 23, 2013 Page 5
toxic if consumed in drinking water and is not regulated by the Environmental Protection
Agency (EPA) under the Safe Water Drinking Act (SWDA).
• A USGS study by Ellsworth near wastewater wells (Class II Underground Injection Control
(UIC) wells) in Menlo Park, CA suggests the high pressure injection might make well
cement cracks more likely. Findings by other researchers suggest a similar finding, but
conclude further research is needed. Although this may have implications for high pressure
injection techniques used in hydraulic fracturing, there is no scientific consensus on the
probability of its occurrence or the mechanisms involved. Local wells classified as UICs are
actually injecting at sub-fracturing pressures; see more below under earthquakes.
• Most shallow water contamination resulting from hydraulic fracturing and conventional oil
and gas production has been linked to surface activities resulting in releases of wastewater
due to accidents, poor management of wastewater storage and disposal, and illicit dumping.
• Most aquifer contamination (i.e., potential drinking water resources) from conventional oil
and gas production has been linked to well casing failures. There is not enough research for
hydraulic fracturing operations to show a similar link.
In response to public concern and industry growth, in 2009, the US House of Representatives
requested that the US EPA conduct scientific research to examine the relationship between hydraulic
fracturing and drinking water resources. The project planning phase involved agency consultation
with other federal agencies, state and interstate regulatory agencies, industry, non-governmental
organizations, and others in the private and public sector to determine the focus of the study
regarding potential impacts on human health and the environment. The primary research focused
on investigating impacts to drinking water resources. The first progress report on the results of this
research was published by the EPA, December 2012, Study of the Potential Impacts of Hydraulic
Fracturing on Drinking Water Resources, Progress Report, EPA 601/R-12/011, Office of Research
and Development. The research consists of 18 research projects and is organized around five stages
of the hydraulic fracturing water cycle:
1. Water acquisition: What are the possible impacts of large volume water withdrawals from
ground and surface waters on water resources?
2. Chemical mixing: What are the possible impacts of hydraulic fracturing fluid surface spills
on or near well pads on water resources?
3. Well injection: What are the possible impacts of the injection and fracturing process on
water resources?
4. Flowback and produced water: What are the possible impacts of both types of wastewater
surface spills on or near well pads on water resources?
5. Wastewater treatment and waste disposal: What are the possible impacts of inadequate
treatment of hydraulic fracturing wastewater on water resources?
The results from the study, which are not expected until 2014, are intended to inform the public and
provide policymakers at all levels with high-quality scientific knowledge that can be used in
decision-making. The research involves collection and analysis of existing data from 24,925 wells
that have been hydraulically fractured, complex modeling conducted by the Lawrence Berkeley
National Laboratory, toxicity assessments of 1,858 chemicals associated with hydraulic fracturing,
April 23, 2013 Page 6
and case studies. The EPA also manages the two most comprehensive databases on toxicological
data that are used for risk assessments nationally and internationally.
The literature reviews for this study are subject to a separate quality review that assesses the
soundness, applicability and utility, clarity and completeness, uncertainty and variability, and
evaluation and review of the data and information before inclusion in the research. Attachment 3
includes references accepted for inclusion in the EPA report that are organized by research topic
related to water quality. This list is a subset of references reviewed to date that cover the most
relevant research topics being investigated; for a complete list refer to the 2012 EPA report cited
above. The EPA has compiled and continues to search for literature relevant to the research
questions posed in this report including a recent Federal Register notice requesting peer-reviewed
data and publications relevant to this study. There has not been any preliminary data released from
this effort.
Waste and Wastewater Environmental Concerns
• Hydraulic fracturing produces higher volumes of wastewater that surface as flowback in a
shorter period of time than conventional drilling techniques. This creates more challenges
for capture, storage, and disposal of wastewater and associated emissions than for
conventional drilling operations (e.g., more VOC emissions if not captured adequately, more
potential for accidental spills).
• Wastewater management and disposal may be the single most important issue associated
with environmental and human health protection. The Bureau of Land Management has
proposed new requirements for submission of wastewater management plans prior to
drilling. Deep injections of wastes in Class II UIC wells, not fracturing operations, have been
linked to earthquakes to date.
Earthquake Potential in Fort Collins
Water disposal in the oil field involves injecting waste water into a deep disposal well. This process
usually increases pressure in the rock above the native state (pre-water disposal) of the rock. Usually
there is not any fluid removed from the rock, only fluid (wastewater) added, thereby increasing
reservoir pressure. Many other industries and the Federal government also use water disposal wells.
There have been noted cases of water disposal wells causing seismic activity. National Academies
of Science concluded a study in 2012 and listed three major findings:
1. “the process of hydraulic fracturing a well as presently implemented for shale gas recovery
does not pose a high risk for inducing felt seismic events;”
2. “injection for disposal of wastewater derived from energy technologies into the subsurface
does pose some risk for induced seismicity, but very few events have been documented over
the past several decades relative to the large number of disposal wells in operation”; and
3. “Carbon Capture and Storage (CCS) due to the large net volumes of injected fluids, may
have potential for inducing larger seismic.”
The factor that appears to have the most direct consequence in regard to induced seismicity is the
net fluid balance.
April 23, 2013 Page 7
The Bureau of Reclamation stated it has not done any independent studies regarding hydraulic
fracturing or deep injection wells. However, it did state that the work done between 1999 and 2004
on all the Horsetooth Dams was performed as mitigation for major seismicity that it defines as much
greater than what research reveals is a risk due to deep injection wells. Locally, a process called
waterflooding is used and, in general, operators are required to maintain pressures that are below
fracture gradient and even further lower, based on the last mechanical integrity test, according to
COGCC regulations. In other words, at the Fort Collins Field waterflooding (recycled water), the
Muddy formation maintains pressures near or slightly below original reservoir pressures.
Waterflooding started in the Fort Collins Field as a smaller pilot test in September 1979 after
obtaining COGCC approval. Upon success of the pilot, COGCC approved expansion and the
expanded project started in July 1985. According to the current operator, “We’ve been injecting
water for a long time at fairly steady rates without any recorded seismic events.”
Habitat Fragmentation Resulting From Oil and Gas Development
Several current studies pertinent to the Front Range or Rocky Mountain region were briefly
reviewed to support the following conclusions:
• Wildlife impacts and habitat fragmentation from oil and gas activities have been
documented, largely for the Greater Yellowstone and Western Wyoming regions. Species
studied include mule deer, pronghorn, and greater sage-grouse. The studies largely focused
on how migration patterns and winter habitat use could be or have been affected by oil and
gas development. Mule deer migration patterns changed in the initial year of oil and gas
development. Migration patterns did not appear to acclimate three years after well
establishment. Instead, mule deer migration patterns continued to drift further from the well
pad development areas. High value habitat areas prior to the study shifted to low habitat
values throughout the study.
A further study found that mule deer abundance for the herds in the same area had declined
by 23% during 2001-2010, where the oil and gas development had expanded.
One recent study has also examined the impact of oil and gas development on sagebrush-
dependent songbirds (Gilbert and Chalfoun 2012). Some species, which are generally more
tolerant to disturbance, such as the Horned lark (Eremophila alpestris) did not respond to
increases in well densities. However other species, such as the Brewer’s sparrow (Spizella
breweri) and sage sparrow (Amphispiza belli) which are dependent on sagebrush
communities, had significant population decreases as oil and gas well density increased,
suggesting there may be significant impacts to sagebrush-obligate species. A comprehensive
synthesis of oil and gas impacts was recently compiled by The Wildlife Society in 2012. In
addition to the issues addressed above, the report also identifies increased noxious weed
invasions, impacts to waterfowl from wetland impacts, and the potential for increased
competition between deer and elk as highly valued habitat is used for oil and gas
development. The report also highlights that the cumulative effects of habitat fragmentation,
overall loss, and degradation may prove to have the most impact on wildlife.
• Horizontal drilling may reduce the overall impacts of habitat fragmentation, as multiple
areas of land can be accessed from a single well pad. However, it is difficult to know the
extent of this reduction without further study.
April 23, 2013 Page 8
• Based on the studies available, habitat fragmentation effects from oil and gas development
appear to be better understood at the landscape level, e.g., how oil and gas development
affects pronghorn and mule deer migration patterns. Thus, the findings from these studies
may be best applied at the regional scale, e.g.,Larimer County and the Rocky Mountain
Foothills.
• Staff did not find any research that compared the habitat fragmentation effects of oil and gas
development in rural or open undeveloped lands with those in more traditional urban
development.
Mitigation measures are proposed by staff and included in the Operator Agreement – see Attachment
3 for some of the measures included specific to hydraulic fracturing. Another significant measure
is a requirement in the Agreement that the Operator must have twenty-four (24) hour supervision
on site for any new drilling.
Information regarding the existing Fort Collins Field, well locations and expansion plans
Level of oversight: Since 2009, the COGCC inspected the Fort Collins Field at least 142 times.
There are no known safety concerns with existing wells. Existing wells would continue to have
oversight by the COGCC. Any new wells must conform to all COGCC regulations in addition to
any Best Management Practices contained in the Operator Agreement.
Count of pads and wellheads in the existing field: There are currently fifteen (15) wells in the City
limits; seven (7) of those produce oil, the remaining are water re-injection wells. It is not certain
which wells pads will be regulated by the Agreement or which will remain as “existing” (see
Attachment 6 for possible locations). Prospect Energy has indicated which well pads are likely to
be added to, however a proposed new development may affect any new well locations. It is
estimated that two (2) or three (3) well pads may be used for new wells and the remaining four (4)
or five (5) would remain as is. An additional six (6) to eight (8) additional wells are possible in City
limits of the Fort Collins Field.
Why can’t the Best Management Practices listed in the Agreement be applied to all wells in the
City?
Generally, new requirements apply to new development so the proposed agreement limited any new
conditions and/or requirements to any new development.
What is the difference between the existing field and the UDA?
The primary difference is that the existing field has been in oil production since 1924 and while
exploration has occurred in the UDA, neither oil or gas production has followed. There is however,
current production both east and west of the UDA so there is some likelihood of either oil or gas
resources (or both) being present. Another key difference is that any development in the UDA must
occur under City jurisdiction rather than County since the UDA is already in the City. All
development in the existing field was annexed into the City.
Will the Operator voluntarily provide sniffers to neighbors of the well sites so they can monitor
air quality?
April 23, 2013 Page 9
Providing sniffers to neighbors could provide numerous benefits to nearby neighbors, such as early
detection of hydrogen sulfide and Volatile Organic Compounds (VOCs). As health concerns are
more often related to VOCs, it may be best to focus on early detection of VOCs. However,
monitoring and measuring VOCs require more technically rigorous protocols. For example, citizens
would need to be trained in the equipment, a standard methodology would need to be established,
ideally citizen “teams” would be established so quality assurance would increase, and re-training
on at least an annual basis would be recommended. This type of Citizen Science effort may lend
itself to be better managed by the City or by the Larimer County Department of Health, which could
better manage the data over a longer time period. Because of the required rigor associated with
monitoring VOCs, it may prove a liability for the Operator to manage. Staff is not aware of a case
where an operator has wanted to take on such liability.
Comparison table illustrating parts of the Agreement that exceed Federal or State guidelines or
regulation
Staff focused on key air and water quality measures contained in the Operator Agreement for
illustration purposes as to how they meet or exceed State and Federal regulations or guidelines. The
commitment to provide a minimum of a one-thousand (1,000) foot set-back along the south and
western boundaries of the UDA exceeds existing state set-back regulations. Prospect Energy has
previously described their operations as exceeding current state or federal regulations by installing
a thermal oxidizer, disclosing chemicals, conducting neighborhood meetings, installing vapor
recover, using camera technology for leak detection, conducting an hydrogen sulfide survey of
operations which led to a wet-land being the source of odors rather than the company. All technical
staff members were asked to confirm that the areas proposed by their respective disciplines met or
exceeded current regulatory guidelines. See Attachment 3.
If Federal or State regulations are less than what is required in the Agreement, which prevails?
The Operator agreement specifies that whatever measure is “more stringent” (Appendix A, #1) is
what applies, so if the Agreement is more stringent it applies.
If the City and Larimer County agree that any oil and gas development in the Growth
Management Area requires annexation to the City, will the terms and conditions of the
Agreement apply to those areas?
Yes. Language contained in Section #3 of the Agreement requires that, at such time, if at all, the
City and County enter into a written agreement that authorized the City to regulate,” such
operations will be governed by the Agreement.
ATTACHMENTS
1. Project timeline
2. Current Legislation
3. Comparison Table Operator Agreement BMPs vs. Federal & State
4. Powerpoint Presentation
5. March 19, 2013 Agenda Item Summary - Memorandum of Understanding (MOU) with
Prospect Energy, w/o attachments
April 23, 2013 Page 10
6. Prospect Energy’s Fort Collins Field Well locations
7. Comparison Table Operator Agreement BMPs vs. COGCC.
Attachment #1
Oil and Gas Operations - Project Timeline – Updated April 19, 2013
Issue 2012 2013
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Moratorium
Hydraulic Fracturing Ban
Operator Agreement
Notes
Prior to May 2012:
Larimer County and City
rules reference pre-emption
by the COGCC rules (see
Section 3.8.14 of the Land
Use Code)
Moratorium:
1st Reading
5/15/12
(6-0 vote)
2nd Reading
6/5/12
(3-3 vote)
Council Work
Session: 6/12/12
Summer and fall 2012: Advisory Committee
meetings, Planning and Zoning Board
recommends adoption of Land Use Code
regulations (11/15/12)
In December, staff presented Council with
three options, including two Land Use Code
regulatory options and the moratorium.
A six-month moratorium passes on 1st Reading
12/4/12 (6-0 vote)
A seven-month moratorium adopted on
second reading (6-0 vote, 12/18/12), expires
07/31/13.
Hydraulic
Fracturing Ban:
1st Reading
2/19/13
(5-2 vote)
On 3/1/13,
staff first
meets with
Prospect
Energy to
develop an
Operator
Agreement
Hydraulic fracturing
ban (City Code
Sections 12-135, 12-
136) is adopted on
second reading
(5-2 vote, 3/5/13).
Operator Agreement
adopted by
Resolution 3/19/13
(4-2 vote).
1st Reading to
exempt Prospect
1
Oil and Gas‐related bills 2013
SB13‐202
ADDITIONAL INSPECTIONS AT OIL & GAS FACILITIES
The bill requires the Colorado Oil and Gas Conservation Commission (COGCC) in the
Department of Natural Resources (DNR) to report to the Joint Budget Committee and
House and Senate committees of reference with jurisdiction over energy by February 1,
2014, on utilizing a risk‐based strategy for inspecting oil and gas locations that targets
operational phases that are most likely to experience spills, excess emissions, and other
types of violations.
The report is to include findings, recommendations, and a plan, including staffing and
equipment needs for implementing the strategy.
The bill requires implementation of a strategy by July 1, 2014, which may include a pilot
project to test the strategy. The reporting requirement is repealed September 1, 2014.
SB13‐275
CONCERNING THE CREATION OF AN INTERIM COMMITTEE OF THE GENERAL ASSEMBLY TO
REVIEW MATTERS RELATING TO PIPELINE SAFETY
The bill creates a legislative interim committee to address oil and gas pipeline safety and
to review and propose bills on that topic.
The Pipeline Safety Review Committee must convene stakeholders, request briefings
from regulatory agencies and information from other sources, make determinations,
and consider other issues.
It is authorized to meet up to 6 times during the interim; consult with experts, including
state personnel; and propose up to 3 bills.
HB13‐1267
CONCERNING INCREASED PENALTIES FOR VIOLATIONS BY OIL AND GAS OPERATORS
Current law specifies that a violation of the "Oil and Gas Conservation Act" is punishable
by a maximum fine of $1,000 per day, subject to a penalty schedule promulgated by the
oil and gas conservation commission that considers aggravating and mitigating
circumstances.
The maximum total fine is capped at $10,000 for violations that are not significant.
The bill increases the maximum daily fine to $15,000, sets a minimum fine of $5,000 per
violation per day for violations that have a significant adverse impact on public health,
safety, or welfare, including the environment and wildlife resources, and repeals the cap
on the maximum total fine.
HB13‐1268
CONCERNING A DISCLOSURE OF POSSIBLE SEPARATE OWNERSHIP OF THE MINERAL ESTATE IN
THE SALE OF REAL PROPERTY
The bill requires a seller to disclose in the sale of real property that a separate mineral
estate may subject the property to oil, gas, or mineral extraction. A standard disclosure
ATTACHMENT 2
2
or a substantially similar disclosure is required. A seller that provides this disclosure is
not liable for any damages of the purchaser from oil, gas, or mineral extraction.
Would apply to contracts entered into on or after January 1, 2014.
HB13‐1269
CONCERNING THE REDUCTION OF CONFLICTS OF INTEREST WITHIN THE COLORADO OIL AND
GAS CONSERVATION COMMISSION
Section 1 of the bill amends the commission's mandate to ensure that the development
of oil and gas resources protects public health, the environment, and wildlife resources.
Section 2 redefines "waste" to exclude reduced production that results from compliance
with government regulation.
Section 3 requires an annual disclosure on a public website by each commissioner the
identity of each operator and oil and gas service company of which the commissioner is
an employee, officer, or director or in which the commissioner has a direct or
substantial financial interest; the nature of the commissioner's direct or substantial
financial interest and position with each such operator or oil and gas service company
and the commissioner's duties in connection with the position; and a listing of each such
operator's or oil and gas service company's business interests in Colorado.
HB13‐1273
CONCERNING NEW FUNDING LOCAL GOVERNMENTS OIL AND GAS DEVELOPMENT IMPACTS
Bill requires operators to pay a local government designee fee to the Colorado Oil and
Gas Conservation Commission (COGCC) when applying for a permit to drill.
The COGCC will allocate the fee equally to each local government that has a registered
local government designee within whose boundaries the oil and gas facility to be
permitted is located.
The bill allows local governments to collect an impact fee or development charge when
issuing a development permit to offset the costs for environmental or public health and
welfare oversight on new oil and gas development.
The bill also repeals the prohibition on local governments charging a tax or fee for
conducting inspections or monitoring of oil and gas operations.
HB13‐1275 ‐ FAILED
CONCERNING A FRONT RANGE OIL AND GAS HUMAN HEALTH STUDY
Requires the State Board of Health (board), in the Department of Public Health and
Environment (DPHE), to issue a request for proposals (RFP) to conduct a review of
existing epidemiological data to determine whether oil and gas operations can have an
adverse effect on human health.
The selected contractor's final report, which must be prepared in consultation with the
oversight committee created in the bill, is due by March 15, 2014.
The review is to be based on data collected in or near Larimer, Weld, Boulder, and
Arapahoe counties and is to include at least one control area. The contractor is required
3
to design the review with input from medical researchers, statisticians, and
environmentalists to provide scientifically‐based information, including:
• acute, chronic, debilitating, fatal, and transgenerational conditions of the general
population and certain at‐risk populations; and
• an analysis of existing incidence data for an appropriate period of time before and
after the commencement of oil and gas operations in each particular geographic area.
The review may include a finding regarding whether the Division of Administration or
the Water Quality Division in the DPHE, or the Colorado Oil and Gas Conservation
Commission (COGCC) in the Department of Natural Resources, should exercise their
power to issue a cease‐and‐desist order for specific oil and gas facilities.
The oversight committee is comprised of 11 members. Appointees who are not
legislators must be physicians or have experience in occupational or public health,
epidemiology, biomedical science, or statistics. Appointments must be made by July 1,
2013, and are made as follows:
• the President of the Senate and Speaker of the House each make three appointments,
including one legislator from each house;
• the minority leaders of each house make two appointments; and
• the Governor appoints one member to represent DPHE
HB13‐1278
CONCERNING OIL SPILLS GAS RELEASES REPORTING
The bill requires that spills of oil or exploration and production waste of one barrel (42
U.S. gallons) that is spilled outside of berms or other secondary containment
mechanisms be reported within 24 hours of discovery to both the Colorado Oil and Gas
Commission (COGCC) and the local jurisdiction responsible for emergency response.
The spill must be reported to the Colorado Oil and Gas Commission (COGCC), the local
jurisdiction responsible for emergency response, the surface owner, and owners of land
adjacent to the spill.
The COGCC may promulgate rules to implement these requirements.
HB13‐1316
OIL GAS COMMISSION UNIFORM GROUNDWATER SAMPLE RULE
Bill requires the COGCC to adopt a uniform standard groundwater monitoring rule for
the entire state.
Attachment #3
Note – within the table, the section of the Operator Agreement is referenced in parentheses, e.g., (Appendix B) Develop Water Quality
Monitoring Plan indicates that the standard can be found in Appendix B.
Oil and Gas Operations
Comparison Table – Selected Sections of the Operator Agreement compared with Federal and State Regulations
Updated April 22, 2013
Operator Agreement Water Quality Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
1. (Appendix B) Develop
water quality monitoring
plan
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
Water quality monitoring plan required
2. (27) Sample “Available
Water Sources”
No equivalent
regulation
Water wells registered with CO Division of
Water Resources preferred,
Also allows permitted or adjudicated
springs or monitoring wells
Same requirements as COGCC
3. (27) Number of water
sources sampled
No equivalent
regulation
Cap of 4 water sources Same requirements as COGCC
4. (27) Location of water
sources sampled
No equivalent
regulation
Located within ½ mile radius of proposed
well
Same requirements as COGCC
5. (27) Orientation of
sampling locations
No equivalent
regulation
Both up‐gradient and down‐gradient
sampling required
Same requirements as COGCC
6. (27) Multiple identified
aquifers
No equivalent
regulation
Sampling of multiple defined aquifers (e.g.,
deepest and shallowest)
Same requirements as COGCC
7. (27) Timing of sampling No equivalent
regulation
1 baseline sampling event prior to site
construction
2 post‐completion sampling events (one
between 6 and 12 months after and one
between 60 and 72 months after)
Operator Agreement is more stringent
Attachment #3
Operator Agreement Water Quality Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
8. (27) Sampling procedures
and analysis
No equivalent
regulation
Baseline sampling for drinking water
analytes, dissolved and gaseous petroleum
hydrocarbons, and microbiological
parameters
Post‐completion sampling for same
parameters as baseline sampling
Additional stable isotope analysis of
methane performed if thresholds for
methane exceeded
Operator Agreement is more stringent
Same parameters for baseline and post‐
completion sampling are tested
Same tests using stable isotope analysis
required
Added new requirement for testing
dissolved metals
9. (39) Soil gas monitoring No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
Added requirement that may be used to
assess well casing integrity and potential
for methane gas migration
Operator Agreement Air Quality Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
1. (21.a) – General Duty to
Minimize Emissions
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
2. (21.b) – HLP‐VRU on new
wells in the UDA
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent –
note that this is the same as operator
agreement in the region (not limited to
City limits)
2
Attachment #3
Comparison Table – Operator Agreement vs. State and Federal Regulations
Operator Agreement Air Quality Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
3. (21.d) No uncontrolled
venting of methane
40 CFR Part 60
Subpart
OOOO with
exceptions for
safety and
feasibility
CDPHE Regulation No. 6 Part A Operator Agreement is more stringent
Requirement applies regardless of well
type.
4. (21.d) All gas vapors shall
be captured to the extent
feasible
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
5. (21.d) Vapor capture
equipment shall operator
at 98% efficiency or
greater
40 CFR Part 60
Subpart
OOOO
requires 95%
on some
equipment at
natural gas
wells
CDPHE Rule 805.b(2) and CDPHE Reg. 7
XVIIB.1 – requires 90‐95% control
depending on equipment type and
uncontrolled emissions
Operator Agreement is more stringent
6. (21.e) Capture and
beneficial use of natural
gas is preferred over
flaring
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
7. (21.e) Flaring shall be
continuously monitored
40 CFR
60.18(f)
No equivalent regulation Operator Agreement is more stringent
8. (21.e) No venting of gas
may occur except under
COGCC rule 805(B)(3)(b) or
rule 912
No equivalent
regulation
COGCC Rule 805 and Rule 912 allow
venting for safety and emergencies
Attachment #3
Operator Agreement Air Quality Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
9. (21.f.1) Flare shall be
operated with natural gas
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
10. (21.f.1) Flare shall be
operated with 98% or high
Volatile Organic
Compound (VOC)
destruction efficiency (DE)
40 CFR Part 60
Subpart
OOOO
requires 95%
on some
equipment at
natural gas
wells.
COGCC requires 90‐95% control required
depending on the source
Operator Agreement is more stringent
11. (21.f.2) Flare shall be
designed and operated in
compliance with 40 CFR
60.18(f) and CDPHE Reg. 7
Section XVIIB
Complies with
EPA Federal
regulation
Complies with CDPHE regulation Same requirements as state and federal
regulations
12. (21.f.3) The flare shall be
operated with a flame
present at all times when
emissions may be vented
to it, pursuant to the
methods specified in 40
CFR 60.18(f).
Complies with
EPA Federal
regulation 40
CFR 60.18
Complies with CDPHE Reg. 7 Section
XVII.B.1.c
Same requirements as state and federal
regulations
4
Attachment #3
Comparison Table – Operator Agreement vs. State and Federal Regulations
Operator Agreement Air Quality Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
13. (21.f.4) An automatic pilot
system shall be used when
feasible. Other ignition
systems may include the
installation and operation
of a telemetry alarm
system or an on‐site
visible indicator showing
proper function.
No equivalent
regulation
CDPHE Reg. 7 Section XVII.B.1.c requires no
visible emissions and observation of proper
function; similar to current language and
includes proposed changes to Reg. 7
Operator Agreement is more stringent
14. (21.g) The Company shall
develop and maintain a
leak detection and
component repair
program according to EPA
Method 21 for equipment
used in permanent
operations. LDAR shall be
performed on newly
installed equipment, and
then on an annual basis.
EPA 40 CFR
Part Subpart
Vva – LDAR
Requirements
for several
industries that
emit VOCs
COGCC Rule 604.c.(2).f – leak detection
plan required if within designated setback
location
Operator Agreement is equivalent or
more stringent
Operator Agreement language is similar
to EPA requirement; VOC leaks from
equipment similar to COGCC rule, and
applies regardless of location.
5
Attachment #3
Operator Agreement Air Quality Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
15. (21.g) A Forward‐Looking
Infrared (FLIR) camera
shall be used as the
preferred implementation
method of EPA Method 21
as available from the
state; if unavailable, other
methods shall be used in
compliance with this
method.
EPA Method
21 40 – CFR
Part 60,
Appendix A‐7
and 40 CFR
60.18(g)
(FLIR camera
is an
alternative
compliance
method
accepted by
EPA
COGCC Rule 604.c.(2).f ‐ leak detection plan
required if within designated setback
location.
Operator Agreement is more stringent
because this requirement applies to all
types of development and regardless of
location.
16. (21.g) Upon request from
the City, the Company
shall implement EPA
Method 21 upon
additional concerns
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
17. (21.g) At least once per
year, the Company shall
notify the City prior to FLIR
camera use in case the
City wishes to observe the
method
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
18. (21.h) One Time Baseline
Air Quality Monitoring
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
6
Attachment #3
Comparison Table – Operator Agreement vs. State and Federal Regulations
Operator Agreement Air Quality Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
19. (21.i) One Time Air
Sampling During Well
Completion
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
20. (21.j) Ongoing Air Quality
Monitoring
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
21. (21.k) The City may require
the Company to conduct
additional air monitoring
as needed to respond to
emergency events such as
spill, process upsets, or
accidental releases or in
response to odor
complaints in City Limits
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
22. (21.l) Air Quality Action
Days – requires operator
to develop temporary
response actions to poor
quality air days
No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
7
Attachment #3
Operator Agreement Air Quality Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
23. (22.a) Green Completions
Gas gathering lines,
separators, and sand traps
capable of supporting
green completions as
described in COGCC Rule
805 shall be installed at
any location at which
commercial quantities of
gas are reasonably
expected to be produced
based on existing adjacent
wells within one (1) mile
or well in the Fort Collins
Field, whichever is greater.
40 CFR Part 60
Subpart
OOOO for
natural gas
wells
COGCC 604.c.(2).c and COGCC 805.b(3) –
same requirements for wells located within
a Designated Setback Location, effective
August 2013
Operator Agreement is equivalent or
more stringent
Operator Agreement language requires
green completions regardless of where
well is located and where viable
quantities of gas are produced.
24. (22.b) Uncontrolled
venting is prohibited
40 CFR Part 60
Subpart
OOOO for
natural gas
wells,
exceptions for
safety and
feasibility
COGCC 604.c.(2).c – same requirements as
for wells located within a Designated
Setback Location effective August 2013
Operator Agreement is equivalent or
more stringent
Operator Agreement language prohibits
uncontrolled venting regardless of
where well is located.
8
Attachment #3
Comparison Table – Operator Agreement vs. State and Federal Regulations
Operator Agreement Air Quality Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
25. (22.c.1‐4) Temporary
flowback flaring and
oxidizing equipment shall
include the following
elements (see Operator
Agreement)
40 CFR Part 60
Subpart
OOOO for
natural gas
wells,
specifies
similar or
equivalent
equipment for
reduced
emission
completions.
COGCC 604.c.(2).c – same requirements as
for wells located within a Designated
Setback Location effective August 2013
Operator Agreement is equivalent or
more stringent
Operator Agreement language requires
specific equipment regardless of where
well is located and where feasible.
9
Attachment #3
Operator Agreement Notification and Inspection Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
26. (3) Conceptual Review No equivalent
regulation
No equivalent regulation; Local
Government Designee can elect to be
notified
(Rule 306.b) Local governments that have
appointed a local governmental designee
(LGD) shall be given an opportunity to
engage in such consultation concerning an
application for Permit‐to‐Drill, Form 2, or
an Oil and Gas Location Assessment, Form
2A, for the location of roads, production
facilities and well sites prior to the
commencing of operations with heavy
equipment.
Operator Agreement is equivalent or
more stringent
Added requirement ‐ Requires City be
notified 30 days prior to submittal of an
Application for a Permit to Drill
27. (4) Mailed Notice No equivalent
regulation
(Rule 305.a) Pre‐application notifications.
For Oil and Gas Locations proposed within
an Urban Mitigation Area or within the
Buffer Zone Setback, an Operator shall
provide a “Notice of Intent to Conduct Oil
and Gas Operations” to surface owners,
owners of all Building Units within the
Exception Zone Setback, and owners of
surface property within five hundred (500)
feet of the proposed Oil and Gas Location,
not less than thirty (30) days prior to
submitting a Form 2A Oil and Gas Location
Assessment to the Director.
Operator Agreement is more stringent
Added requirement to notify (in
addition to surface owners) that any
surface owner, regardless of whether a
building is present, within ½ mile shall be
notified; any surface owner within 500’
of a proposed gathering line shall be
notified, and that any person registered
as a neighborhood group or organization
shall also be notified
10
Attachment #3
Comparison Table – Operator Agreement vs. State and Federal Regulations
Operator Agreement Notification and Inspection Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
28. (5) Posted Notice No equivalent
regulation
No equivalent regulation Operator Agreement is more stringent
Added requirement to post sign in
similar manner as to other development
review applications
29. (6) Neighborhood
Meetings
No equivalent
regulation
(Rule 305) Operators must engage in
expanded notice and outreach efforts with
nearby residents and conduct additional
engagement with local governments about
proposed operations. As part of this,
operators proposing drilling within 1,000 feet
must meet with anyone within that area who
asks.
Operator Agreement is more stringent
Added requirement that neighborhood
meetings must be conducted in
accordance with existing City standards
30. (7) Notification to the City
and the public regarding
commencement of
operations
No equivalent
regulation
(Rule 912.e) Operators shall notify the local
emergency dispatch or the local
governmental designee of any natural gas
flaring. Notice shall be given prior to flaring
when flaring can be reasonably anticipated,
or as soon as possible, but in no event
more than two (2) hours after the flaring
occurs.
Operator Agreement is more stringent
Added requirement that any
commencement, not just for flaring,
requires notification
11
Attachment #3
Operator Agreement Notification and Inspection Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
31. (8) Inspections No equivalent
regulation
COGCC maintains an Onsite Inspection
Policy (last updated December 2005) that
governs protocol for inspections related to
permit approval. Onsite inspections may be
requested under Rule 306. The purpose of
the onsite inspection shall be to determine
whether technical or operational conditions
of approval should be attached to the APD
in order to:
1. Avoid potential unreasonable crop loss
or land damage;
2. Address potential health, safety and
welfare or significant adverse
environmental impacts within COGCC
jurisdiction regarding the proposed surface
location that may not be adequately
addressed by COGCC rules or orders, or
3. Otherwise ensure compliance with the
COGCC’s rules relating to advance notice
and good faith consultation with respect to
timing of operations and location of
facilities.
Operator Agreement is more stringent
Added requirement that City can inspect
at any time, with 24 hours advanced
notice (see also Emergency Response
section)
12
Attachment #3
Comparison Table – Operator Agreement vs. State and Federal Regulations
Operator Agreement Setback Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
32. (2) Setbacks required for
new wells
No equivalent
regulation
Statewide uniform setback – 500’ from
building units; 1,000’ from institutional
buildings
If proposing to construct a well within
1,000 feet of an occupied structure, the
operators are required to meet new and
enhanced measures to limit the disruptions
a nearby drill site can create. Those
measures include closed loop drilling that
eliminate pits, liner standards to protect
against spills, capture of gases to reduce
odors and emissions, as well as strict
controls on the nuisance impacts of noise,
dust and lighting.
Operator Agreement is more stringent
Added requirement that a minimum
setback of 1,000’ be applied in the
Undeveloped Acreage (UDA) on the
south and western borders to increase
the setbacks from any existing or
proposed residential development
Operator Agreement Waste Management and Disposal Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
33. (9) Containment berms Exempted
under RCRA
for E&P
wastes
Rule 906 requires secondary containment
with liquids >3,500 total dissolved solids.
Rule does not apply to water tanks < 50
barrels
Operator Agreement is more stringent
Required for all tanks and separators at
new well pads
Must be lined
Additional containment required within
500 feet up‐gradient of surface water
34. (10) Pitless systems Pits allowed
under RCRA
Pits allowed under Rule 902 Operator Agreement is more stringent
No pits allowed
35. (14) Onsite storage of Allowed Allowed under 900 series Rules Operator Agreement is more stringent
13
Attachment #3
wastes under RCRA No long‐term storage allowed
36. (18) Use of produced
water for dust suppression
Allowed
under E&P
RCRA
Exemption
Allowed under 900 series Rules Operator Agreement is more stringent
Not allowed
37. (45) Land treatment or
disposal of drilling muds
Allowed
under E&P
RCRA
Exemption
Allowed under 900 series Rules Operator Agreement is more stringent
Not allowed
38. (45) Spill Prevention,
Control, and
Countermeasure Plan
(SPCC)
None for this
size facility
Not required for a facility of this size Copy of Operator Company‐level SPCC
provided to Director, similar to State
regulations
Operator Agreement Chemical Disclosure Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
39. (14) Chemical Disclosure
and Storage
No equivalent
regulation
Website fracfocus.org was developed by
the Ground Water Protection Council and
the Interstate Oil and Gas Compact
Commission. Operators must utilize registry
to post information. (See Rule 205)
Operator Agreement is more stringent
Added requirement to also provide the
information on chemicals to the City;
also does not allow any chemicals to be
permanently stored on the site.
Operator Agreement Emergency Response Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
40. (20) Emergency
preparedness plan
Numerous
federal
agencies
It is our understanding that similar
standards that are used at the federal level
are employed at the State level
Same requirements as state and federal
regulations, as well as the adopted
Boulder County and Loveland
Attachment #3
Comparison Table – Operator Agreement vs. State and Federal Regulations
oversee
emergency
response
issues; they
have similar
standards to
what is
proposed
Staff also looked to the International Fire
Code, International Building Code, and
other state and federal regulations to
develop these standards
regulations
Operator Agreement Natural Resources Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
41. (32) Natural Resources –
requires compliance with
Section 3.4.1 of the Land
Use Code
Must comply
with
Endangered
Species Act
and other
federal
regulations
(Rule 1201 and 1203) – The state requires
certain regulations for operating within
sensitive natural areas, all of which would
apply to Prospect Energy, e.g., the
requirement to install wildlife crossovers if
open trenches are left open for more than
5 days and are greater than 5’ in width, can
also trigger consultation with the Division
of Parks and Wildlife.
Operator Agreement is more stringent
Added requirement to require that all
natural habitats and features as
identified by the City be accounted for,
protected, as if necessary, mitigated in
the site analysis and design; not just the
resources outlined by the state, e.g.,
winter migration corridors for mule
deer, bald eagle nests, etc.
Operator Agreement Noise Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
42. (33) Noise mitigation No equivalent
regulation
known to staff
(Rule 802) The type of land use of the
surrounding area shall be determined by
the Director in consultation with the Local
Governmental Designee taking into
Operator Agreement is more stringent
Attachment #3
Operator Agreement Noise Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
consideration any applicable zoning or
other local land use designation. In the
hours between 7:00 a.m. and the next 7:00
p.m. the noise levels permitted above may
be increased ten (10) dB(A) for a period not
to exceed fifteen (15) minutes in any one
(1) hour period. The allowable noise level
for periodic, impulsive or shrill noises is
reduced by five (5) dB (A) from the levels
shown.
ZONE 7:00 am to
next 7:00 pm
7:00 pm
to next
7:00 am
Residential/
Agricultural/Rural
55 db(A) 50 db(A)
Commercial 60 db(A) 55 db(A)
Light industrial 70 db(A) 65 db(A)
Industrial 80 db(A) 75 db(A)
(Rule 802.e) Exhaust from all engines,
motors, coolers and other mechanized
equipment shall be vented in a direction
away from all building units.
with State regulations will be achieved;
also requires noise mitigation measures
to be constructed whenever the
operation is at the edge of either an
existing residential development or area
zoned for future residential
development.
43. (19) Electric equipment No equivalent
regulation
(Rule 802.f) All Oil and Gas Facilities with
engines or motors which are not electrically
Operator agreement is similar to state
regulations; the City stresses the use of
16
Attachment #3
Comparison Table – Operator Agreement vs. State and Federal Regulations
Operator Agreement Noise Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
known to staff operated that are within four hundred
(400) feet of Building Units shall be
equipped with quiet design mufflers or
equivalent. All mufflers shall be properly
installed and maintained in proper working
order.
Electric Equipment at all sites; the state
specifies a certain distance at which
additional measures must be taken.
Operator Agreement Transportation and Circulation Requirements
Operator Agreement
Requirement
Federal State/COGCC Comparison
44. (44) Transportation and
Circulation
No equivalent
regulation
known to staff
(Rule 334) All persons subject to the COGCC
rules and regulations while using public
highways or roads shall be subject to the
State Vehicles and Traffic Laws pursuant to
Title 42, C.R.S. and the State Highway and
Roads Laws, Title 43, C.R.S., pertaining to
the use of public highways or roads within
the state.
(Rule 604.c.2.d) Traffic Plan. If required by
the local government, a traffic plan shall be
coordinated with the local jurisdiction prior
to commencement of move in and rig up.
Any subsequent modification to the traffic
plan must be coordinated with the local
jurisdiction.
Operator Agreement is more stringent
Added requirement that a
Transportation Impact Analysis be
submitted to the City during the
Conceptual Review of the project; also
requires proposed traffic and access
routes as well as a bond to cover any
damage that occurred during the well
drilling and completion phase of the site.
17
1
Discussion: Operating Agreement
Prospect Energy & Second Reading
Ordinance No. 57
Laurie Kadrich
Director, Community Development & Neighborhood Services
Dan Weinheimer
Policy and Project Manager
Lindsay Ex
Senior Environmental Planner
April 23, 2013 Work Session
ATTACHMENT 4
2
Items for City Council
Consideration:
Option #1:
If Council considers exempting Prospect Energy on
Second Reading should Council:
– Act to amend the Operator Agreement to
include greater set-back requirements in the
Undeveloped Acreage (UDA), and
– Prohibit any re-entry into the plugged and
abandoned wells in the Fort Collins Field?
3
Items for City Council
Consideration:
Option #2
Should the UDA be removed from the Agreement
and exemption from the moratorium and ban limited
to the Fort Collins Field?
– If so, should the Agreement be amended to
prohibit re-entry into plugged and abandoned
wells?
4
Items for City Council
Consideration:
• Would Council consider moving forward with Land
Use Code (LUC) amendments to address
reciprocal set-backs and requirements to identify
plugged and abandoned wells prior to
development?
• Should staff continue with LUC development
regulations now that the ban is in place?
5
2012
Issue 2nd
Quarter
Moratorium
Ban
Operator
Agreement
Notes Passes 1st
reading –
5/15/12
Fails 2nd
reading -
6/5/12
Work Session 6/12/12
Timeline: Moratorium
6
2012
Issue 2nd
Quarter 3rd
Quarter 4th
Quarter
Moratorium
Ban
Operator
Agreement
Notes Passes 1st
reading –
5/15/12
Fails 2nd
reading -
6/5/12
Work Session 6/12/12
Staff develops Land
Use Code
regulations
6-month moratorium
passes on 1st
reading – 12/4/12
7-month moratorium
passes on 2nd
reading – 12/18/12
Timeline: Second Moratorium
7
2012
Issue 2nd
Quarter 3rd
Quarter 4th
Quarter
Moratorium
Ban
Operator
Agreement
Notes Passes 1st
reading –
5/15/12
Fails 2nd
reading -
6/5/12
Work Session 6/12/12
Staff develops Land
Use Code
regulations
6-month moratorium
passes on 1st
reading – 12/4/12
7-month moratorium
passes on 2nd
reading – 12/18/12
Prospect
Energy
Field in
operation since
1924; PE
purchases in
2009
After 1st
reading, 3rd
Party sale falls through;
Regulatory environment
rating change from
stable to uncertain
During moratorium,
unable to develop
fields.
Informed proved
reserves will be
downgraded by SEC.
Impacts reported by Prospect Energy
8
2013
Issue 1st Quarter
Moratorium
Ban
Operator
Agreement
Notes Hydraulic Fracturing Ban passes on 1st
reading
Adopted on 2nd
Reading
Staff meets with PE on 3/1/13 to develop an
Operator Agreement
Operator Agreement adopted 3/19/13; 1st
reading to exempt PE from ban and
moratorium passes
Timeline: Hydraulic Fracturing Ban
9
2013
Issue 1st Quarter 2nd
Quarter
Moratorium
Ban
Operator
Agreement
Notes Hydraulic Fracturing Ban passes on 1st
reading
Adopted on 2nd
Reading
Staff meets with PE on 3/1/13 to develop an
Operator Agreement
Operator Agreement adopted 3/19/13; 1st
reading to exempt PE from ban and
moratorium passes
2nd
Reading to lift
the ban and
moratorium
postponed from
4/16 to 4/23
Amended
Operator
Agreement also
postponed
Timeline: Hydraulic Fracturing Ban
10
2013
Issue 1st Quarter 2nd
Quarter
Moratorium
Ban
Operator
Agreement
Notes Hydraulic Fracturing Ban passes on 1st
reading
Adopted on 2nd
Reading
Staff meets with PE on 3/1/13 to develop an
Operator Agreement
Operator Agreement adopted 3/19/13; 1st
reading to exempt PE from ban and
moratorium passes
2nd
Reading to lift
the ban and
moratorium
postponed from
4/16 to 4/23
Amended
Operator
Agreement also
postponed
Prospect
Energy
Other mineral royalty owners affected
Bank writes down Fort Collins proved
reserves.
Operator
Agreement
remains on hold;
Bank awaits City
Council vote.
Impacts reported by Prospect Energy
11
Stakeholder Interests:
• Environmental
– Citizen Initiative
• Don’t Frack
the Fort
• Clean Water
Action
• Fort Collins
Sustainability
Group
• Mineral Interest
– Legal Action
• Governor
• COGA
• COGCC
• Dept. of Natural
Resources
• Local Operator
• Mineral Owners
12
89.33%
Rules City
Limits
Excluded
from
Drilling
(effective 8/1/13)
13
Percentage affected by adopting
Operator Agreement (with UDA)
COGCC Setback
Rules (500’)
With Operator
Agreement
City Limits 89.33% excluded 90.70% excluded
GMA 90.71% excluded 91.70% excluded
14
Well Activity
City Limits &
City-owned
Natural Areas
(Affected by the
Moratorium)
15
Existing
Wells in
Fort Collins
City Limits
Affected by the
Ban
16
Operator Agreement
• Listed as an local control option for Oil & Gas
during moratorium/LUC discussions
• First draft submitted 2-7-13 by Prospect Energy
– No UDA included; Erie model
• First meeting to negotiate 3-1-13
• Second draft submitted 3-6-13
– Included the UDA
– Contained LUC Option B elements
• Operator Agreement adopted 3-19-13
17
Fort Collins
Field &
Neighborhoods
18
UDA
Neighborhood
& Zoning Map
Potential for four
well pad sites
19
Industrial
Employment
School
Park
Low Density
Mixed-Use
Neighborhood
Medium
Density
Mountain Vista
Subarea Plan
Framework (2009)
20
Undeveloped
Acreage
Anheuser-
Busch
Future
School NE
Comm.
Park
Rabbit Brush
Park
Trailhead
Park
Mountain Vista
Subarea Plan
Framework (2009)
21
UDA
Future
School NE
Comm.
Park
Rabbit Brush
Park
Trailhead
Park
Anheuser-
Busch
Prospect Energy = Potential Well Pad
Conceptual Plan
22
UDA
Future
School NE
Comm.
Park
Rabbit Brush
Park
Trailhead
Park
Anheuser-
Busch
= Potential Well Pad
= Approx. 1000’ Setback
Prospect Energy
Conceptual Plan
23
Would Prospect remove the UDA
from the Operator Agreement?
• Prospect Energy will not enter into an amended
agreement including only the Fort Collins Field
• While Council approved the Agreement on
3-19-13 it does not become effective until
Prospect Energy is removed from the moratorium
and the ban.
• Prospect Energy will amend the Agreement to
provide 1000’ set-backs on the south and west
sides of the UDA
24
Fort Collins Field: Existing Wells
• 15 wells
• Oversight
– COGCC
– 142 inspections
since 2009
– 5 spill notices
since 2009
• Expansion
– Limited to existing
well pads
– 6-8 new wells
– 2-3 well pads used
for expansion
25
Fort Collins Field
Potential Areas
for Additional
Wells
26
Comparison Table: OA vs. Federal
and State
• Council asked Staff to evaluate areas in the
agreement that are equal to or exceed State and
Federal guidelines
– Air and Water Quality meet or exceed
regulations
– Notice requirements exceed regulations
– Set-backs and chemical disclosure exceed
– See Attachment #3 for more details
27
Legislation 2013
• SB13-202
– Inspections
• SB13-275
– Interim Committee
• HB13-1267
– Increased fines
• HB13-1268
– Ownership
disclosure
• HB13-1269
– Conflict Interest
• HB13-1273
– Impact fee
• HB13-1275
– Failed
• HB13-1278
– Oil spills
• HB13-1316
– Groundwater
28
Future Operator Agreements
• Any ideas, suggestions for next
agreement?
29
Items for City Council
Consideration:
Option #1:
If Council considers exempting Prospect Energy on
Second Reading should Council:
– Act to amend the Operator Agreement to
include greater set-back requirements in the
UDA, and
– Prohibit any re-entry into the plugged and
abandoned wells in the Fort Collins Field?
30
Items for City Council
Consideration:
Option #2
Should the UDA be removed from the Agreement
and exemption from the moratorium and ban limited
to the Fort Collins Field?
– If so, should the Agreement be amended to
prohibit re-entry into plugged and abandoned
wells.
31
Items for City Council
Consideration:
• Would Council consider moving forward with Land
Use Code (LUC) amendments to address
reciprocal set-backs and requirements to identify
plugged and abandoned wells prior to
development?
• Should staff continue with LUC development
regulations now that the ban is in place?
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ATTACHMENT 5
DATE: March 19, 2013
STAFF: Laurie Kadrich, Lindsay Ex
Dan Weinheimer
AGENDA ITEM SUMMARY
FORT COLLINS CITY COUNCIL 28
SUBJECT
Items Relating to an Operator Agreement between the City and Prospect Energy, LLC.
A. Resolution 2013-024 Approving an Oil and Gas Operator Agreement Between the City and Prospect Energy,
LLC.
B. First Reading of Ordinance No. 057, 2013, Terminating the Moratorium Imposed by Ordinance No. 145, 2012
with Respect to Oil and Gas Operations Conducted under an Oil and Gas Operator Agreement Between the
City and Prospect Energy, LLC.
EXECUTIVE SUMMARY
Council is considering the approval an Operator’s Agreement with Prospect Energy that would permit Prospect Energy
to conduct oil and gas operations in the city limits. The terms of the Agreement ensure stringent public health and
safety measures are in place through Best Management Practices (BMPs),which generally exceed current
requirements mandated by the Colorado Oil and Gas Conservation Commission (COGCC), and provide strict controls
on the release of methane gases and other volatile organic compounds (VOCs). If the Agreement is approved,
Council will consider adopting Ordinance No. 057, 2013 removing the Moratorium imposed by Ordinance No. 145,
2012 with respect to an Oil and Gas Operator Agreement with Prospect Energy.
BACKGROUND / DISCUSSION
Oil and gas production is currently limited to the Fort Collins Field (Attachment #2), located in the northeast portion
of the city. The Fort Collins Field is regulated by the COGCC and has been in production since about 1925. In the city
limits, the field consists of seven oil producing wells and seven injecting wells, all of which are managed by one
operator, Prospect Energy. Prospect Energy is unable to drill new wells since Ordinance No. 145 (Moratorium) was
approved December, 2012. In addition, the company is no longer able to utilize hydraulic fracturing since the adoption
of Ordinance No. 032. Prospect Energy also holds certain leasehold interests within the City described as the
Undeveloped Area (UDA), as depicted in Attachment #2. Council allowed for exemptions from Ordinance No. 032
provided a Council approved operator agreement was in place that includes strict controls on methane release and
adequately protects the public health, safety and welfare of the city. The recommended agreement with Prospect
Energy contains such provisions. A summary of those provisions follows with more detailed information contained
in Exhibit A to Resolution 2013-024.
Summary of Controls for Methane Gas
Prospect Energy captures all gases from production and tanks and routes them to a thermal oxidizer for destruction.
This method currently results in over 99% of all emissions being destroyed. The COGCC rule requires 95% of
emissions be destroyed. This proposed Agreement requires at least 98% destruction and use of a thermo-oxidizer
for emission destruction to be utilized for any new wells in the Fort Collins Field. In the UDA, Prospect Energy will
capture and destroy emissions at the well (Exhibit A -Section 21 (b)) or send through a thermal oxidizer. Prospect
Energy also agrees to comply with:
• Environmental Protection Agency (EPA) Method 21 (Section 21 – Exhibit A)
• No uncontrolled venting of methane (Section 21 – Exhibit A)
• Minimal flaring during drilling and completions (Section 21 – Exhibit A)
• Develop and maintain a Leak Detection and Repair (LDAR) (Section 21 – Exhibit A)
N Use a Forward-Looking Infrared (FLIR) camera
N Notify the City for observation of testing
• Green Completions (Section 22- Exhibit A)
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March 19, 2013 -2- ITEM 28
• Containment of all produced water or flowback fluids and no permanent storage of waste products (Section
45 – Exhibit A)
Summary of Best Management Practices
(Public Health and Safety Measures – details in Exhibit A)
Setbacks – Any new wells drilled will conform to the current COGCC rules which will be five hundred (500) feet from
any building and one thousand (1,000) feet from any institutional facility beginning August 1, 2013. However, in the
Fort Collins Field, new wells must be constructed on existing well pads because of an existing Surface Use Agreement
(SUA), which conform to previous COGCC setbacks. Those well pads are located near or within Water’s Edge,
Richard’s Lake and Hearthfire subdivisions.
Conceptual Review – No less than thirty (30) days prior to the submission of an Application for a Permit to Drill (APD)
(note: APD is the COGCC permitting process), Prospect Energy will schedule a meeting with the City to review the
proposed new well or drilling activity. The goal of this meeting would be for staff and the applicant to review the
proposed oil and gas operation in a manner that ensures compliance with the operator agreement and applicable state
and federal regulations. This pre-submittal meeting will also allow the applicant and staff to explore site-specific
concerns, to discuss project impacts and potential mitigation methods including field design and infrastructure
construction to minimize impacts, to discuss coordination of field design with other existing or potential development
and operators, to identify sampling and monitoring plans for air and water quality, and other elements of the operator
agreement as contained in Exhibit A.
Community Notice –Prospect Energy must provide community and staff notice. Prior to an APD, the Agreement
specifies mailed notice, posted notice, neighborhood meetings and also a notification to the public prior to the
commencement of drilling. Consistent with Option “B” of the proposed Land Use Code regulations, notice is required
for any oil and gas operation to surface owners within two thousand six hundred forty (2,640) feet of the parcel and
to persons registered in writing with the Planning Director.
Closed Loop Pitless Systems – are required for the Containment and/or Recycling of Drilling and Completion Fluids.
Wells shall be drilled, completed and operated using closed loop, pitless systems for containment and/or recycling of
all drilling, completion, flowback and produced fluids.
Chemical disclosure and storage - the City will be provided, in table format, the name, Chemical Abstract Services
(CAS) number, volume, storage, containment and disposal method for all drilling and completion chemicals (solids,
fluids, and gases) used on the well pad. Fracture chemicals will be uploaded onto the Frac Focus website. The City
will also post such information on the City website. The Company will not permanently store hydraulic fracturing
chemicals, flowback from hydraulic fracturing, or produced water in the current City limits.
Electric equipment – Prospect Energy will be required to utilize electric-powered engines for motors,
compressors, and drilling equipment and for pumping systems when feasible in order to mitigate noise and reduce
emissions.
Emergency preparedness plan – Prospect Energy is required to develop an emergency preparedness plan for each
specific facility site, which shall be in compliance with the International Fire Code. Among other provisions, the plan
shall be filed with the Poudre Fire Authority and the City of Fort Collins Office of Emergency Management and updated
on an annual basis or as conditions change (responsible field personnel change, ownership changes, etc.). The plan
includes a provision establishing a process by which the operator engages with the surrounding neighbors to educate
them on the risks of the on-site operations and to establish a process for surrounding neighbors to communicate with
Prospect Energy.
Air Quality – Prospect Energy must comply with emissions regulations as required by State and Federal laws. In
addition, there will be no uncontrolled venting of methane. All gas vapors will be captured to the extent practicable.
Vapor capture equipment will operate at 98% efficiency or better. There are no gas sales lines in the Fort Collins field
because the quantity and quality of gas is low and not marketable. If salable gas were to occur in the UDA, a sales
line would be constructed. The Operator will develop and maintain a leak detection and component repair (LDAR)
program according to EPA Method 21 for equipment used in permanent operations. LDAR will be performed on newly
installed equipment, and then on an annual basis. A forward-looking infrared (FLIR) camera will be used as the
preferred implementation method of EPA Method 21 as available from the state; if unavailable, other methods will be
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used in compliance with this method. Upon request from the City, Prospect Energy will implement EPA Method 21
should additional concerns arise. At least once per year, Prospect Energy will notify the City prior to FLIR camera use
in case the City wishes to observe the method.
Prospect Energy and the City will split the costs of baseline sampling and analytical work performed by a third party
consultant agreeable to both parties over a five (5) day sampling period. Prospect Energy will conduct air sampling
during well completion. Periodic air monitoring will be performed for hydrogen sulfide (H2S), a hazardous air pollutant
(HAP). Prospect Energy will perform field monitoring using the Jerome 631 XC or equivalent instrument annually, or
until such time that odors are not detected past the Fort Collins Tank Battery fence line in City Limits. The City may
require additional air monitoring as needed to respond to emergency events such as spill, process upsets, or
accidental releases or in response to odor complaints in City Limits.
During well completion, the capture and beneficial use of natural gas is preferred over flaring. However since the Fort
Collins field has so little natural gas it is not reasonable to capture the gas and as such minimal flaring will occur. What
flaring does occur will be monitored twenty-four (24) hours per day. During production the flare shall be fired with
natural gas and shall be operated with a ninety eight (98) percent or higher VOC destruction efficiency. An automatic
pilot system shall be used when feasible. Other ignition systems will include the installation and operation of a
telemetry alarm system or an on-site visible indicator showing proper function.
Water Quality Monitoring Plan – Prospect Energy shall comply with COGCC Rule 609. In summary, this requires
pre- and post-drilling testing. The rules require oil and gas operators to sample all “Available Water Sources” (owner
has given consent for sampling and testing and has consented to having the sample data obtained made available
to the public), with a cap of four (4) water sources, within one-half (1/2) mile radius of a proposed well, multi-well site,
or dedicated injection well. Water sources include registered water wells, permitted or adjudicated springs, and certain
monitoring wells. Prospect Energy agrees to the following requirements above and beyond the COGCC requirements:
analyzing for dissolved metals as indicated in the Land Use Code; sampling intervals to be baseline (before drilling),
post-drilling at one, three, and six years. Analytical results will be shared with the COGCC, the City, and the landowner.
All spills, for new and existing wells, shall be managed in accordance with COGCC regulations.
Soil Gas Monitoring – The City, at its discretion, may conduct soil gas monitoring to assess well casing integrity. This
would be typically completed within 90 days of new well completion. The City shall notify the Operator prior to entering
the site for soil gas monitoring.
Spills - The Company shall comply with COGCC Rule 609 “Spills and Releases”, and notify the City and whenever
there is notification to the COGCC. The Company shall also copy the City on any written correspondence to the
COGCC or other regulatory authority.
Transportation and circulation - Prospect Energy shall include in their applications detailed descriptions of all
proposed access routes for equipment, water, sand, waste fluids, waste solids, mixed waste, and all other material
to be hauled on the public streets and roads of the City. The submittal shall also include the estimated weights of
vehicles when loaded, a description of the vehicles, including the number of wheels and axles of such vehicles, trips
per day and any other information required by the Traffic Engineer. Preliminary information is required for this item
for the Conceptual Review meeting, in accordance with Exhibit A. The Company shall comply with all Transportation
and Circulation requirements as contained in the Land Use Code as may be reasonably required by the City’s Traffic
Engineer.
Wastewater and Waste Management - There will be minimal waste water in the Fort Collins Field, as there will be
no tank batteries (produced water and oil storage) in the City for the Fort Collins field. As described in “Closed Loop
System” and “Green Completions,” there is no discharge of fluids and fluids are contained. Storage, transportation,
and treatment of wastes during well drilling and completion are handled by third party contractors, under the direction
of the Operator. Waste is stored in tanks, transported by tanker truck, and disposed of at licensed disposal facilities.
In the UDA, new secondary containment shall be constructed of steel, with sufficient perimeter and height to hold one
and one-half (1.5) times the volume of the largest tank and sufficient freeboard to prevent overflow. No potential
ignition sources shall be installed inside the secondary containment area unless the containment enclosed a fired
vessel. The requirements for secondary containment will meet the Fort Collins Stormwater Criteria Manual. No land
treatment of oil impacted or contaminated drill cuttings are permitted. The use of a closed loop drilling system
precludes discharge of produced water or flowback to the ground or the use of pits. Produced water or flowback will
not be used for dust suppression. A copy of the field’s Spill Prevention, Control, and Countermeasure Plan (SPCC)
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will be given to the City, which describes spill prevention and mitigation practices. The Company will provide the City
documentation of waste disposal and its final disposition.
Water supply – Prospect Energy will identify in the site plan its source for water used in both the drilling and
production phases of operations. The sources and amount of water used in the City shall be documented and this
record shall be provided to the City annually or sooner, upon request of the City Manager. The disposal of water used
on site shall also be detailed including anticipated haul routes, approximate number of vehicles needed to supply and
dispose of water, and the final destination for water used in operation.
Comparison with LUC Option “B”
During Council deliberations, direction was given to staff to proceed with negotiations for an Agreement with Prospect
Energy that was consistent with the Land Use Code provisions reviewed by Council in Ordinance No. 144. While
Ordinance No. 144 was not adopted it contained regulation for oil and gas exploration and production. One of the
options was for a single-track development review process that generally contained more stringent regulations than
currently required by the COGCC and was described as Option “B”. Staff prepared a matrix illustrating how the
proposed agreement with Prospect Energy meets or exceeds requirements in Option B (Attachment 3).
Other Conditions of the Agreement
Through this Agreement, Prospect Energy will comply with all BMPs for New Wells as defined as a “Company-
operated well spudded during the term of this agreement, and located on either a currently existing well pad or a new
well pad that is located within the City limits.” In other words, BMPs will not apply to previously developed wells either
inside or outside the city limits owned by Prospect Energy. Approving this agreement requires Prospect Energy to
comply with the terms of the Agreement and removes any further development review permitting process. However,
the Agreement provides for public and staff notice, staff review and periodic inspections of any New Wells. Prospect
Energy will also be required to use the most stringent regulation in effect whether the regulation is a State, Federal
or required by this Agreement.
The term proposed in the Agreement is for five (5) years with successive five (5) year terms, until either Party wishes
to terminate the Agreement. The Agreement is binding to anyone who acquires either the Fort Collins Field or the
Undeveloped Acreage (UDA). There is also a non-performance clause in the Agreement which allows for mediation
and court remedies in the event the performance is not “cured.”
If Council approves this agreement, Prospect Energy has indicated they would continue operating the Fort Collins Field
and potentially increase the number of wells by six (6) to eight (8). As required by a SUA all new wells will be drilled
from existing well pads thus minimizing any future surface impact from the new drilling. It is likely that hydraulic
fracturing would be utilized in the operation of the field. This fracturing would not be in conjunction with horizontal
drilling and does not require intensive water usage seen in other natural gas developments. For example, the last six
(6) hydraulic fracturing processes in the Muddy J Formation - Fort Collins Field averaged 114,129 gallons of water
compared to 380,272 for a Wattenberg Vertical well or a Wattenberg Horizontal well requiring 2,992,374 gallons (data
provided by COGCC). In addition, it is likely that the Fort Collins Field will not produce any marketable gas due to the
extremely low quantity of gas contained in the field.
Prospect Energy also holds certain leasehold interests within the City described as the Undeveloped Area (UDA) as
depicted in (Attachment #2). If Council approves this agreement Prospect Energy intends to explore oil and gas
development in the UDA. It should be noted that Prospect Energy has Surface Use Agreements with the surface
owners for the Fort Collins Field (since 1988, amended 2001) and the UDA (2011). Those agreements govern any
potential well locations and associated facilities within the Subdivisions and other specified terms, including, but not
limited to, landscaping and fencing around wells and associated production equipment.
FINANCIAL / ECONOMIC IMPACTS
A true triple bottom line analysis includes an assessment of environmental, social, and economic impacts. Staff
analysis to date has focused on potential and possible environmental impacts if hydraulic fracturing is allowed. Staff
was unable to conclusively determine financial impacts of any health and safety hazard related to hydraulic fracturing
due to the significant number of variables that relate to the hydraulic fracturing process, transportation of material and
waste produced, and removal of waste materials. A social impact analysis has not yet been undertaken for this
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discussion. It is assumed that social impacts of hydraulic fracturing are discussed and addressed in terms of concerns
about health impacts, impacts to property and housing values, and quality of life.
Prospect Energy indicates that without this Agreement they would no longer be able to adequately operate the Fort
Collins Field or expand into other existing lease holdings currently within the city limits.
ENVIRONMENTAL IMPACTS
Documented in Agenda Item Summary (AIS) 26, prepared for Council Hearing February 19, 2013.
STAFF RECOMMENDATION
Staff recommends adoption of Resolution 2013-024. If adopted, staff recommends exempting Prospect Energy from
the moratorium enacted by Ordinance No. 145, 2013.
ATTACHMENTS
1. Vicinity Map
2. Fort Collins Field & UDA
3. Matrix Comparing Agreement & LUC Option B
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 1
Oil and Gas
Operator Agreement Comparison with Colorado Oil and Gas Conservation Commission Regulations
How this Matrix is Organized: This matrix compares the proposed Operator Agreeement with the regulations from the Colorado Oil and Gas Conservation
Commission (COGCC). The first column includes the Best Management Practices from Appendix A (or where noted, the body of the Operator Agreement) as
compared to the different standards from the COGCC.
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
1: General Application Procedure
Operator Agreement Body:
4. City Regulatory Approvals. The Company shall not be required to
obtain any project development plan or final plan approval from the City
to conduct its oil and gas operations within the City limits, as long as the
Company complies with the terms and conditions contained herein, and
this Agreement shall control all oil and gas operations conducted by the
Company within the City limits. Prior to the submission of a COGCC Form
2 and/or Form 2A to the COGCC, the Company shall meet with the City
to review the proposed oil and gas operation to ensure compliance with
this Agreement, all applicable state and federal regulations, and any site‐
specific concerns, which concerns may include overall project impacts and
economically and technically feasible mitigation measures or BMPs
related to field design and infrastructure construction to minimize
potential adverse impacts to public health, safety and welfare. At such
time, if at all, that the City and Larimer County, Colorado (the “County”)
enter into a written agreement that authorizes the City to regulate the oil
and gas operations of the Company within the Growth Management
Area, such operations shall thereafter be governed by the terms and
conditions of this Agreement and shall be subject to the City’s regulatory
authority as provided in this Agreement. “Growth Management Area”
shall be as described in that certain Intergovernmental Agreement
entered into by the City of Fort Collins and Larimer County on June
24,2008, nunc pro func [sic] October 17, 2006.
Appendix A
1. Regulations. The Company shall comply with all applicable state and
federal regulations in addition to the terms of this agreement and the
COGCC issues a Form 2 and Form 2A permit but allows local government permitting
and site review.
Form 2 is the Application for Permit to Drill (APD) and Form 2A is the Oil and Gas
Location Assessment which reviews each well/well pad’s suitability for permitting.
COGCC rules adopted January 9, 2013 (in effect August 1, 2013) provide for local
neighborhood and surface owner meetings as conditions for drilling within certain
distances of occupied buildings.
(New rules) 305. FORM 2 AND 2A APPLICATION PROCEDURES
a. Pre‐application notifications. For Oil and Gas Locations proposed within an Urban
Mitigation Area or within the Buffer Zone Setback, an Operator shall provide a
“Notice of Intent to Conduct Oil and Gas Operations” to the persons specified herein
not less than thirty (30) days prior to submitting a Form 2A Oil and Gas Location
Assessment to the Director.
(1) Urban Mitigation Area Notice to Local Government. For Oil and Gas Locations
within an Urban Mitigation Area, an Operator shall notify the local government in
writing that it intends to apply for an Oil and Gas Location Assessment. Such
notice shall be provided to the Local Governmental Designee in those jurisdictions
that have designated an LGD, and to the planning department in jurisdictions that
have no LGD. The notice shall include a general description of the proposed Oil
and Gas Facilities, the location of the proposed Oil and Gas Facilities, the
anticipated date operations (by calendar quarter and year) will commence, and
that an additional notice pursuant to Rule 305.c. will be sent by the Operator. This
notice shall serve as an invitation to the local government to engage in discussions
with the Operator regarding proposed operations and timing, local government
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 2
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
Best Management Practices included below. Whichever regulation is
most stringent shall apply.
3. Conceptual Review. No less than thirty (30) days prior to the
submission of an Application for a Permit to Drill, the Company agrees to
schedule a meeting with the City to review the proposed new well or
drilling activity. The goal of this meeting shall be for staff and the
applicant to review the proposed oil and gas operation in a manner that
ensures compliance with the operator agreement and applicable state
and federal regulations. This pre‐submittal meeting shall also allow the
applicant and staff to explore site‐specific concerns, to discuss project
impacts and potential mitigation methods including field design and
infrastructure construction to minimize impacts, to discuss coordination
of field design with other existing or potential development and
operators, to identify sampling and monitoring plans for air and water
quality, and other elements of the operator agreement as contained in
Appendices A and B. Based upon the foregoing, applicants are
encouraged to conduct the pre‐submittal meeting with the City prior to
completing well siting decisions, to the extent reasonably feasible.
jurisdictional requirements, and opportunities to collaborate regarding site
development. A local government may waive its right to notice under this
provision at any time by providing written notice to an Operator and the Director.
(2) Exception Zone and Buffer Zone Setback Notice to the Surface Owner and
Building Unit Owners. For Oil and Gas Locations proposed within the Exception
Zone or Buffer Zone Setback, Operators shall notify the Surface Owner and the
owners of all Building Units that a permit to conduct Oil and Gas Operations is
being sought. The Operator may rely on the county assessor tax records to
identify the persons entitled to receive the Notice.
Notice shall include the following:
A. The Operator’s contact information;
B. The location and a general description of the proposed Well or Oil and Gas
Facilities;
C. The anticipated date operations will commence (by calendar quarter and
year);
D. The Local Governmental Designee’s (LGD) contact information;
E. Notice that the Building Unit owner may request a meeting to discuss the
proposed operations by contacting the LGD or the Operator; and
F. A “Notice of Comment Period” will be sent pursuant to Rule 305.c. when the
public comment period commences.
2: Setbacks
2. Setbacks for New Wells. It is the intent of the Company to maximize
equipment and wellhead setbacks from occupied buildings and
residences beyond the setbacks required by the COGCC to the extent
feasible and practicable.
The Parties recognize that a portion of the Field is within the Fort Collins
City Limits and as such, development has occurred within the already
established Field. The surface owner has obtained permitted plats for
residential areas in the vicinity of existing oil and gas activities, including a
constructed city park and contemplated building units and public roads
within three hundred fifty (350) feet of an existing well. Further, the
Parties acknowledge that the Commission rules require a minimum of five
hundred (500) feet safety setback for New Well construction from a
building unit and one thousand feet (1,000) from a high occupancy
COGCC modified setback rules on January 9, 2013 and they go into effect August 1,
2013.
604. SETBACK AND MITIGATION MEASURES FOR OIL AND GAS FACILITIES,
DRILLING, AND WELL SERVICING OPERATIONS
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 3
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
building.
Any New Wells drilled in the UDA shall conform to the Commission
setback rules then in effect, except for any New Well in the UDA drilled
before August 1, 2013, shall be subject to the Commission setback rules
to take effect on August 1, 2013. In the Fort Collins Field, New Wells shall
be constructed on existing Well Pads, which due to previous setback
requirements, and City approval of residential development, do not
conform to five hundred (500) feet setbacks, and are given an exemption
from the Commission in the Rules now in effect.
The Parties recognize the existence of a Surface Use Agreement (the
“SUA”) between the Company and the surface owner which expressly
governs the locations of wells and associated facilities within the Water’s
Edge, Richard’s Lake and Hearthfire subdivisions (the “Subdivisions”), and
that certain terms found in the SUA may affect Commission setbacks and
other Commission rules.
2A or associated Form 2, or obtains a variance pursuant to Rule 502;
and
ii. the Operator certifies it has complied with Rules 305.a, 305.c., and 306.e.;
and
iii. the Form 2A or Form 2 contains conditions of approval related to site
specific mitigation measures sufficient to eliminate, minimize or mitigate
potential
adverse impacts to public health, safety, welfare, the environment, and
wildlife to the maximum extent technically feasible and economically
practicable; or
iv. the Oil and Gas Location is approved as part of a Comprehensive Drilling
Plan pursuant to Rule 216.
B. Non‐Urban Mitigation Area Locations. Except as provided in subsection
604.b., below, the Director shall not approve a Form 2 or Form 2A proposing to
locate a Well or a Production Facility within an Exception Zone Setback not in
an Urban
Mitigation Area unless the Operator certifies it has complied with Rules 305.a.,
305.c., and 306.e., and the Form 2A or Form 2 contains conditions of approval
related to site specific mitigation measures sufficient to eliminate, minimize or
mitigate potential adverse impacts to public health, safety, welfare, the
environment, and wildlife to the maximum extent technically feasible and
economically practicable.
(2) Buffer Zone Setback. No Well or Production Facility shall be located one
thousand (1,000) feet or less from a Building Unit until the Operator certifies it
has complied with Rule 306.e. and the Form 2A or Form 2 contains conditions of
approval related to site specific mitigation measures as necessary to eliminate,
minimize or mitigate potential adverse impacts to public health, safety, welfare,
the environment, and wildlife.
(3) High Occupancy Buildings. No Well or Production Facility shall be located one
thousand (1,000) feet or less from a High Occupancy Building Unit without
Commission approval following Application and Hearing. Exception Zone Setback
mitigation measures pursuant to Rule 604.c. shall be required for Oil and Gas
Locations within one thousand (1,000) feet of a High Occupancy Building, unless
the Commission determines otherwise.
(4) Designated Outside Activity Areas. No Well or Production Facility shall be
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 4
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
located three hundred fifty (350) feet or less from the boundary of a Designated
Outside Activity. The Commission, in its discretion, may establish a setback of
greater than three hundred fifty (350) feet based on the totality of circumstances.
Buffer Zone Setback mitigation measures pursuant to Rule 604.c. shall be
required for Oil and Gas Locations within one thousand (1,000) feet of a
Designated Outside Activity Area, unless the Commission determines otherwise.
(5) Maximum Achievable Setback. If the applicable setback would extend beyond
the area on which the Operator has a legal right to locate the Well or Production
Facilities, the Operator may seek a variance under Rule 502.b. to reduce the
setback to the maximum achievable distance.
3: Notice
4. Mailed Notice. The City shall mail notice of the pending Application for
a Permit to Drill no more than ten (10) days after the conceptual review
meeting has taken place. The Company shall reimburse the City for the
costs of the mailing. Owners of record shall be ascertained according to
the records of the Larimer County Assessor’s Office, unless more current
information is made available in writing to the City prior to the mailing of
the notices. Notice of the pending application shall include reference to
the neighborhood meeting, if applicable, and be made as follows:
⼀ To the surface owners of the parcels of land on which the oil and
gas operation is proposed to be located;
⼀ To the surface owners of the parcels of land within five hundred
(500) feet of a proposed gathering line;
⼀ To the surface owners of the parcels of land within two thousand
six hundred forty (2,640) feet of the parcel on which the oil and gas
operation is proposed to be located; and
⼀ To persons registered in writing with the City as representing
bona fide neighborhood groups and organizations and homeowners'
associations within the area of notification.
(5) Application Notice to Surface Owners and Surrounding Landowners. This
subsection shall apply to oil and gas operations instead of the notice provisions
contained in Section 2.2.6 of this Land Use Code.
(a) The Director shall mail notice no less than five (5) days after the
application has been deemed complete by the Director. Notice of the
application shall be made as follows:
1. To the surface owners of the parcels of land on which the oil and gas
operation is proposed to be located;
2. To the surface owners of the parcels of land within five hundred
(500) feet of a proposed gathering line;
3. To the surface owners of the parcels of land within two thousand
six hundred forty (2,640) feet of the parcel on which the oil and gas
operation is proposed to be located; and
4. To persons registered in writing with the Director as representing bona
fide neighborhood groups and organizations and homeowners' associations
within the area of notification.
(b) The Director shall also provide public notice of the application received
by posting the application on the City’s website for public review, but excluding
any information required by the Commission to be kept confidential.
(c) Notice shall also be provided by the Director of the neighborhood meeting
and public hearing in accordance with Section 2.2.6 of this Land Use Code.
(6) Posting Site. The Applicant shall post a sign on the site in a location
visible to the public (i.e., visible from a public road) stating that a development plan
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 5
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
5. Posted Notice. The real property proposed to be developed shall also
be posted with a sign, giving notice to the general public of the proposed
development. For parcels of land exceeding ten (10) acres in size, two (2)
signs shall be posted. The size of the sign(s) required to be posted shall
be as established in the Supplemental Notice Requirements of Section
2.2.6(D) of the City’s Land Use Code. Such signs shall be provided by the
City and shall be posted on the subject property in a manner and at a
location or locations reasonably calculated by the City to afford the best
notice to the public, which posting shall occur within ten (10) days
following the Conceptual Review meeting.
6. Neighborhood Meetings. A neighborhood meeting shall be required
on any New Well, even on existing Well Pads, that requires an
Application for a Permit to Drill. Notice of the neighborhood meeting
shall be provided in accordance with Sections 4 and 5 above. The
Company shall attend the neighborhood meeting. The City shall be
responsible for scheduling and coordinating the neighborhood meeting
and shall hold the meeting in the vicinity of the proposed development. A
written summary of the neighborhood meeting shall be prepared by the
City. The written summary shall be included in the Local Government
Designee (LGD) comments provided to the COGCC at the time of the
public hearing or permit review to consider the Application for a Permit
to Drill.
7. Notification to the City and the public regarding commencement of
operations. Prior to the commencement of any new drilling operations,
the Company shall provide to the City Manager for posting on the
website the information outlined in Appendix B regarding
commencement of operations, which the Company may revise from
time‐to‐time during operations, with prior approval from the City.
review application has been applied for and providing the phone number of the
Planning Department where information regarding the application may be
obtained. All signs for oil and gas operations shall be twelve (12) square feet in size.
For parcels of land exceeding ten (10) acres in size, two (2) signs shall be posted.
Such signs shall be provided by the Director and shall be posted on the subject
property in a manner and at a location or locations reasonably calculated by the
Director to afford the best notice to the public, which posting shall occur within
fourteen (14) days following submittal of a development application to the Director.
4: General Requirements
8. Inspections. The City shall have the right to inspect the Company’s
operations and its sites during business hours, upon the giving of twenty‐
four (24) hour advance written notice to the Company.
COGCC maintains an inspection protocol and scheduling based upon several factors.
This inspection protocol is not codified in a rule. Each area has a lead field inspector
whose job is to inspect a site at least once during well completion, based upon
complaints or in a rotation. This inspector may cite an operator for violations of
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Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 6
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
COGCC rules and has access to the well site for such inspections without prior
notice.
9. Containment berms. The Company shall utilize steel‐rim berms around
tanks and separators at new Well Pads. All berms and containment
devices shall be inspected at regular intervals and maintained in good
condition. No potential ignition sources shall be installed inside the
secondary containment area unless the containment area encloses a fired
vessel. Refer to American Petroleum Institute Recommended Practices,
API RP ‐ D16.
a) Containment berms shall be constructed of steel rings, designed
and installed to prevent leakage and resist degradation from erosion
or routine operation.
b) Secondary containment for tanks shall be constructed with a
synthetic or engineered liner that contains all primary containment
vessels and flowlines and is mechanically connected to the steel ring
to prevent leakage.
c) For locations within five hundred (500) feet and upgradient of a
surface water body, tertiary containment, such as an earthen berm, is
required around production facilities.
Rule 604.a.4
Berms or other secondary containment devices shall be constructed around crude
oil, condensate, and produced water tanks to provide secondary containment for
the largest single tank and sufficient freeboard to contain precipitation. Berms and
secondary containment devices and all containment areas shall be sufficiently
impervious to contain any spilled or released material. Berms and secondary
containment devices shall be inspected at regular intervals and maintained in good
condition. No potential ignition sources shall be installed inside the secondary
containment area unless the containment area encloses a fired vessel.
Rule 603.e.12 DRILLING AND WELL SERVICING OPERATIONS AND HIGH DENSITY
AREA RULES
Berm construction. Berms or other secondary containment devices in high density
areas shall be constructed around crude oil, condensate, and produced water
storage tanks and shall enclose an area sufficient to contain and provide secondary
containment for one‐hundred fifty percent (150%) of the largest single tank. Berms
or other secondary containment devices shall be sufficiently impervious to contain
any spilled or released material. No more than two (2) crude oil or condensate
storage tanks shall be located within a single berm. All berms and containment
devices shall be inspected at regular intervals and maintained in good condition. No
potential ignition sources shall be installed inside the secondary containment area
unless the containment area encloses a fired vessel. Refer to American Petroleum
Institute Recommended Practices, API RP ‐ D16.
10. Closed Loop Pitless Systems for the Containment and/or Recycling of
Drilling and Completion Fluids. Wells shall be drilled, completed and
operated using closed loop pitless systems for containment and/or
recycling of all drilling, completion, flowback and produced fluids.
(New Rules)
604.c. Mitigation Measures.
The following requirements apply to an Oil and Gas Location within a Designated
Setback Location and such requirements shall be incorporated into the Form 2A or
associated Form 2 as Conditions of Approval.
B. Closed Loop Drilling Systems – Pit Restrictions.
i. Closed loop drilling systems are required within the Buffer Zone Setback.
ii. Pits are not allowed on Oil and Gas Locations within the Buffer Zone Setback,
except fresh water storage pits, reserve pits to drill surface casing, and emergency
pits as defined in the 100‐Series Rules.
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Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
iii. Fresh water pits within the Exception Zone shall require prior approval of a Form
15 pit permit. In the Buffer Zone, fresh water pits shall be reported within 30‐days of
pit construction.
iv. Fresh water storage pits within the Buffer Zone Setback shall be conspicuously
posted with signage identifying the pit name, the operator’s name and contact
information, and stating that no fluids other than fresh water are permitted in the
pit. Produced water, recycled E&P waste, or flowback fluids are not allowed in fresh
water storage pits.
v. Fresh water storage pits within the Buffer Zone Setback shall include emergency
escape provisions for inadvertent human access.
11. Anchoring. All equipment at drilling and production sites shall be
anchored to the extent necessary to resist flotation, collapse, lateral
movement, or subsidence. All guy line anchors left buried for future use
shall be identified by a marker of bright color not less than four (4) feet in
height and not greater than one (1) foot east of the guy line anchor.
Rule 603.k. Statewide equipment anchoring requirements.
All equipment at drilling and production sites in geological hazard and floodplain
areas shall be anchored to the extent necessary to resist flotation, collapse, lateral
movement, or subsidence.
603.e.(11) (In high density areas) Guy line anchors. All guy line anchors left buried
for future use shall be identified by a marker of bright color not less than four (4)
feet in height and not greater than one (1) foot east of the guy line anchor.
12. Burning. No open burning shall occur on the site of any oil and gas
operation.
Rule 603.j. Statewide equipment, weeds, waste, and trash requirements.
All locations, including wells and surface production facilities, shall be kept free of
the following: equipment, vehicles, and supplies not necessary for use on that lease;
weeds; rubbish, and other waste material. The burning or burial of such material on
the premises shall be performed in accordance with applicable local, state, or
federal solid waste disposal regulations and in accordance with the 900‐Series Rules.
In addition, material may be burned or buried on the premises only with the prior
written consent of the surface owner.
13. Chains. Traction chains from heavy equipment shall be removed
before entering a City street.
Staff did not find COGCC regulations addressing chains.
14. Chemical disclosure and storage. The City shall be provided, in table
format, the name, Chemical Abstracts Service (CAS) number, volume,
storage, containment and disposal method for all drilling and completion
chemicals (solids, fluids, and gases) used on the Well Pad. Fracture
chemicals shall be uploaded onto the Frac Focus website. The Company
shall not permanently store hydraulic fracturing chemicals, flowback from
205A. HYDRAULIC FRACTURING CHEMICAL DISCLOSURE.
a. Applicability. This Commission Rule 205a applies to hydraulic fracturing
treatments performed on or after April 1, 2012.
b. Required disclosures.
(1) Vendor and service provider disclosures. A service provider who performs
any part of a hydraulic fracturing treatment and a vendor who provides
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Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 8
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
hydraulic fracturing, or produced water in the City limits. hydraulic fracturing additives directly to the operator for a hydraulic fracturing
treatment shall, with the exception of information claimed to be a trade secret,
furnish the operator with the information required by subsection
205A.b.(2)(A)(viii) – (xii) and subsection 205A.b.(2)(B), as applicable, and with
any other information needed for the operator to comply with subsection
205A.b.(2). Such information shall be provided as soon as possible within 30
days following the conclusion of the hydraulic fracturing treatment and in no
case later than 90 days after the commencement of such hydraulic fracturing
treatment.
(2) Operator disclosures.
A. Within 60 days following the conclusion of a hydraulic fracturing treatment,
and in no case later than 120 days after the commencement of such hydraulic
fracturing treatment, the operator of the well must complete the chemical
disclosure registry form and post the form on the chemical disclosure registry,
including:
i. the operator name;
ii. the date of the hydraulic fracturing treatment;
iii. the county in which the well is located;
iv. the API number for the well;
v. the well name and number;
vi. the longitude and latitude of the wellhead;
vii. the true vertical depth of the well;
viii. the total volume of water used in the hydraulic fracturing treatment of
the well or the type and total volume of the base fluid used in the hydraulic
fracturing treatment, if something other than water;
ix. each hydraulic fracturing additive used in the hydraulic fracturing fluid
and the trade name, vendor, and a brief descriptor of the intended use or
function of each hydraulic fracturing additive in the hydraulic fracturing
fluid;
x. each chemical intentionally added to the base fluid;
xi. the maximum concentration, in percent by mass, of each chemical
intentionally added to the base fluid; and
xii. the chemical abstract service number for each chemical intentionally
added to the base fluid, if applicable.
B. If the vendor, service provider, or operator claim that the specific identity
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Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 9
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
of a chemical, the concentration of a chemical, or both the specific identity
and concentration of a chemical is/are claimed to be a trade secret, the
operator of the well must so indicate on the chemical disclosure registry form
and, as applicable, the vendor, service provider, or operator shall submit to
the Director a Form 41 claim of entitlement to have the specific identity of a
chemical, the concentration of a chemical, or both withheld as a trade secret.
The operator must nonetheless disclose all information required under
subsection 205A.b.(2)(A) that is not claimed to be a trade secret. If a chemical
is claimed to be a trade secret, the operator must also include in the chemical
registry form the chemical family or other similar descriptor associated with
such chemical.
C. At the time of claiming that a hydraulic fracturing chemical, concentration,
or both is entitled to trade secret protection, a vendor, service provider or
operator shall file with the commission claim of entitlement, Form 41,
containing contact information. Such contact information shall include the
claimant’s name, authorized representative, mailing address, and phone
number with respect to trade secret claims. If such contact information
changes, the claimant shall immediately submit a new Form 41 to the
Commission with updated information.
D. Unless the information is entitled to protection as a trade secret,
information submitted to the Commission or posted to the chemical
disclosure registry is public information.
(3) Ability to search for information.
A. If the Commission determines, as of January 1, 2013, that:
i. The chemical disclosure registry does not allow the Commission staff and
the public to search and sort the registry for Colorado information by
geographic area, ingredient, chemical abstract service number, time period,
and operator; and
ii. There is no reasonable assurance that the registry will allow for such
searches by a date certain acceptable to the Commission,
Then the provisions of subsection 205A.b.(3)(B) below shall apply.
B. Beginning February 1, 2013, any operator who posts a chemical disclosure
form on the chemical disclosure registry shall also submit the form to the
Commission in an electronic format acceptable to the Commission. As soon
thereafter as practicable, the Commission shall make such forms available on
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Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 10
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
the Commission’s website in a manner that allows the public to search the
information and sort the forms by geographic area, ingredient, chemical
abstract service number, time period and operator, as practicable.
(4) Inaccuracies in information. A vendor is not responsible for any inaccuracy in
information that is provided to the vendor by a third party manufacturer of the
hydraulic fracturing additives. A service provider is not responsible for any
inaccuracy in information that is provided to the service provider by the vendor.
An operator is not responsible for any inaccuracy in information provided to the
operator by the vendor or service provider.
(5) Disclosure to health professionals. Vendors, service companies, and
operators shall identify the specific identity and amount of any chemicals
claimed to be a trade secret to any health professional who requests such
information in writing if the health professional provides a written statement of
need for the information and executes a confidentiality agreement, Form 35.
The written statement of need shall be a statement that the health professional
has a reasonable basis to believe that (1) the information is needed for purposes
of diagnosis or treatment of an individual, (2) the individual being diagnosed or
treated may have been exposed to the chemical concerned, and (3) knowledge
of the information will assist in such diagnosis or treatment. The confidentiality
agreement, Form 35, shall state that the health professional shall not use the
information for purposes other than the health needs asserted in the statement
of need, and that the health professional shall otherwise maintain the
information as confidential. Where a health professional determines that a
medical emergency exists and the specific identity and amount of any chemicals
claimed to be a trade secret are necessary for emergency treatment, the
vendor, service provider, or operator, as applicable, shall immediately disclose
the information to that health professional upon a verbal acknowledgement by
the health professional that such information shall not be used for purposes
other than the health needs asserted and that the health professional shall
otherwise maintain the information as confidential. The vendor, service
provider, or operator, as applicable, may request a written statement of need,
and a confidentiality agreement, Form 35, from all health professionals to
whom information regarding the specific identity and amount of any chemicals
claimed to be a trade secret was disclosed, as soon as circumstances permit.
Information so disclosed to a health professional shall in no way be construed as
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Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 11
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
publicly available.
c. Disclosures not required. A vendor, service provider, or operator is not required
to:
(1) disclose chemicals that are not disclosed to it by the manufacturer, vendor,
or service provider;
(2) disclose chemicals that were not intentionally added to the hydraulic
fracturing fluid; or
(3) disclose chemicals that occur incidentally or are otherwise unintentionally
present in trace amounts, may be the incidental result of a chemical reaction or
chemical process, or may be constituents of naturally occurring materials that
become part of a hydraulic fracturing fluid.
d. Trade secret protection.
(1) Vendors, service companies, and operators are not required to disclose trade
secrets to the chemical disclosure registry. (2) If the specific identity of a
chemical, the concentration of a chemical, or both the specific identity and
concentration of a chemical are claimed to be entitled to protection as a trade
secret, the vendor, service provider or operator may withhold the specific
identity, the concentration, or both the specific identity and concentration, of
the chemical, as the case may be, from the information provided to the
chemical disclosure registry. Provided, however, operators must provide the
information required by Rule 205A.b.(2)(B) & (C). The vendor, service provider,
or operator, as applicable, shall provide the specific identity of a chemical, the
concentration of a chemical, or both the specific identity and concentration of a
chemical claimed to be a trade secret to the Commission upon receipt of a letter
from the Director stating that such information is necessary to respond to a spill
or release or a complaint from a person who may have been directly and
adversely affected or aggrieved by such spill or release. Upon receipt of a
written statement of necessity, such information shall be disclosed by the
vendor, service provider, or operator, as applicable, directly to the Director or
his or her designee and shall in no way be construed as publicly available.
The Director or designee may disclose information regarding the specific
identity of a chemical, the concentration of a chemical, or both the specific
identity and concentration of a chemical claimed to be a trade secret to
additional Commission staff members to the extent that such disclosure is
necessary to allow the Commission staff member receiving the information to
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Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 12
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
assist in responding to the spill, release, or complaint, provided that such
individuals shall not disseminate the information further. In addition, the
Director may disclose such information to any Commissioner, the relevant
county public health director or emergency manager, or to the Colorado
Department of Public Health and Environment’s director of environmental
programs upon request by that individual. Any information so disclosed to the
Director, a Commission staff member, a Commissioner, a county public health
director or emergency manager, or to the Colorado Department of Public Health
and Environment’s director of environmental programs shall at all times be
considered confidential and shall not be construed as publicly available. The
Colorado Department of Public Health and Environment’s director of
environmental programs, or his or her designee, may disclose such information
to Colorado Department of Public Health and Environment staff members under
the same terms and conditions as apply to the director.
e. Incorporated materials. Where referenced herein, these regulations incorporate
by reference material originally published elsewhere. Such incorporation does not
include later amendments to or editions of the referenced material. Pursuant to
section 24‐4‐103 (12.5) C.R.S., the Commission maintains copies of the complete
text of the incorporated materials for public inspection during regular business
hours. Information regarding how the incorporated material may be obtained or
examined is available at the Commission’s office located at 1120 Lincoln Street,
Suite 801, Denver, Colorado 80203.
15. Color. Facilities shall be painted in a uniform, non‐contrasting, non‐
reflective color, to blend with the surrounding landscape and, with colors
that match the land rather than the sky. The color should be slightly
darker than the surrounding landscape.
804. VISUAL IMPACT MITIGATION
Production facilities, regardless of construction date, which are observable from any
public highway shall be painted with uniform, non‐contrasting, non‐reflective color
tones (similar to the Munsell Soil Color Coding System), and with colors matched to
but slightly darker than the surrounding landscape by September 1, 2010.
16. Cultural and Historical Resource Protection. If a significant surface or
sub‐surface archaeological site is discovered during construction, the
Company shall be responsible for immediately contacting the City to
report the discovery. If any disturbance of the resource occurs, the
Company shall be responsible for mitigating the disturbance to the
cultural or historical property through a data recovery plan approved by
the City.
Staff did not find COGCC regulations addressing Cultural and Historical Resources
Protection.
17. Discharge valves. Open‐ended discharge valves on all storage tanks, Staff did not find COGCC regulations addressing discharge valves.
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 13
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
pipelines and other containers shall be secured where the operation site
is unattended or is accessible to the general public. Open‐ended
discharge valves shall be placed within the interior of the tank secondary
containment.
18. Dust suppression. Dust associated with on‐site activities and traffic
on access roads shall be minimized throughout construction, drilling
and operational activities such that there are no visible dust emissions
from access roads or the site to the extent practical given wind
conditions. No produced water or other process fluids shall be used for
dust suppression. The Company will avoid dust suppression activities
within three hundred (300) feet of the ordinary high water mark of any
waterbody, unless the dust suppressant is water. Material Safety Data
Sheets (MSDS) for any chemical based dust suppressant shall be
submitted to the City for approval prior to use.
(New Rules)
805.c. Fugitive dust.
Operators shall employ practices for control of fugitive dust caused by their
operations. Such practices shall include but are not limited to the use of speed
restrictions, regular road maintenance, restriction of construction activity during
high‐wind days, and silica dust controls when handling sand used in hydraulic
fracturing operations. Additional management practices such as road surfacing,
wind breaks and barriers, or automation of wells to reduce truck traffic may also be
required if technologically feasible and economically reasonable to minimize fugitive
dust emissions.
19. Electric equipment. Electric‐powered engines for motors,
compressors, and drilling equipment and for pumping systems shall be
used in order to mitigate noise and to reduce emissions when feasible.
(New Rules)
802.f. All Oil and Gas Facilities with engines or motors which are not electrically
operated that are within four hundred (400) feet of Building Units shall be equipped
with quiet design mufflers or equivalent. All mufflers shall be properly installed and
maintained in proper working order.
20. Emergency preparedness plan. The Company is required to develop
an emergency preparedness plan for each specific facility site, which shall
be in compliance with the International Fire Code. The plan shall be filed
with the Poudre Fire Authority and the City of Fort Collins Office of
Emergency Management and updated on an annual basis or as conditions
change (responsible field personnel change, ownership changes, etc.).
The emergency preparedness plan shall consist of at least the following
information:
a) Name, address and phone number, including twenty‐four (24)
hour emergency numbers for at least two persons responsible for
emergency field operations.
b) An as‐built facilities map in a format suitable for input into the
City’s GIS system depicting the locations and type of above and below
ground facilities including sizes, and depths below grade of all oil and
gas gathering and transmission lines and associated equipment,
isolation valves, surface operations and their functions, as well as
Portions of emergency planning, spill response, and emergency operation
procedures exist throughout the COGCC rules but there is not a requirement for an
emergency preparedness plan.
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Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 14
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
transportation routes to and from exploration and development sites,
for emergency response and management purposes. The
information concerning pipelines and isolation valves shall be held
confidentially by the City's Office of Emergency Management and the
Battalion Chief, and shall only be disclosed in the event of an
emergency or to emergency responders. The City shall deny the right
of inspection of the as‐built facilities maps to the public pursuant to
C.R.S. § 24‐72‐204.
c) Detailed information addressing each reasonable potential
emergency that may be associated with the operation. This may
include any or all of the following: explosions, fires, gas, oil or water
pipeline leaks or ruptures, hydrogen sulfide or other toxic gas
emissions, or hazardous material vehicle accidents or spills. A
provision that any spill outside of the containment area, that has the
potential to leave the facility or to threaten waters of the state, or as
required by the City‐approved Emergency Preparedness Plan shall be
reported to the local emergency dispatch and the COGCC Director in
accordance with COGCC regulations.
d) Detailed information identifying access or evacuation routes, and
health care facilities anticipated to be used.
e) A project specific emergency preparedness plan for any project
that involves drilling or penetrating through known zones of
hydrogen sulfide gas.
f) Detailed information showing that the Company has adequate
personnel, supplies, and training to implement the emergency
response plan immediately at all times during construction and
operations.
g) The Company shall have current Material Safety Data Sheets
(MSDS) for all chemicals used or stored on a site. The MSDS sheets
shall be provided immediately upon request to City officials, a public
safety officer, or a health professional.
h) The plan shall include a provision establishing a process by which
the Company engages with the surrounding neighbors to educate
them on the risks of the on‐site operations and to establish a process
for surrounding neighbors to communicate with the Company.
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Colorado Oil and Gas Conservation Commission Regulations
i) All training associated with the Emergency Preparedness plan
shall be coordinated with the City’s Office of Emergency
Management and Poudre Fire Authority.
j) A provision obligating the Company to reimburse the appropriate
emergency response service providers for costs incurred in
connection with any emergency in accordance with Colorado State
Statutes.
21. Air quality. The Company must comply with emissions regulations
governed by the Colorado Department of Public Health and Environment
(CDPHE), Air Pollution Control Division (APCD). Air emissions from wells
shall be in compliance with the permit and control provisions of the
Colorado Air Quality Control Program, Title 25, Section 7, C.R.S., COGCC
Rule 805, and all state and federal regulations for the control of fugitive
dust, and control of ozone, ozone precursors, methane, and hazardous air
pollutants by the Larimer County Public Health Department, and the
CDPHE‐APCD. The Company must comply with 40 CFR Subpart OOOO as
published on August 16, 2012 (Quad O).
a) General Duty to Minimize Emissions. The Company shall
incorporate in the development plan; operations, procedures, and
field design features to the maximum extent feasible that minimize
air pollutant emissions including but not limited to:
1) Consolidation of product treatment and storage facilities
2) Centralization of compression facilities
3) Liquids gathering and water delivery systems
4) Telemetric control and monitoring systems
5) Pipeline infrastructure prior to well completion.
b) In the UDA, the Company will utilize a high‐low pressure vessel
(HLP) and vapor recovery unit (VRU) for New Wells that are placed on
production. The Company may remove the VRU at such time it
determines that the VRU system is no longer necessary due to
reduced emission recoveries and/or efficiencies, but no earlier than
one (1) year after the new well is placed on production. The
Company may opt to capture gas and send through a thermal oxidizer
324A. POLLUTION
a. The operator shall take precautions to prevent significant adverse environmental
impacts to air, water, soil, or biological resources to the extent necessary to protect
public health, safety and welfare, including the environment and wildlife resources,
taking into consideration cost‐effectiveness and technical feasibility to prevent the
unauthorized discharge or disposal of oil, gas, E&P waste, chemical substances,
trash, discarded equipment or other oil field waste.
b. No operator, in the conduct of any oil or gas operation shall perform any act or
practice which shall constitute a violation of water quality standards or
classifications established by the Water Quality Control Commission for waters of
the state, or any point of compliance established by the Director pursuant to Rule
324D. The Director may establish one or more points of compliance for any event of
pollution, which shall be complied with by all parties determined to be a responsible
party for such pollution.
c. No owner, in the conduct of any oil or gas operation, shall perform any act or
practice which shall constitute a violation of any applicable air quality laws,
regulations, and permits as administered 300‐41 by the Air Quality Control
Commission or any other local or federal agency with authority for regulating air
quality associated with such activities.
805. ODORS AND DUST
a. General. Oil and gas facilities and equipment shall be operated in such a manner
that odors and dust do not constitute a nuisance or hazard to public welfare.
b. Odors.
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Colorado Oil and Gas Conservation Commission Regulations
in lieu of a HLP and VRU.
c) Plunger lifts are not typically used in the Fort Collins Field due to
insufficient gas. However if there is future use of plunger lifts,
emissions shall be controlled from the motor control valve using low
bleed pneumatic controllers.
d) There shall be no uncontrolled venting of methane. All gas vapors
shall be captured to the extent practicable. Vapor capture
equipment shall operate at ninety‐eight percent (98) percent
efficiency or better. There are no gas sales lines in the Fort Collins
field because the quantity and quality of gas is low and not
marketable. If salable gas were to occur in the UDA, a sales line shall
be constructed.
e) Flaring during drilling and completions:
During well completion, the capture and beneficial use of natural gas
is preferred over flaring. Minimal flaring may occur in the Fort Collins
field, because there is minimal gas in the field. Flaring shall be
continuously monitored on‐site by the Company, under twenty‐four
(24) hour watch and is regulated by COGCC Rules 317, 805B(3)B, and
912. No venting of gas may occur, except under COGCC Green
Completion Practices (Rule 805 B(3)B), or in very limited cases under
Rule 912 with the COGCC Director approval.
f) Flaring during production operations:
1) The flare shall be fired with natural gas and shall be operated
with a ninety eight (98) percent or higher VOC destruction
efficiency.
2) The flare shall be designed and operated in a manner that
shall ensure no visible emissions, pursuant to the provisions of 40
CFR 60.18(f), except for periods not to exceed a total of five (5)
minutes during any two (2) consecutive hours. Where applicable,
B. No violation of Rule 805.b.(1) shall be cited by the Commission, provided that
the practices identified in Rule 805.b.(2) are used.
(2) Production Equipment and Operations.
A. Condensate Tanks. All condensate tanks with a potential to emit volatile
organic compounds (VOC) of five (5) tons per year (tpy) or greater, located in
Garfield, Mesa, or Rio Blanco County and within 1/4 mile of a building unit,
educational facility, assembly building, hospital, nursing home, board and care
facility, jail, or designated outside activity area shall utilize a control device
capable of achieving 95% control efficiency of VOC and shall hold a valid permit
from the Colorado Department of Public Health and Environment, Air Pollution
Control Division, for the tank and control device. Condensate tanks meeting the
above criteria and existing on May 1, 2009 on federal lands and on April 1, 2009
on all other lands shall be in compliance with this subsection by October 1,
2009.
B. Crude Oil and Produced Water Tanks. All crude oil and produced water tanks
with a potential to emit VOC of five (5) tpy or greater, located in Garfield, Mesa,
or Rio Blanco County and within 1/4 mile of a building unit, educational facility,
assembly building, hospital, nursing home, board and care facility, jail, or
designated outside activity area shall utilize a control device capable of
achieving 95% control efficiency of VOC and shall hold a valid permit from the
Colorado Department of Public Health and Environment, Air Pollution Control
Division, for the tank and control device. Crude oil and produced water tanks
meeting the above criteria and existing on May 1, 2009 on federal lands and on
April 1, 2009 on all other lands shall be in compliance with this subsection by
October 1, 2009.
C. Glycol Dehydrators. All glycol dehydrators with a potential to emit VOC of
five (5) tpy or greater, located in Garfield, Mesa, or Rio Blanco County and
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Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 17
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
flares shall also be in compliance with 5 CCR 1001‐9 Regulation 7
Section XVIIB for non‐condensate oil.
3) The flare shall be operated with a flame present at all times
when emissions may be vented to it, pursuant to the methods
specified in 40 CFR 60.18(f).
4) An automatic pilot system shall be used when feasible. Other
ignition systems may include the installation and operation of a
telemetry alarm system or an on‐site visible indicator showing
proper function.
g) Leak Detection and Repair (LDAR) – The Company shall develop
and maintain a leak detection and component repair program
according to EPA Method 21 for equipment used in permanent
operations. LDAR shall be performed on newly installed equipment,
and then on an annual basis. A Forward‐Looking Infrared (FLIR)
camera shall be used as the preferred implementation method of EPA
Method 21 as available from the state; if unavailable, other methods
shall be used in compliance with this method. Upon request from the
City, the Company shall implement EPA Method 21 upon additional
concerns. At least once per year, the Company shall notify the City
prior to FLIR camera use in case the City wishes to observe the
method.
h) One Time Baseline Air Quality Monitoring ‐ the Company and the
City shall split the cost for a one time Baseline Sampling and
Analytical. The work shall be done by a third party consultant
agreeable to both parties over a five day sampling period with each
location sampled per day. The sampling locations shall be as follows:
1) Upwind of Tank Battery
2) Downwind of Tank Battery
3) City Park
4) One location downtown, such as New Belgium Brewery
or Wild Boar Coffee
i) One Time Air Sampling During Well Completion – The Company
D. Pits. Pits constructed after May 1, 2009 on federal land or after April 1, 2009
on all other land with a potential to emit VOC of five (5) tpy or greater and
located in Garfield, Mesa, or Rio Blanco County shall not be located within 1/4
mile of a building unit, educational facility, assembly building, hospital, nursing
home, board and care facility, jail, or designated outside activity area. For the
purposes of this section, compliance with Rule 902.c shall be considered a
required practice. Operators may provide site‐specific data and analyses to
COGCC staff establishing that pits potentially subject to this subsection do not
have a potential to emit VOC of five (5) tpy or greater.
E. Pneumatic Devices. In instances when new, replaced, or repaired pneumatic
devices are installed, low or no bleed valves must be used, where technically
feasible.
(3) Well completions.
A. Green completion practices are required on oil and gas wells where reservoir
pressure, formation productivity, and wellbore conditions are likely to enable
the well to be capable of naturally flowing hydrocarbon gas in flammable or
greater concentrations at a stabilized rate in excess of five hundred (500) MCFD
to the surface against an induced surface backpressure of five hundred (500)
psig or sales line pressure, whichever is greater. Green completion practices are
not required for exploratory wells, where the wells are not sufficiently
proximate to sales lines, or where green completion practices are otherwise not
technically and economically feasible.
B. Green completion practices shall include, but not be limited to, the following
emission reduction measures:
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shall conduct air sampling during well completion. The work shall be
done by a third party consultant agreeable to both parties. This shall
be done over a five day sampling period with each location sampled
per day. The sampling shall be for one well completion in the City
(City’s choice of which well completion). The sampling locations shall
be as follows:
1) Upwind of well
2) Downwind of well
j) Ongoing Air Quality Monitoring ‐ Periodic air monitoring shall be
performed for hydrogen sulfide (H2S), a hazardous air pollutant
(HAP). The Company shall perform field monitoring using the Jerome
631 XC or equivalent instrument annually, or until such time that
odors are not detected past the Fort Collins Tank Battery fence line in
City Limits.
k) The City may require the Company to conduct additional air
monitoring as needed to respond to emergency events such as spill,
process upsets, or accidental releases or in response to odor
complaints in City Limits.
1) In response to emergency events that involve the
potential release of hazardous air pollutants, the Company may
be required to conduct air sampling in accordance with
subsection i above.
2) In response to odor complaints, the Company may be
required to conduct air sampling in accordance with subsection j
above or use a photo‐ionization detector (PID) to measure
detected levels of VOCs that exceed acute health‐based exposure
thresholds, or other air sampling methodology depending on the
nature of the complaint.
l) Air Quality Action Days. The Company shall respond to air quality
Action Day advisories posted by the Colorado Department of Public
Health and Environment for the Front Range Area by implementing
air emission reduction measures committed to in the Air Quality
iii. Well effluent containing more than ten (10) barrels per day of
condensate or within two (2) hours after first encountering hydrocarbon gas
of salable quality shall be directed to a combination of sand traps,
separators, surge vessels, and tanks or other equipment as needed to
ensure safe separation of sand, hydrocarbon liquids, water, and gas and to
ensure salable products are efficiently recovered for sale or conserved and
that non‐salable products are disposed of in a safe and environmentally
responsible manner.
iv. If it is safe and technically feasible, closed‐top tanks shall utilize
backpressure systems that exert a minimum of four (4) ounces of
backpressure and a maximum that does not exceed the pressure rating of
the tank to facilitate gathering and combustion of tank vapors.
Vent/backpressure values, the combustor, lines to the combustor, and
knock‐outs shall be sized and maintained so as to safely accommodate any
surges the system may encounter.
v. All salable quality gas shall be directed to the sales line as soon as
practicable or shut in and conserved. Temporary flaring or venting shall be
permitted as a safety measure during upset conditions and in accordance
with all other applicable laws, rules, and regulations.
C. An operator may request a variance from the Director if it believes that
employing green completion practices is not feasible because of well or field
conditions or that following them in a specific instance would endanger the
safety of well site personnel or the public.
D. In instances where green completion practices are not technically feasible or
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Mitigation Plan. Emission reduction measures shall be implemented
for the duration of an air quality Action Day advisory and may include
measures such as:
1) Minimize vehicle and engine idling
2) Reduce truck traffic and worker traffic
3) Delay vehicle refueling
4) Suspend or delay use of fossil fuel powered ancillary
equipment
5) Postpone construction activities
22. Green completions.
a) Gas gathering lines, separators, and sand traps capable of supporting
green completions as described in COGCC Rule 805 shall be installed at
any location at which commercial quantities of gas are reasonably
expected to be produced based on existing adjacent wells within one (1)
mile or well.
b) Uncontrolled venting is prohibited.
c) Temporary flowback flaring and oxidizing equipment shall include
the following:
1) Adequately sized equipment to handle 1.5 times the largest
flowback volume of gas experienced in a ten (10) mile radius
producing from the same formation;
2) Valves and porting available to divert gas to flaring and oxidizing
equipment; and
3) Auxiliary fueled with sufficient supply and heat to combust or
oxidize non‐combustible gases in order to control odors and
hazardous gases. The flowback combustion device shall be equipped
with a reliable continuous ignition source over the duration of
flowback, except in conditions that may result in a fire hazard or
explosion.
4) The Company has a general duty to safely maximize resource
recovery and minimize releases to the atmosphere during flowback
and subsequent recovery/operation.
(New Rules)
Rule 805.b. (3) Well completions.
A. Green completion practices are required on oil and gas wells where reservoir
pressure, formation productivity, and wellbore conditions are likely to enable the
well to be capable of naturally flowing hydrocarbon gas in flammable or greater
concentrations at a stabilized rate in excess of five hundred (500) MCFD to the
surface against an induced surface backpressure of five hundred (500) psig or
sales line pressure, whichever is greater. Green completion practices are not
required for exploratory wells, where the wells are not sufficiently proximate to
sales lines, or where green completion practices are otherwise not technically and
economically feasible.
B. Green completion practices shall include, but not be limited to, the following
emission reduction measures:
i. The operator shall employ sand traps, surge vessels, separators, and tanks
as soon as practicable during flowback and cleanout operations to safely
maximize resource recovery and minimize releases to the environment.
ii. Well effluent during flowback and cleanout operations prior to
encountering hydrocarbon gas of salable quality or significant volumes of
condensate
may be directed to tanks or pits (where permitted) such that oil or condensate
volumes shall not be allowed to accumulate in excess of twenty (20) barrels
and must be removed within twenty‐four (24) hours.
The gaseous phase of non‐flammable effluent may be directed to a flare pit or
vented from tanks for safety purposes until flammable gas is encountered.
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quality shall be directed to a combination of sand traps, separators, surge
vessels, and tanks or other equipment as needed to ensure safe separation of
sand, hydrocarbon liquids, water, and gas and to ensure salable products are
efficiently recovered for sale or conserved and that non‐salable products are
disposed of in a safe and environmentally responsible manner.
iv. If it is safe and technically feasible, closed‐top tanks shall utilize
backpressure systems that exert a minimum of four (4) ounces of
backpressure and a maximum that does not exceed the pressure rating of the
tank to facilitate gathering and combustion of tank vapors.
Vent/backpressure values, the combustor, lines to the combustor, and knock‐
outs shall be sized and maintained so as to safely accommodate any surges
the system may encounter.
v. All salable quality gas shall be directed to the sales line as soon as
practicable or shut in and conserved. Temporary flaring or venting shall be
permitted as a safety measure during upset conditions and in accordance with
all other applicable laws, rules, and regulations.
C. An operator may request a variance from the Director if it believes that using
green completion practices is infeasible due to well or field conditions, or would
endanger the safety of wellsite personnel or the public.
D. In instances where green completion practices are not technically feasible,
operators shall employ Best Management Practices (BMPs) to reduce emissions.
Such BMPs shall consider safety and shall include measures or actions to minimize
the time period during which gases are emitted directly to the atmosphere, and
monitoring and recording the volume and time period of such emissions.
23. Exhaust. The exhaust from all engines, motors, coolers and other
mechanized equipment shall be vented up or in a direction away from the
closest existing residences.
802.e. Exhaust from all engines, motors, coolers and other mechanized equipment
shall be vented in a direction away from all building units.
24. Fencing. Permanent perimeter fencing shall be installed around
production equipment, and shall be secured. The main purpose of the
fencing is to deter entrance by unauthorized people. The Company shall
use visually interesting fencing, when feasible, but the parties recognize
that there is a need for air circulation, and for the field personnel who
regularly inspect the facilities to be able to identify visual operational
deficiencies when driving by. Landscaping may be used for screening. If a
chain link fence is required to achieve safety requirements set by the
Rule 604.c.2.M
Fencing requirements. Unless otherwise requested by the Surface Owner, well sites
constructed within Designated Setback Locations, shall be adequately fenced to
restrict access by unauthorized persons.
1002. SITE PREPARATION AND STABILIZATION
a. Effective June 1, 1996:
(1) Fencing of drill sites and access roads on crop lands. During drilling operations
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COGCC, then landscaping and other screening mechanisms shall be
required that comply with the City’s Land Use Code regulations and the
Company’s safety requirements.
on crop lands, when requested by the surface owner, the operator shall delineate
each drillsite and access road on crop lands constructed after such date by berms,
single strand fence, or other equivalent method in order to discourage
unnecessary surface disturbances.
(2) Fencing of reserve pit when livestock is present. During drilling operations
where livestock is in the immediate area and is not fenced out by existing fences,
the operator, at the request of the surface owner, will install a fence around the
reserve pit.
(3) Fencing of well sites. Subsequent to drilling operations, where livestock is in
the immediate area and is not fenced out by existing fences, the operator, at the
request of the surface owner, will install a fence around the wellhead, pit, and
production equipment to prevent livestock entry.
25. Flammable material. All land within twenty five (25) feet of any tank,
or other structure containing flammable or combustible materials shall be
kept free of dry weeds, grass or rubbish, and will conform to Section 315
of the International Fire Code.
Staff did not find COGCC regulations addressing flammable materials.
26. Floodplains. All oil and gas operations shall comply with Chapter 10
of the City Code.
Oil and gas operations are allowed in floodplains. The following rules apply to
floodplains:
603.k. Statewide equipment anchoring requirements. All equipment at drilling and
production sites in geological hazard and floodplain areas shall be anchored to the
extent necessary to resist flotation, collapse, lateral movement, or subsidence.
Rule 1005d. Requires special drilling pit closures within the 100‐year floodplain (see
the 900 Series).
Rule 1204.a.4 Establish new staging, refueling, and chemical storage areas outside
of riparian zones and floodplains.
27. Water Quality Monitoring Plan. The Company shall comply with
COGCC Rule 609. In summary, this requires pre‐ and post‐drilling testing.
The rules require oil and gas operators to sample all “Available Water
Sources” (owner has given consent for sampling and testing and has
consented to having the sample data obtained made available to the
public), with a cap of four (4) water sources, within one‐half (1/2) mile
radius of a proposed well, multi‐well site, or dedicated injection well.
Water sources include registered water wells, permitted or adjudicated
Rule 609 (Statewide Groundwater Baseline Sampling and Monitoring):
a. Applicability and effective date.
(1) This Rule 609 applies to Oil Wells, Gas Wells (hereinafter, Oil and Gas Wells),
Multi‐Well Sites, and Dedicated Injection Wells as defined in the 100‐ Series Rules,
for which a Form 2 Application for Permit to Drill is submitted on or after May 1,
2013.
(2) This Rule 609 does not apply to an existing Oil or Gas Well that is repermitted
for use as a Dedicated Injection Well.
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springs, and certain monitoring wells. The Company agrees to the
following requirements above and beyond the COGCC requirements:
analyzing for dissolved metals as indicated in the Land Use Code; and
sampling intervals to be baseline (before drilling), post‐drilling at one,
three, and six years. Analytical results shall be shared with the COGCC,
the City, and the landowner. All spills, for new and existing wells, shall be
managed in accordance with COGCC regulations.
(3) This rule does not apply to Oil and Gas Wells, Multi‐Well Sites, or Dedicated
Injection Wells that are regulated under Rule 608.b., Rule 318A.e.(4), or Orders of
the Commission with respect to the Northern San Juan Basin promulgated prior to
the effective date of this Rule that provide for groundwater testing.
(4) Nothing in this Rule is intended, and shall not be construed, to preclude or
limit the Director from requiring groundwater sampling or monitoring at other
Production Facilities consistent with other applicable Rules, including but not
limited to the Oil and Gas Location Assessment process, and other processes in
place under 900‐series E&P Waste Management Rules (Form 15, Form 27, Form
28).
(5) An operator may elect to install one or more groundwater monitoring wells to
satisfy, in full or in part, the requirements of Rule 609.b., but installation of
monitoring wells is not required under this Rule.
b. Sampling locations. Initial baseline samples and subsequent monitoring samples
shall be collected from all Available Water Sources, up to a maximum of four (4),
within a one‐half (1/2) mile radius of a proposed Oil and Gas Well, Multi‐Well Site,
or Dedicated Injection Well. If more than four (4) Available Water Sources are
present within a one‐half (1/2) mile radius of a proposed Oil and Gas Well, Multi‐
Well Site, or Dedicated Injection Well, the operator shall select the
four sampling locations based on the following criteria:
(1) Proximity. Available Water Sources closest to the proposed Oil or Gas Well, a
Multi‐Well Site, or Dedicated Injection Well are preferred.
(2) Type of Water Source. Well maintained domestic water wells are preferred
over other Available Water Sources.
(3) Orientation of sampling locations. To extent groundwater flow direction is
known or reasonably can be inferred, sample locations from both downgradient
and up‐gradient are preferred over cross‐gradient locations.
Where groundwater flow direction is uncertain, sample locations should be
chosen in a radial pattern from a proposed Oil and Gas Well, Multi‐Well Site, or
Dedicated Injection Well.
(4) Multiple identified aquifers available. Where multiple defined aquifers are
present, sampling the deepest and shallowest identified aquifers is preferred.
(5) Condition of Water Source. An operator is not required to sample Water
Sources that are determined to be improperly maintained, nonoperational, or
have other physical impediments to sampling that would not allow for a
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representative sample to be safely collected or would require specialized sampling
equipment (e.g. shut‐in wells, wells with confined space issues, wells with no tap
or pump, non‐functioning wells, intermittent springs).
c. Inability to locate an Available Water Source. Prior to spudding, an operator may
request an exception from the requirements of this Rule 609 by filing a Form 4
Sundry Notice for the Director’s review and approval if:
(1) No Available Water Sources are located within one‐half (1/2) mile of a
proposed Oil and Gas Well, Multi‐Well Site, or Dedicated Injection Well;
(2) The only Available Water Sources are determined to be unsuitable pursuant to
subpart b.5, above. An operator seeking an exception on this ground shall
document the condition of the Available Water Sources it has deemed
unsuitable; or
(3) The owners of all Water Sources suitable for testing under this Rule refuse to
grant access despite an operator’s reasonable good faith efforts to obtain consent
to conduct sampling. An operator seeking an exception on this ground shall
document the efforts used to obtain access from the owners of suitable Water
Sources.
(4) If the Director takes no action on the Sundry Notice within ten (10) business
days of receipt, the requested exception from the requirements of this Rule 609
shall be deemed approved.
d. Timing of sampling.
(1) Initial sampling shall be conducted within 12 months prior to setting conductor
pipe in a Well or the first Well on a Multi‐Well Site, or commencement of drilling a
Dedicated Injection Well; and
(2) Subsequent monitoring: One subsequent sampling event shall be conducted at
the initial sample locations between six (6) and twelve (12) months, and a second
subsequent sampling event shall be conducted between sixty (60) and seventy‐
two (72) months following completion of the Well or Dedicated Injection Well, or
the last Well on a Multi‐Well Site. Wells that are drilled and abandoned without
ever producing hydrocarbons are exempt from subsequent monitoring sampling
under this subpart d.
(3) Previously sampled Water Sources. In lieu of conducting the initial sampling
required pursuant to subjection d.(1) or the second subsequent sampling event
required pursuant to subsection d.(2), an Operator may rely on water sampling
analytical results obtained from an Available Water Source within the sampling
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area provided:
A. The previous water sample was obtained within the 18 months preceding
the initial sampling event required pursuant to subsection d.(1) or the second
subsequent sampling event required pursuant to subsection d.(2); and
B. the sampling procedures, including the constituents sampled for, and the
analytical procedures used for the previous water sample were substantially
similar to those required pursuant to subparts e.(1) and (2), below. An
operator may not rely solely on previous water sampling
analytical results obtained pursuant to the subsequent sampling requirements
of subsection d.(2), above, to satisfy the initial sampling requirement of
subsection d.(1); and
C. the Director timely received the analytical data from the previous sampling
event.
(4) The Director may require additional sampling if changes in water quality are
identified during subsequent monitoring.
e. Sampling procedures and analysis.
(1) Sampling and analysis shall be conducted in conformance with an accepted
industry standard as described in Rule 910.b.(2). A model Sampling and
Analysis Plan (“COGCC Model SAP”) shall be posted on the COGCC website, and
shall be updated periodically to remain current with evolving industry standards.
Sampling and analysis conducted in conformance with the COGCC Model SAP shall
be deemed to satisfy the requirements of this subsection f.(1). Upon request, an
operator shall provide its sampling protocol to the Director.
(2) The initial baseline testing described in this section shall include pH, specific
conductance, total dissolved solids (TDS), dissolved gases (methane, ethane,
propane), alkalinity (total bicarbonate and carbonate as CaCO3), major anions
(bromide, chloride, fluoride, sulfate, nitrate and nitrite as N, phosphorus), major
cations (calcium, iron, magnesium, manganese, potassium, sodium), other
elements (barium, boron, selenium and strontium), presence of bacteria (iron
related, sulfate reducing, slime forming), total petroleum hydrocarbons (TPH) and
BTEX compounds (benzene, toluene, ethylbenzene and xylenes). Field
observations such as odor, water color, sediment, bubbles, and effervescence
shall also be documented. The location of the sampled Water Sources shall be
surveyed in accordance with Rule 215.
(3) Subsequent sampling to meet the requirements of subpart d.(2) shall include
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total dissolved solids (TDS), dissolved gases (methane, ethane, propane), major
anions (bromide, chloride, sulfate, and fluoride), major cations (potassium,
sodium, magnesium, and calcium), alkalinity (total bicarbonate and carbonate as
CaCO3), BTEX compounds (benzene, toluene, ethylbenzene and xylenes), and TPH.
(4) If free gas or a dissolved methane concentration greater than 1.0 milligram per
liter (mg/l) is detected in a water sample, gas compositional analysis and stable
isotope analysis of the methane (carbon and hydrogen – 12C, 13C, 1H and 2H)
shall be performed to determine gas type. The operator shall notify the Director
and the owner of the water well immediately if:
A. the test results indicated thermogenic or a mixture of thermogenic and
biogenic gas;
B. the methane concentration increases by more than 5.0 mg/l between
sampling periods; or
C. the methane concentration is detected at or above 10 mg/l.
(5) The operator shall notify the Director immediately if BTEX compounds or TPH
are detected in a water sample.
f. Sampling Results. Copies of all final laboratory analytical results shall be provided
to the Director and the water well owner or landowner within three (3) months of
collecting the samples. The analytical results, the surveyed sample
Water Source locations, and the field observations shall be submitted to the
Director in an electronic data deliverable format.
(1) The Director shall make such analytical results available publicly by posting on
the Commission’s web site or through another means announced to the public.
(2) Upon request, the Director shall also make the analytical results and surveyed
Water Source locations available to the Local Governmental Designee from the
jurisdiction in which the groundwater samples were collected, in the same
electronic data deliverable format in which the data was provided to the Director.
g. Liability. The sampling results obtained to satisfy the requirements of this Rule
609, including any changes in the constituents or concentrations of constituents
present in the samples, shall not create a presumption of liability, fault, or causation
against the owner or operator of a Well, Multi‐Well Site, or Dedicated Injection Well
who conducted the sampling, or on whose behalf sampling was conducted by a
third‐party. The admissibility and probity of any such sampling results in an
administrative or judicial proceeding shall be determined by the presiding body
according to applicable administrative, civil, or evidentiary rules.
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28. Landscaping. In the Fort Collins Field, existing Well Pads shall be used
for any New Wells and all landscaping shall be in compliance with the City
of Fort Collins Land Use Code standards and in compliance with the safety
requirements of the Company. Existing vegetation shall be minimally
impacted. In the UDA, motorized equipment shall be restricted to the
Well Pad and access roads to the Well Pads. A Visual Mitigation Plan,
along with fencing and landscaping, shall be developed for new
construction.
804. VISUAL IMPACT MITIGATION
Production facilities, regardless of construction date, which are observable from any
public highway shall be painted with uniform, non‐contrasting, non‐reflective color
tones (similar to the Munsell Soil Color Coding System), and with colors matched to
but slightly darker than the surrounding landscape by September 1, 2010.
Restoration and revegetation standards require post‐production revegetation (Rule
1003.e and 1004.c)
29. Lighting. Except during drilling, completion or other operational
activities requiring additional lighting, down‐lighting is required, meaning
that all bulbs must be fully shielded to prevent light emissions above a
horizontal plane drawn from the bottom of the fixture. A lighting plan
shall be developed to establish compliance with this provision. The
lighting plan shall indicate the location of all outdoor lighting on the site
and any structures, and include cut sheets (manufacturer's specifications
with picture or diagram) of all proposed fixtures.
803. LIGHTING
To the extent practicable, site lighting shall be directed downward and internally so
as to avoid glare on public roads and building units within seven (700) hundred feet.
30. Maintenance of machinery. Routine field maintenance of vehicles
or mobile machinery shall not be performed within three hundred (300)
feet of any water body.
The COGCC must first make a determination if an area is a “sensitive area;” only
then will special requirements be triggered, such as increased requirements on
Exploration and Production Waste Management, e.g., a leak detection system. Staff
did not find COGCC regulations requiring machines to be maintained outside of a
300’ buffer zone from a water body.
31. Mud Tracking. The Company shall take all practicable measures to
ensure that vehicles do not track mud or debris onto City streets. If mud
or debris is nonetheless deposited on City streets, the streets shall be
cleaned immediately by the Company using pressured water from a
water truck. This shall be done as part of maintenance. If for some
reason it cannot be done, or needs to be postponed, the LGD shall be
notified of the Company’s plan for mud removal.
Staff did not find COGCC regulations addressing mud tracking.
32. Natural Resources. An Ecological Characterization Study shall be
provided if any New Well is within 500 feet of a Natural Habitat or
Feature, and if impacting these resources, mitigation plans to ensure no
net resource loss per Fort Collins Land Use Code 3.4.1.
Rule 1201 and 1203 – The state requires certain regulations for operating within
sensitive natural areas, all of which would apply to Prospect Energy, e.g., the
requirement to install wildlife crossovers if open trenches are left open for more
than 5 days and are greater than 5’ in width, can also trigger consultation with the
Division of Parks and Wildlife.
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33. Noise mitigation. Noise mitigation measures shall be constructed
along any edge of any oil and gas operation site if such edge is between
the oil and gas operation and existing residential development or land
which is zoned for future residential development. The noise mitigation
measures shall, to the maximum extent feasible, decrease noise from the
oil and gas operations to comply with the sound limitation regulations set
forth in Commission Rule 802. A noise mitigation study shall be
submitted with the application to demonstrate that noise shall be
decreased to the maximum extent feasible.
Rule 802 The type of land use of the surrounding area shall be determined by the
Director in consultation with the Local Governmental Designee taking into
consideration any applicable zoning or other local land use designation. In the hours
between 7:00 a.m. and the next 7:00 p.m. the noise levels permitted above may be
increased ten (10) dB(A) for a period not to exceed fifteen (15) minutes in any one
(1) hour period. The allowable noise level for periodic, impulsive or shrill noises is
reduced by five (5) dB (A) from the levels shown.
ZONE 7:00 am to
next 7:00 pm
7:00 pm
to next
7:00 am
Residential/
Agricultural/Rural
55 db(A) 50 db(A)
Commercial 60 db(A) 55 db(A)
Light industrial 70 db(A) 65 db(A)
Industrial 80 db(A) 75 db(A)
Rule 802.e Exhaust from all engines, motors, coolers and other mechanized
equipment shall be vented in a direction away from all building units.
34. Pipelines. Any newly constructed or substantially modified pipelines
on site shall meet the following requirements:
(a) To the maximum extent feasible, all flow lines, gathering lines, and
transmission lines shall be sited a minimum of fifty (50) feet away
from general residential, commercial, and industrial buildings, as well
as the high‐water mark of any surface water body. This distance shall
be measured from the nearest edge of the pipeline. Pipelines and
gathering lines that pass within 150 feet of general residential,
commercial, and industrial buildings or the high water mark of any
surface water body shall incorporate leak detection, secondary
containment, or other mitigation, as appropriate.
(b) To the maximum extent feasible, pipelines shall be aligned with
established roads in order to minimize surface impacts and reduce
habitat fragmentation and disturbance.
(c) To the maximum extent feasible, operators shall share existing
In the Greater Wattenberg Area, the COGCC does encourage new operations to
collocate with existing production facilities (Rule 318A(5)).
The COGCC does require that “In order to reasonably minimize land disturbances
and facilitate future reclamation, well sites, production facilities, gathering pipelines,
and access roads shall be located, adequately sized, constructed, and maintained so
as to reasonably control dust and minimize erosion, alteration of natural features,
removal of surface materials, and degradation due to contamination.” (Rule
1000.2.e).
Rules 1101‐1103 cover the installation, reclamation and abandonment of pipelines.
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Colorado Oil and Gas Conservation Commission Regulations
pipeline rights‐of‐way and consolidate new corridors for pipeline
rights‐of‐way to minimize surface impacts.
(d) To the maximum extent feasible, operators shall use boring
technology when crossing streams, rivers, or irrigation ditches with a
pipeline to minimize negative impacts to the channel, bank, and
riparian areas.
35. Recordation of flowlines. All new flowlines, including transmission
and gathering systems, shall have the legal description of the location
recorded with the City Clerk and the Larimer County Clerk and Recorder
within thirty (30) days of completion of construction. Abandonment of
any recorded flowlines shall be recorded with the Larimer County Clerk
and Recorder’s office within thirty (30) days after abandonment.
Staff did not find COGCC regulations addressing recordation of flowlines.
36. Recreational Activity Standards. The installation and operation of
any oil and gas operation shall not cause significant degradation to the
quality and quantity of recreational activities in the City. Methods to
achieve compliance with this standard include, but are not limited to
locating operations away from trails and from property used for
recreational purposes, or by using existing Well Pads.
The COGCC requires setbacks only for areas identified as “designated outside
activity areas.” If an area is formally designated, then the same setback provisions
and rules that apply in high density areas applies to these recreational areas.
37. Removal of debris. When an oil and gas operation becomes
operational, all construction‐related debris shall be removed from the site
for proper disposal. The site shall be maintained free of debris and excess
materials at all times during operation. Materials shall not be buried or
burned on‐site.
1003.a. General. Debris and waste materials other than de minimis amounts,
including, but not limited to, concrete, sack bentonite and other drilling mud
additives, sand plastic, pipe and cable, as well as equipment associated with the
drilling, re‐entry, or completion operations shall be removed. All E&P waste shall be
handled according to the 900 Series rules. All pits, cellars, rat holes, and other bore
holes unnecessary for further lease operations, excluding the drilling pit, will be
backfilled as soon as possible after the drilling rig is released to conform with
surrounding terrain. On crop land, if requested by the surface owner, guy line
anchors shall be removed as soon as reasonably possible after the completion rig is
released. When permanent guy line anchors are installed, it shall not be mandatory
to remove them. When permanent guy line anchors are installed on cropland, care
shall be taken to minimize disruption or cultivation, irrigation, or harvesting
operations. If requested by the surface owner or its representative, the anchors
shall be specifically marked, in addition to the marking required below, so as to
facilitate farming operations. All guy line anchors left buried for future use shall be
identified by a marker of bright color not less than four (4) feet in height and not
greater than one (1) foot east of the guy line anchor. In addition, all well sites and
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 29
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
surface production facilities shall be maintained in accordance with Rule 603.j.
38. Removal of equipment. All equipment used for drilling, re‐
completion and maintenance of the facility shall be removed from the
site within thirty (30) days of completion of the work, unless otherwise
agreed to by the surface owner. Permanent storage of equipment on
Well Pad sites shall not be allowed.
See above for rule 1003.a.
39. Soil Gas Monitoring. The City, at its discretion, may conduct soil gas
monitoring to assess well casing integrity. This shall be typically
completed within ninety (90) days of New Well completion. The City shall
notify the Company prior to entering the site for soil gas monitoring.
Soil gas monitoring is only required by the COGCC in the case of coalbed methane
exploration.
40. Spills. The Company shall comply with COGCC Rule 906“Spills and
Releases”, and notify the City and whenever there is notification to the
COGCC. The Company shall also copy the City on any written
correspondence to the COGCC or other regulatory authority.
The City also requires in the Emergency Response section that the Office
of Emergency Management and Poudre Fire Authority may require
notification of spills less than 5 barrels (current COGCC requirements)
depending on the type of spill.
906. SPILLS AND RELEASES
a. General. Spills/releases of E&P waste, including produced fluids, shall be
controlled and contained immediately upon discovery to protect the environment,
public health, safety, and welfare, and wildlife resources. Impacts resulting from
spills/releases shall be investigated and cleaned up as soon as practicable. The
Director may require additional activities to prevent or mitigate threatened or
actual significant adverse environmental impacts on any air, water, soil or biological
resource, or to the extent necessary to ensure compliance with the concentration
levels in Table 910‐1, with consideration to WQCC ground water standards and
classifications.
b. Reportable spills and reporting requirements for spills/releases.
(1) Spills/releases of E&P waste or produced fluid exceeding five (5) barrels,
including those contained within lined or unlined berms, shall be reported on
COGCC Spill/Release Report, Form 19.
(2) Spills/releases which exceed twenty (20) barrels of an E&P waste shall be
reported on COGCC Spill/Release Report, Form 19, and shall also be verbally
reported to the Director as soon as practicable, but not more than twenty‐four
(24) hours after discovery.
(3) Spills/releases of any size which impact or threaten to impact any waters of
the state, residence or occupied structure, livestock, or public byway shall be
reported on COGCC Spill/Release Report, Form 19, and shall also be verbally
reported to the Director as soon as practicable, but not more than twenty‐four
(24) hours, after discovery.
(4) Spills/releases of any size which impact or threaten to impact any surface
water supply area shall be reported to the Director and to the Environmental
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 30
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
Release/Incident Report Hotline (1‐877‐518‐5608). Spills and releases that impact
or threaten a surface water intake shall be verbally reported to the emergency
contact for that facility immediately after discovery.
(5) For all reportable spills, operators shall submit a Spill/Release Report, Form
19, within ten (10) days after discovery. An 8 1/2 x 11 inch topographic map
showing the governmental section and location of the spill shall be included. Such
report shall also include information relating to initial mitigation, site
investigation, and remediation. The Director may require additional information.
(6) Chemical spills and releases shall be reported in accordance with applicable
state and federal laws, including the Emergency Planning and Community Right‐
to‐Know Act, the Comprehensive Environmental Response, Compensation, and
Liability Act, the Oil Pollution Act, and the Clean Water Act, as applicable.
c. Surface owner notification and consultation. The operator shall notify the
affected surface owner or the surface owner’s appointed tenant of reportable spills
as soon as practicable, but not more than twenty‐four (24) hours, after discovery.
The operator also shall make good faith efforts to notify and consult with the
affected surface owner, or the surface owner’s appointed tenant, prior to
commencing operations to remediate E&P waste from a spill/release in an area not
being utilized for oil and gas operations.
d. Remediation of spills/releases. When threatened or actual significant adverse
environmental impacts on any air, water, soil or other environmental resource from
a spill/release exists or when necessary to ensure compliance with the
concentration levels in Table 910‐1, with consideration to WQCC ground water
standards and classifications, the Director may require operators to submit a Site
Investigation and Remediation Workplan, Form 27. Such spills/releases shall be
remediated in accordance with Rules 909. and 910.
e. Spill/release prevention.
(1) Secondary containment. Secondary containment that was constructed before
May 1, 2009 on federal land, or before April 1, 2009 on other land, shall comply
with the rules in effect at the time of construction. Secondary containment
constructed on or after May 1, 2009 on federal land, or on or after April 1, 2009
on other land shall be constructed or installed around all tanks containing oil,
condensate, or produced water with greater than 3,500 milligrams per liter (mg/l)
total dissolved solids (TDS) and shall be sufficient to contain the contents of the
largest single tank and sufficient freeboard to contain precipitation. Secondary
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 31
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
containment structures shall be sufficiently impervious to contain discharged
material. Operators are also subject to tank and containment requirements under
Rules 603. and 604. This requirement shall not apply to water tanks with a
capacity of fifty (50) barrels or less.
(2) Spill/release evaluation. Operators shall determine the cause of a
spill/release, and, to the extent practicable, shall implement measures to prevent
spills/releases due to similar causes in the future. For reportable spills, operators
shall submit this information to the Director on the Spill/Release Report, Form
19, within ten (10) days after discovery of the spill/release.
41. Stormwater control plan. All oil and gas operations shall comply and
conform with the Fort Collins Storm Criteria Manual (FCSCM), including
submission of an Erosion Control Report and Plan.
Rule 1002.f f. Stormwater management.
(1) All oil and gas locations are subject to the Best Management Practices
requirements of Rule 1002.f.(2). In addition, upon the termination of a construction
stormwater permit issued by the Colorado Department of Public Health and
Environment for an oil and gas location, such oil and gas location is subject to the
Post‐Construction Stormwater Program requirements of Rule 1002.f.(3), except that
such requirements are not applicable to Tier 1 Oil and Gas Locations.
(2) Oil and gas operators shall implement and maintain Best Management Practices
(BMPs) at all oil and gas locations to control stormwater runoff in a manner that
minimizes erosion, transport of sediment offsite, and site degradation. BMPs shall
be maintained until the facility is abandoned and final reclamation is achieved
pursuant to Rule 1004. Operators shall employ BMPs, as necessary to comply with
this rule, at all oil and gas locations, including, but not limited to, well pads, soil
stock piles, access roads, tank batteries, compressor stations, and pipeline rights of
way. BMPs shall be selected based on site‐specific conditions, such as slope,
vegetation cover, and proximity to water bodies, and may include maintaining in‐
place some or all of the BMPs installed during the construction phase of the facility.
Where applicable based on site‐specific conditions, operators shall implement BMPs
in accordance with good engineering practices, including measures such as:
A. Covering materials and activities and stormwater diversion to minimize contact
of precipitation and stormwater runoff with materials, wastes, equipment, and
activities with potential to result in discharges causing pollution of surface
waters.
B. Materials handling and spill prevention procedures and practices implemented
for material handling and spill prevention of materials used, stored, or disposed
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 32
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
of that could result in discharges causing pollution of surface waters.
C. Erosion controls designed to minimize erosion from unpaved areas, including
operational well pads, road surfaces and associated culverts, stream crossings,
and cut/fill slopes.
D. Self‐inspection, maintenance, and good housekeeping procedures and
schedules to facilitate identification of conditions that could cause breakdowns or
failures of BMPs. These procedures shall include measures for maintaining clean,
orderly operations and facilities and shall address cleaning and maintenance
schedules and waste disposal practices. In conducting inspections and
maintenance relative to stormwater runoff, operators shall consider seasonal
factors, such as winter snow cover and spring runoff from snowmelt, to ensure
site conditions and controls are adequate and in place to effectively manage
stormwater.
E. Spill response procedures for responding to and cleaning up spills. The
necessary equipment for spill cleanup shall be readily available to personnel. Spill
Prevention, Control, and Countermeasure plans incorporated by reference must
be identified in the Post‐Construction Stormwater Management Program
specified in Rule 1002.f.(3).
F. Vehicle tracking control practices to control potential sediment discharges
from operational roads, well pads, and other unpaved surfaces. Practices could
include road and pad design and maintenance to minimize rutting and tracking,
controlling site access, street sweeping or scraping, tracking pads, wash racks,
education, or other sediment controls.
(3) Operators of oil and gas facilities shall develop a Post‐Construction Stormwater
Program in compliance with this section no later than the time of termination of
stormwater permits issued by the Colorado Department of Public Health and
Environment for construction of oil and gas facilities.
A. The Post‐Construction Stormwater Program shall reflect good faith efforts by
operators to select and implement BMPs intended to serve the purposes of this
rule. BMPs shall be selected to address potential sources of pollution which may
reasonably be expected to affect the quality of discharges associated with the
ongoing operation of production facilities during the post‐construction and
reclamation operation of the facilities. Pollutant sources that must be addressed
by BMPs, if present, include:
i. Transport of chemicals and materials, including loading and unloading
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 33
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
operations;
ii. Vehicle/equipment fueling;
iii. Outdoor storage activities, including those for chemicals and additives;
iv. Produced water and drilling fluids storage;
v. Outdoor processing activities and machinery;
vi. Significant dust or particulate generating processes;
vii. Erosion and vehicle tracking from well pads, road surfaces, and pipelines;
viii. Waste disposal practices;
ix. Leaks and spills; and
x. Ground‐disturbing maintenance activities.
B. The Post‐Construction Stormwater Program shall be developed, supervised,
documented, and maintained by a qualified person(s) with training or prior work
experience specific to stormwater management. Employees and subcontractors
shall be trained to make them aware of the BMPs implemented and maintained
at the site and procedures for reporting needed maintenance or repairs.
Documentation shall include a description of the BMPs selected to ensure proper
implementation, operation, and maintenance.
C. Facility‐specific maps, installation specification, and implementation criteria
shall also be included when general operating procedures and descriptions are
not adequate to clearly describe the implementation and operation of BMPs.
42. Temporary access roads. Temporary access roads associated with oil
and gas operations shall be reclaimed and re‐vegetated to the original
state.
1002.a.(1) (1) Fencing of drill sites and access roads on crop lands. During drilling
operations on crop lands, when requested by the surface owner, the operator shall
delineate each drillsite and access road on crop lands constructed after such date by
berms, single strand fence, or other equivalent method in order to discourage
unnecessary surface disturbances.
1002.e(1) In order to reasonably minimize land disturbances and facilitate future
reclamation, well sites, production facilities, gathering pipelines, and access roads
shall be located, adequately sized, constructed, and maintained so as to reasonably
control dust and minimize erosion, alteration of natural features, removal of surface
materials, and degradation due to contamination.
1002.e(4) Access roads. Existing roads shall be used to the greatest extent
practicable to avoid erosion and minimize the land area devoted to oil and gas
operations. Roadbeds shall be engineered to avoid or minimize impacts to riparian
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 34
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
areas or wetlands to the extent practicable. Unavoidable impacts shall be mitigated.
Road crossings of streams shall be designed and constructed to allow fish passage,
where practicable and appropriate. Where feasible and practicable, operators are
encouraged to share access roads in developing a field. Where feasible and
practicable, roads shall be routed to complement other land usage. To the greatest
extent practicable, all vehicles used by the operator, contractors, and other parties
associated with the well shall not travel outside of the original access road
boundary. Repeated or flagrant instance(s) of failure to restrict lease access to lease
roads which result in unreasonable land damage or crop losses shall be subject to a
penalty under Rule 523.
Access roads are also addressed in Rule 603e.14 (regarding access roads
accommodating emergency vehicles in high density areas) and Rule 1004 (final
reclamation)
43. Trailers. A construction trailer or office is permitted as an accessory
use during active drilling and well completion only.
Staff did not find COGCC regulations addressing construction trailers.
44. Transportation and circulation. All applicants for drilling and
completion operations (New Wells) shall include in their applications
detailed descriptions of all proposed access routes for equipment, water,
sand, waste fluids, waste solids, mixed waste, and all other material to be
hauled on the public streets and roads of the City. The submittal shall
also include the estimated weights of vehicles when loaded, a description
of the vehicles, including the number of wheels and axles of such
vehicles, trips per day and any other information required by the Traffic
Engineer. Preliminary information is required for this item for the
Conceptual Review meeting, in accordance with Appendix B. The
Company shall comply with all Transportation and Circulation
requirements as contained in the Land Use Code as may be reasonably
required by the City’s Traffic Engineer.
Transportation is addressed in Rule 1203 by directing operators to “Reduce traffic
associated with transporting drilling water and produced liquids through the use of
pipelines, large tanks, or other measures where technically feasible and
economically practicable” (subsection 16) and in Rule 1204 by encouraging
operators to minimize impacts to wildlife in planning transportation networks.
Otherwise, transportation and circulation issues are left to local governments to
address.
45. Wastewater and Waste Management. In the Fort Collins Field, all
fluids shall be contained and there shall be no discharge of fluids, as
described in the Closed Loop System and Green Completions section of
this Appendix. Waste shall be stored in tanks, transported by tanker
trucks, and disposed of at licensed disposal fields. In the UDA, new
secondary containment shall be constructed of steel, with sufficient
Rule 900 series (approximately 17 pages long) allows for land treatment or disposal
of drilling muds.
A Spill Prevention, Control, and Countermeasure Plan is not required for facilities of
this size by COGCC.
ATTACHMENT 7
Operator Agreement – Comparison Matrix of the Operator Agreement to COGCC Regulations 35
Proposed Operator Agreement
Colorado Oil and Gas Conservation Commission Regulations
perimeter and height to hold one and one‐half (1.5) times the volume of
the largest tank and sufficient freeboard to prevent overflow. No
potential ignition sources shall be installed inside the secondary
containment area unless the containment enclosed a fired vessel. The
requirements for secondary containment will meet the Fort Collins
Stormwater Criteria Manual. No land treatment of oil impacted or
contaminated drill cuttings are permitted. The use of a closed loop
drilling system precludes discharge of produced water or flowback to the
ground or the use of pits. Produced water or flowback will not be used
for dust suppression. A copy of the field’s Spill Prevention, Control, and
Countermeasure Plan (SPCC) will be given to the City, which describes
spill prevention and mitigation practices. The Company will provide the
City documentation of waste disposal and its final disposition.
46. Water supply. The Company shall identify in the site plan its source
for water used in both the drilling and production phases of operations.
The sources and amount of water used in the City shall be documented
and this record shall be provided to the City annually or sooner, if
requested by the City Manager. The disposal of water used on site shall
also be detailed including anticipated haul routes, approximate number
of vehicles needed to supply and dispose of water and the final
destination for water used in operation.
No COGCC regulation applicable to water supply.
47. Weed control. The Company shall be responsible for ongoing weed
control at oil and gas operations, pipelines, and along access roads during
construction and operation, until abandonment and final reclamation is
completed per City, Larimer County or other applicable agency
regulations. The appropriate weed control methods and species to be
controlled shall be determined through review and recommendation by
the County Weed Coordinator by reference to the Larimer County
Noxious Weed Management Plan and in coordination with the
requirements of the surface owner.
1003.f. Weed control. During drilling, production, and reclamation operations, all
disturbed areas shall be kept as free of all undesirable plant species designated to
be noxious weeds as practicable. Weed control measures shall be conducted in
compliance with the Colorado Noxious Weed Act, C.R.S. §35‐5.5‐115 and the current
rules pertaining to the administration and enforcement of the Colorado Noxious
Weed Act. It is recommended that the operator consult with the local weed control
agency or other weed control authority when weed infestation occurs. It is the
responsibility of the operator to monitor affected and reclaimed lands for noxious
weed infestations. If applicable, the Director may require a weed control plan.
(Also see Rules 603j, 1002c, and 1003, and 1004 regarding weeds).
CITY COUNCIL AGENDA
Karen Weitkunat, Mayor Council Chambers
Gerry Horak, District 6, Mayor Pro Tem City Hall West
Bob Overbeck, District 1 300 LaPorte Avenue
Lisa Poppaw, District 2 Fort Collins, Colorado
Gino Campana, District 3
Wade Troxell, District 4
Ross Cunniff, District 5 Cablecast on City Cable Channel 14
on the Comcast cable system
Darin Atteberry, City Manager
Steve Roy, City Attorney
Wanda Nelson, City Clerk
The City of Fort Collins will make reasonable accommodations for access to City services, programs, and activities
and will make special communication arrangements for persons with disabilities. Please call 221-6515 (TDD 224-
6001) for assistance.
**REVISED**
ADJOURNED MEETING
April 23, 2013
After the Work Session
1. Call Meeting to Order.
2. Roll Call.
3. Items Relating to the Oil and Gas Operator Agreement Between the City and Prospect Energy,
LLC. (staff: Laurie Kadrich, Lindsay Ex, Dan Weinheimer)
A. Second Reading of Ordinance No. 057, 2013 Terminating the Moratorium Imposed by
Ordinance No. 145, 2012 with Respect to Oil and Gas Operations Conducted under an
Oil and Gas Operator Agreement Between the City and Prospect Energy, LLC and
Exempting Such Operations from the Prohibitions Contained in Section 12-135 of the City
Code (Options 1 and 2).
B. Resolution 2013-036 Approving an Amendment to the Oil and Gas Operator Agreement
Between the City and Prospect Energy, LLC (Options 1 and 2).
On March 19, 2013, Council approved an Operator’s Agreement with Prospect Energy to conduct
oil and gas operation in the city limits. The terms of the Agreement ensure stringent public health
and safety measures are in place through Best Management Practices (BMPs), which generally
exceed current requirements mandated by the Colorado Oil and Gas Conservation Commission
(COGCC), and provide strict controls on the release of methane gases and other volatile organic
compounds (VOCs). The Council also adopted on First Reading, Ordinance No. 057, 2013, by a
vote of 5-1 (nays: Ohlson, absent: Poppaw), removing the Moratorium imposed by Ordinance No.
145, 2012, with respect to an Oil and Gas Operator Agreement with Prospect Energy.
April 23, 2013
• Option #1- Amended Operator Agreement Resolution 2013-036
Resolution 2013-036 will further amend the Operator’s Agreement with Prospect Energy to clarify
that (1) no new drilling will occur in any plugged or abandoned well in the Fort Collins Field and
that (2) all Colorado Oil and Gas Conservation Commission rules to be effective August 1, 2013
will apply to any exploration and drilling activities in the Undeveloped Acreage (UDA), and (3)
along the west and southern boundaries of the UDA, a 1,000 foot set-back shall be required from
any residential area in accordance with COGCC standards of measurement, and (4) the Amended
Agreement must be executed by both parties on or before June 15, 2013.
• Option #2 – Amended Operator Agreement Resolution 2013-036
Limit the Agreement to the Fort Collins Field by removing UDA from the Operator Agreement and
prohibit re-entry into plugged and abandoned wells.
4. Other Business.
a. Motion to adjourn to 6:00, Monday, April 29, 2013.
5. Adjournment.
REVISED
DATE: April 23, 2013
STAFF: Laurie Kadrich, Lindsay Ex,
Dan Weinheimer
AGENDA ITEM SUMMARY
FORT COLLINS CITY COUNCIL 3
SUBJECT
A. Second Reading of Ordinance No. 057, 2013 Terminating the Moratorium Imposed by Ordinance No. 145,
2012 with Respect to Oil and Gas Operations Conducted under an Oil and Gas Operator Agreement Between
the City and Prospect Energy, LLC and Exempting Such Operations from the Prohibitions Contained in
Section 12-135 of the City Code (Options 1 and 2).
B. Resolution 2013-036 Approving an Amendment to the Oil and Gas Operator Agreement Between the City and
Prospect Energy, LLC (Options 1 and 2).
EXECUTIVE SUMMARY
On March 19, 2013, Council approved an Operator’s Agreement with Prospect Energy to conduct oil and gas operation
in the city limits. The terms of the Agreement ensure stringent public health and safety measures are in place through
Best Management Practices (BMPs), which generally exceed current requirements mandated by the Colorado Oil and
Gas Conservation Commission (COGCC), and provide strict controls on the release of methane gases and other
volatile organic compounds (VOCs). The Council also adopted on First Reading, Ordinance No. 057, 2013, by a vote
of 5-1 (nays: Ohlson, absent: Poppaw), removing the Moratorium imposed by Ordinance No. 145, 2012, with respect
to an Oil and Gas Operator Agreement with Prospect Energy.
• Option #1- Amended Operator Agreement Resolution 2013-036
Resolution 2013-036 will further amend the Operator’s Agreement with Prospect Energy to clarify that (1) no new
drilling will occur in any plugged or abandoned well in the Fort Collins Field and that (2) all Colorado Oil and Gas
Conservation Commission rules to be effective August 1, 2013 will apply to any exploration and drilling activities in the
Undeveloped Acreage (UDA), and (3) along the west and southern boundaries of the UDA, a 1,000 foot set-back shall
be required from any residential area in accordance with COGCC standards of measurement, and (4) the Amended
Agreement must be executed by both parties on or before June 15, 2013.
• Option #2 – Amended Operator Agreement Resolution 2013-036
Limit the Agreement to the Fort Collins Field by removing UDA from the Operator Agreement and prohibit re-entry into
plugged and abandoned wells.
BACKGROUND / DISCUSSION
During Council discussion on March 19, 2013, questions arose regarding the inclusion of Undeveloped Acreage (UDA)
in the Operator Agreement. Staff responded incorrectly as to when staff was aware of the UDA. The UDA was
disclosed on March 1, 2013. Staff received the first Operator Agreement that included the UDA on March 7, 2013.
Council further inquired as to how development of the UDA may occur. Generally, Prospect Energy is limited to the
terms and conditions contained in a confidential Surface Use Agreement (SUA) with Anheuser-Busch, Incorporated
signed in April 2011. According to the Larimer County mineral lease notice (Attachment 4), the SUA is for a primary
term of three years expiring March 2014. If, at the expiration of the Primary Term of the SUA, lands not then included
within a producing or spacing unit are not engaged in drilling or reworking operations, then the lease expires.
According to the notice, an option to extend the agreement for an additional three years is available if Prospect Energy
makes an additional payment.
In addition to any requirements imposed by the SUA, any oil and gas development would be required to comply with
the Council-approved Operator Agreement. A key aspect of the Agreement requires the following:
Conceptual Review – No less than thirty (30) days prior to the submission of an Application for a Permit to Drill (APD)
April 23, 2013 -2- ITEM 3
be for staff and the applicant to review the proposed oil and gas operation in a manner that ensures compliance with
the operator agreement and applicable state and federal regulations. This pre-submittal meeting will also allow the
applicant and staff to:
• explore site-specific concerns
• discuss project impacts and potential mitigation methods including field design and infrastructure construction
to minimize impacts
• discuss coordination of field design with other existing or potential development and operators
• identify sampling and monitoring plans for air and water quality, and other elements of the operator agreement
as contained in Exhibit A (Best Management Practices).
STAFF RECOMMENDATION
If Council desires to have the Best Management Practices described in the Operator Agreement apply to the UDA,
Staff recommends adoption of the Option #1 Ordinance No.57 on Second Reading and Resolution 2013-036 -
Amending the Agreement to clarify that (1) no new drilling will occur in any plugged or abandoned well in the Fort
Collins Field and that (2) all Colorado Oil and Gas Conservation Commission rules to be effective August 1, 2013 will
apply to any exploration and drilling activities in the Undeveloped Acreage (UDA), and (3) along the west and southern
boundaries of the UDA, a 1,000 foot set-back shall be required from any residential area in accordance with COGCC
standards of measurement, and (4) the Amended Agreement must be executed by both parties on or before June 15,
2013.
ATTACHMENTS
1. Copy of First Reading Agenda Item Summary - March 19, 2013 (w/o attachments)
2. Copy of First Reading Agenda Item Summary – December 4, 2012 (LUC & Moratorium) (w/o attachments)
3. Ordinance No. 145, 2012, establishing the Moratorium
4. Larimer County Oil and Gas Lease notice
COPY
COPY
COPY
ATTACHMENT 1
DATE: March 19, 2013
STAFF: Laurie Kadrich, Lindsay Ex
Dan Weinheimer
AGENDA ITEM SUMMARY
FORT COLLINS CITY COUNCIL 28
SUBJECT
Items Relating to an Operator Agreement between the City and Prospect Energy, LLC.
A. Resolution 2013-024 Approving an Oil and Gas Operator Agreement Between the City and Prospect Energy,
LLC.
B. First Reading of Ordinance No. 057, 2013, Terminating the Moratorium Imposed by Ordinance No. 145, 2012
with Respect to Oil and Gas Operations Conducted under an Oil and Gas Operator Agreement Between the
City and Prospect Energy, LLC.
EXECUTIVE SUMMARY
Council is considering the approval an Operator’s Agreement with Prospect Energy that would permit Prospect Energy
to conduct oil and gas operations in the city limits. The terms of the Agreement ensure stringent public health and
safety measures are in place through Best Management Practices (BMPs),which generally exceed current
requirements mandated by the Colorado Oil and Gas Conservation Commission (COGCC), and provide strict controls
on the release of methane gases and other volatile organic compounds (VOCs). If the Agreement is approved, Council
will consider adopting Ordinance No. 057, 2013 removing the Moratorium imposed by Ordinance No. 145, 2012 with
respect to an Oil and Gas Operator Agreement with Prospect Energy.
BACKGROUND / DISCUSSION
Oil and gas production is currently limited to the Fort Collins Field (Attachment #2), located in the northeast portion
of the city. The Fort Collins Field is regulated by the COGCC and has been in production since about 1925. In the city
limits, the field consists of seven oil producing wells and seven injecting wells, all of which are managed by one
operator, Prospect Energy. Prospect Energy is unable to drill new wells since Ordinance No. 145 (Moratorium) was
approved December, 2012. In addition, the company is no longer able to utilize hydraulic fracturing since the adoption
of Ordinance No. 032. Prospect Energy also holds certain leasehold interests within the City described as the
Undeveloped Area (UDA), as depicted in Attachment #2. Council allowed for exemptions from Ordinance No. 032
provided a Council approved operator agreement was in place that includes strict controls on methane release and
adequately protects the public health, safety and welfare of the city. The recommended agreement with Prospect
Energy contains such provisions. A summary of those provisions follows with more detailed information contained in
Exhibit A to Resolution 2013-024.
Summary of Controls for Methane Gas
Prospect Energy captures all gases from production and tanks and routes them to a thermal oxidizer for destruction.
This method currently results in over 99% of all emissions being destroyed. The COGCC rule requires 95% of
emissions be destroyed. This proposed Agreement requires at least 98% destruction and use of a thermo-oxidizer
for emission destruction to be utilized for any new wells in the Fort Collins Field. In the UDA, Prospect Energy will
capture and destroy emissions at the well (Exhibit A -Section 21 (b)) or send through a thermal oxidizer. Prospect
Energy also agrees to comply with:
• Environmental Protection Agency (EPA) Method 21 (Section 21 – Exhibit A)
• No uncontrolled venting of methane (Section 21 – Exhibit A)
• Minimal flaring during drilling and completions (Section 21 – Exhibit A)
• Develop and maintain a Leak Detection and Repair (LDAR) (Section 21 – Exhibit A)
N Use a Forward-Looking Infrared (FLIR) camera
N Notify the City for observation of testing
• Green Completions (Section 22- Exhibit A)
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• Containment of all produced water or flowback fluids and no permanent storage of waste products (Section
45 – Exhibit A)
Summary of Best Management Practices
(Public Health and Safety Measures – details in Exhibit A)
Setbacks – Any new wells drilled will conform to the current COGCC rules which will be five hundred (500) feet from
any building and one thousand (1,000) feet from any institutional facility beginning August 1, 2013. However, in the
Fort Collins Field, new wells must be constructed on existing well pads because of an existing Surface Use Agreement
(SUA), which conform to previous COGCC setbacks. Those well pads are located near or within Water’s Edge,
Richard’s Lake and Hearthfire subdivisions.
Conceptual Review – No less than thirty (30) days prior to the submission of an Application for a Permit to Drill (APD)
(note: APD is the COGCC permitting process), Prospect Energy will schedule a meeting with the City to review the
proposed new well or drilling activity. The goal of this meeting would be for staff and the applicant to review the
proposed oil and gas operation in a manner that ensures compliance with the operator agreement and applicable state
and federal regulations. This pre-submittal meeting will also allow the applicant and staff to explore site-specific
concerns, to discuss project impacts and potential mitigation methods including field design and infrastructure
construction to minimize impacts, to discuss coordination of field design with other existing or potential development
and operators, to identify sampling and monitoring plans for air and water quality, and other elements of the operator
agreement as contained in Exhibit A.
Community Notice –Prospect Energy must provide community and staff notice. Prior to an APD, the Agreement
specifies mailed notice, posted notice, neighborhood meetings and also a notification to the public prior to the
commencement of drilling. Consistent with Option “B” of the proposed Land Use Code regulations, notice is required
for any oil and gas operation to surface owners within two thousand six hundred forty (2,640) feet of the parcel and
to persons registered in writing with the Planning Director.
Closed Loop Pitless Systems – are required for the Containment and/or Recycling of Drilling and Completion Fluids.
Wells shall be drilled, completed and operated using closed loop, pitless systems for containment and/or recycling of
all drilling, completion, flowback and produced fluids.
Chemical disclosure and storage - the City will be provided, in table format, the name, Chemical Abstract Services
(CAS) number, volume, storage, containment and disposal method for all drilling and completion chemicals (solids,
fluids, and gases) used on the well pad. Fracture chemicals will be uploaded onto the Frac Focus website. The City
will also post such information on the City website. The Company will not permanently store hydraulic fracturing
chemicals, flowback from hydraulic fracturing, or produced water in the current City limits.
Electric equipment – Prospect Energy will be required to utilize electric-powered engines for motors,
compressors, and drilling equipment and for pumping systems when feasible in order to mitigate noise and reduce
emissions.
Emergency preparedness plan – Prospect Energy is required to develop an emergency preparedness plan for each
specific facility site, which shall be in compliance with the International Fire Code. Among other provisions, the plan
shall be filed with the Poudre Fire Authority and the City of Fort Collins Office of Emergency Management and updated
on an annual basis or as conditions change (responsible field personnel change, ownership changes, etc.). The plan
includes a provision establishing a process by which the operator engages with the surrounding neighbors to educate
them on the risks of the on-site operations and to establish a process for surrounding neighbors to communicate with
Prospect Energy.
Air Quality – Prospect Energy must comply with emissions regulations as required by State and Federal laws. In
addition, there will be no uncontrolled venting of methane. All gas vapors will be captured to the extent practicable.
Vapor capture equipment will operate at 98% efficiency or better. There are no gas sales lines in the Fort Collins field
because the quantity and quality of gas is low and not marketable. If salable gas were to occur in the UDA, a sales
line would be constructed. The Operator will develop and maintain a leak detection and component repair (LDAR)
program according to EPA Method 21 for equipment used in permanent operations. LDAR will be performed on newly
installed equipment, and then on an annual basis. A forward-looking infrared (FLIR) camera will be used as the
preferred implementation method of EPA Method 21 as available from the state; if unavailable, other methods will be
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used in compliance with this method. Upon request from the City, Prospect Energy will implement EPA Method 21
should additional concerns arise. At least once per year, Prospect Energy will notify the City prior to FLIR camera use
in case the City wishes to observe the method.
Prospect Energy and the City will split the costs of baseline sampling and analytical work performed by a third party
consultant agreeable to both parties over a five (5) day sampling period. Prospect Energy will conduct air sampling
during well completion. Periodic air monitoring will be performed for hydrogen sulfide (H2S), a hazardous air pollutant
(HAP). Prospect Energy will perform field monitoring using the Jerome 631 XC or equivalent instrument annually, or
until such time that odors are not detected past the Fort Collins Tank Battery fence line in City Limits. The City may
require additional air monitoring as needed to respond to emergency events such as spill, process upsets, or
accidental releases or in response to odor complaints in City Limits.
During well completion, the capture and beneficial use of natural gas is preferred over flaring. However since the Fort
Collins field has so little natural gas it is not reasonable to capture the gas and as such minimal flaring will occur. What
flaring does occur will be monitored twenty-four (24) hours per day. During production the flare shall be fired with
natural gas and shall be operated with a ninety eight (98) percent or higher VOC destruction efficiency. An automatic
pilot system shall be used when feasible. Other ignition systems will include the installation and operation of a
telemetry alarm system or an on-site visible indicator showing proper function.
Water Quality Monitoring Plan – Prospect Energy shall comply with COGCC Rule 609. In summary, this requires
pre- and post-drilling testing. The rules require oil and gas operators to sample all “Available Water Sources” (owner
has given consent for sampling and testing and has consented to having the sample data obtained made available
to the public), with a cap of four (4) water sources, within one-half (1/2) mile radius of a proposed well, multi-well site,
or dedicated injection well. Water sources include registered water wells, permitted or adjudicated springs, and certain
monitoring wells. Prospect Energy agrees to the following requirements above and beyond the COGCC requirements:
analyzing for dissolved metals as indicated in the Land Use Code; sampling intervals to be baseline (before drilling),
post-drilling at one, three, and six years. Analytical results will be shared with the COGCC, the City, and the landowner.
All spills, for new and existing wells, shall be managed in accordance with COGCC regulations.
Soil Gas Monitoring – The City, at its discretion, may conduct soil gas monitoring to assess well casing integrity. This
would be typically completed within 90 days of new well completion. The City shall notify the Operator prior to entering
the site for soil gas monitoring.
Spills - The Company shall comply with COGCC Rule 609 “Spills and Releases”, and notify the City and whenever
there is notification to the COGCC. The Company shall also copy the City on any written correspondence to the
COGCC or other regulatory authority.
Transportation and circulation - Prospect Energy shall include in their applications detailed descriptions of all
proposed access routes for equipment, water, sand, waste fluids, waste solids, mixed waste, and all other material
to be hauled on the public streets and roads of the City. The submittal shall also include the estimated weights of
vehicles when loaded, a description of the vehicles, including the number of wheels and axles of such vehicles, trips
per day and any other information required by the Traffic Engineer. Preliminary information is required for this item
for the Conceptual Review meeting, in accordance with Exhibit A. The Company shall comply with all Transportation
and Circulation requirements as contained in the Land Use Code as may be reasonably required by the City’s Traffic
Engineer.
Wastewater and Waste Management - There will be minimal waste water in the Fort Collins Field, as there will be
no tank batteries (produced water and oil storage) in the City for the Fort Collins field. As described in “Closed Loop
System” and “Green Completions,” there is no discharge of fluids and fluids are contained. Storage, transportation,
and treatment of wastes during well drilling and completion are handled by third party contractors, under the direction
of the Operator. Waste is stored in tanks, transported by tanker truck, and disposed of at licensed disposal facilities.
In the UDA, new secondary containment shall be constructed of steel, with sufficient perimeter and height to hold one
and one-half (1.5) times the volume of the largest tank and sufficient freeboard to prevent overflow. No potential
ignition sources shall be installed inside the secondary containment area unless the containment enclosed a fired
vessel. The requirements for secondary containment will meet the Fort Collins Stormwater Criteria Manual. No land
treatment of oil impacted or contaminated drill cuttings are permitted. The use of a closed loop drilling system
precludes discharge of produced water or flowback to the ground or the use of pits. Produced water or flowback will
not be used for dust suppression. A copy of the field’s Spill Prevention, Control, and Countermeasure Plan (SPCC)
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will be given to the City, which describes spill prevention and mitigation practices. The Company will provide the City
documentation of waste disposal and its final disposition.
Water supply – Prospect Energy will identify in the site plan its source for water used in both the drilling and
production phases of operations. The sources and amount of water used in the City shall be documented and this
record shall be provided to the City annually or sooner, upon request of the City Manager. The disposal of water used
on site shall also be detailed including anticipated haul routes, approximate number of vehicles needed to supply and
dispose of water, and the final destination for water used in operation.
Comparison with LUC Option “B”
During Council deliberations, direction was given to staff to proceed with negotiations for an Agreement with Prospect
Energy that was consistent with the Land Use Code provisions reviewed by Council in Ordinance No. 144. While
Ordinance No. 144 was not adopted it contained regulation for oil and gas exploration and production. One of the
options was for a single-track development review process that generally contained more stringent regulations than
currently required by the COGCC and was described as Option “B”. Staff prepared a matrix illustrating how the
proposed agreement with Prospect Energy meets or exceeds requirements in Option B (Attachment 3).
Other Conditions of the Agreement
Through this Agreement, Prospect Energy will comply with all BMPs for New Wells as defined as a “Company-
operated well spudded during the term of this agreement, and located on either a currently existing well pad or a new
well pad that is located within the City limits.” In other words, BMPs will not apply to previously developed wells either
inside or outside the city limits owned by Prospect Energy. Approving this agreement requires Prospect Energy to
comply with the terms of the Agreement and removes any further development review permitting process. However,
the Agreement provides for public and staff notice, staff review and periodic inspections of any New Wells. Prospect
Energy will also be required to use the most stringent regulation in effect whether the regulation is a State, Federal
or required by this Agreement.
The term proposed in the Agreement is for five (5) years with successive five (5) year terms, until either Party wishes
to terminate the Agreement. The Agreement is binding to anyone who acquires either the Fort Collins Field or the
Undeveloped Acreage (UDA). There is also a non-performance clause in the Agreement which allows for mediation
and court remedies in the event the performance is not “cured.”
If Council approves this agreement, Prospect Energy has indicated they would continue operating the Fort Collins Field
and potentially increase the number of wells by six (6) to eight (8). As required by a SUA all new wells will be drilled
from existing well pads thus minimizing any future surface impact from the new drilling. It is likely that hydraulic
fracturing would be utilized in the operation of the field. This fracturing would not be in conjunction with horizontal
drilling and does not require intensive water usage seen in other natural gas developments. For example, the last six
(6) hydraulic fracturing processes in the Muddy J Formation - Fort Collins Field averaged 114,129 gallons of water
compared to 380,272 for a Wattenberg Vertical well or a Wattenberg Horizontal well requiring 2,992,374 gallons (data
provided by COGCC). In addition, it is likely that the Fort Collins Field will not produce any marketable gas due to the
extremely low quantity of gas contained in the field.
Prospect Energy also holds certain leasehold interests within the City described as the Undeveloped Area (UDA) as
depicted in (Attachment #2). If Council approves this agreement Prospect Energy intends to explore oil and gas
development in the UDA. It should be noted that Prospect Energy has Surface Use Agreements with the surface
owners for the Fort Collins Field (since 1988, amended 2001) and the UDA (2011). Those agreements govern any
potential well locations and associated facilities within the Subdivisions and other specified terms, including, but not
limited to, landscaping and fencing around wells and associated production equipment.
FINANCIAL / ECONOMIC IMPACTS
A true triple bottom line analysis includes an assessment of environmental, social, and economic impacts. Staff
analysis to date has focused on potential and possible environmental impacts if hydraulic fracturing is allowed. Staff
was unable to conclusively determine financial impacts of any health and safety hazard related to hydraulic fracturing
due to the significant number of variables that relate to the hydraulic fracturing process, transportation of material and
waste produced, and removal of waste materials. A social impact analysis has not yet been undertaken for this
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discussion. It is assumed that social impacts of hydraulic fracturing are discussed and addressed in terms of concerns
about health impacts, impacts to property and housing values, and quality of life.
Prospect Energy indicates that without this Agreement they would no longer be able to adequately operate the Fort
Collins Field or expand into other existing lease holdings currently within the city limits.
ENVIRONMENTAL IMPACTS
Documented in Agenda Item Summary (AIS) 26, prepared for Council Hearing February 19, 2013.
STAFF RECOMMENDATION
Staff recommends adoption of Resolution 2013-024. If adopted, staff recommends exempting Prospect Energy from
the moratorium enacted by Ordinance No. 145, 2013.
ATTACHMENTS
1. Vicinity Map
2. Fort Collins Field & UDA
3. Matrix Comparing Agreement & LUC Option B
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ATTACHMENT 2
DATE: December 4, 2012
STAFF: Laurie Kadrich
Dan Weinheimer
AGENDA ITEM SUMMARY
FORT COLLINS CITY COUNCIL 26
SUBJECT
Items Relating to Oil and Gas Exploration and Production Regulations.
A. First Reading of Ordinance No. 144, 2012, Amending the Land Use Code Pertaining to Oil and Gas
Exploration and Production Regulations (Option A or B).
AND/OR
B. First Reading of Ordinance No. 145, 2012, Establishing a Moratorium on the Acceptance or Processing of
Land Use Applications, Permit Applications, and Other Applications Seeking Approval to Conduct Oil and Gas
Extraction or Related Operations Within the City of Fort Collins (Option C).
EXECUTIVE SUMMARY
City Council directed staff to evaluate methods by which the City may regulate oil and gas exploration and production.
Since oil and gas operations are governed primarily by the state and federal governments, staff will provide an
overview of what regulations exist and where the City may be effective in both filling existing regulatory “gaps” and
strengthening existing regulations in order to better protect the health and safety of residents. Discussion includes
development review criteria, water and air quality, environmental protections, and emergency services. Staff also
presents information on non-regulatory ways to respond to residents’ concerns including options such as surface-use
and operator agreements, legislative advocacy, regional cooperation, and active participation in related state and
federal rulemaking processes.
Staff is providing three options for Council’s consideration:
• Option A: Dual-track development review process
• Option B: Single-track development review process
• Option C: Moratorium
BACKGROUND / DISCUSSION
Existing oil and gas activity in the city:
Oil production is currently limited to the Fort Collins Field, located in the northeast portion of the city. The Fort Collins
Field is regulated by the Colorado Oil and Gas Conservation Commission and has been in production since about
1925. In the City limits, the field consists of seven producing wells and seven injecting wells within the City limits, all
of which are managed by one operator. Four residential subdivisions have developed around the Fort Collins field,
with an additional subdivision planned in the area.
In addition to the Fort Collins field, well development has historically occurred southward along the I-25 corridor. There
are no active wells in this area today. As all wells were subsequently annexed into City boundaries, there have been
no permits issued to date in the City of Fort Collins.
Two recent developments may result in significant changes in oil and gas exploration in Larimer County. The first is
the successful exploration of the Niobrara formation, which lies deep under much of northeastern Colorado, and the
second is the advancing technology of hydraulic fracturing to extract the resource from within deeply located shale
deposits. This has raised considerable public concern.
Existing regulations
Because oil and gas exploration and production is regulated by the state in Colorado, local jurisdictions are limited
in their ability to control the location, procedures, and impacts of oil and gas drilling in and around their boundaries.
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A combination of the state’s laws and several court cases have resulted in the preemption of local control over various
aspects of oil and gas activities, and the scope of that preemption is the subject of ongoing litigation..
Accordingly, existing oil and gas regulations in the Land Use Code are limited to a single paragraph in Section 3.8.14
and reads as follows:
“Any use that is not permitted under the provisions of Article 4, but that must be allowed because of
preemption by a sovereign jurisdiction or because of a court order, shall be processed as a Planning
and Zoning Board Review (Type 2 review) and shall be approved, with or without conditions, as
necessary to ensure that such use complies with all general standards as set forth in Article 3 and
zone district standards as set forth in Article 4 as are or may reasonably be interpreted to be
applicable to such use, provided that such standards are not preempted or ordered by a court not to
be applied.”
This section indicates that all oil and gas operations are subject to a Type 2, or Planning and Zoning Board review.
This paragraph also suggests that oil and gas operations are subject to the standards set forth in the Land Use Code,
to the extent that they are not preempted by the state.
DISCUSSION - Proposed Framework for Oil and Gas Operations:
As discussed above, the City has a shared authority with the state and other agencies for controlling how oil and gas
operations occur both above and below ground. Typically, the City’s Land Use Code serves as the primary mechanism
for land development in the City. However, because of the shared authority with the state, staff has identified a number
of methods to address specific community concerns and better address oil and gas operations at local levels. Staff
recommends that the City engage at the federal, state and regional levels, as well, to better affect regulations or ensure
compliance with regulations.
Federal
The federal level options are aimed at influencing the Environmental Protection Agency and other regulatory bodies
to gain more stringent oversight of oil and gas operations. The EPA intends to have a new set of operating criteria
for oil and gas in place in 2015 and City of Fort Collins staff intends to comment on whether those policies are
implemented at a statewide or local level. Significant costs may be incurred by the City if implemented locally rather
than utilizing existing statewide resources.
In addition to influencing governmental agencies at the federal level, the City can also utilize federal research,
programs, and services to ensure oil and gas operations both within the City’s boundaries and at a regional level do
not degrade quality of life.
State
Colorado permits oil and gas activity through the Colorado Oil and Gas Conservation Commission (COGCC). In
addition to the COGCC, two other state agencies have a role in oversight of oil and gas operations – the Colorado
Department of Public Health and the Environment (CDPHE) and the Colorado Department of Parks and Wildlife
(DPW). CDPHE’s oversight is focused upon the potential and actual impacts of oil and gas activity on human health,
specifically with regards to air and water quality. The DPW, a sister agency of the COGCC under the Department of
Natural Resources, has oversight of habitat and wildlife protection.
The state-level options include the following opportunities for City involvement:
• Engage in stakeholder processes – As with the federal level engagement opportunities, the City can
participate in stakeholder processes to affect the rules at the state level that affect oil and gas operations.
• Local Government Designee – This tool establishes a staff representative who participates in the state’s
review of oil and gas applications and provides local comments onto the oil and gas applications at the state
level.
• Intergovernmental Agreement (IGA) with the state – An IGA could allow for the City to have inspection
authority, which would increase the oversight of oil and gas operations within city limits.
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• Advocating for legislative change – The City can engage in legislative discussions to influence the state
and other municipalities. Fort Collins’ Legislative Policy Agenda calls for supporting legislation to provide
communities with more tools to address the industry and more power over local land use.
• Designated Outside Activity Areas – This tool allows for an area, e.g., City Park, to receive the same 350-
foot setback that high density areas receive. The City applies for this designation through the state on areas
in the City that meet certain qualifications, e.g., a certain number of users per day or per year. Longmont has
successfully received approval for two City park complexes.
Regional
Regional solutions include addressing some impacts of oil and gas activity collaboratively with other local
governments. These collaborations include hiring a shared inspector to effectively balance the ability to inspect local
wells with the number of existing wells and anticipated activity. Staff initiated conversations with several jurisdictions
about sharing an inspector.
The regional level also presents a partnership opportunity with other municipalities, counties, and researchers to
address issues that go beyond our city borders, e.g., air quality. Intergovernmental agreements to share monitoring
resources and equipment for air quality are one tool the City could explore. From a research perspective, faculty at
Colorado State University is examining air emissions from well sites in Garfield County beginning in spring 2013
through fall 2015. The results of this study, funded jointly by the County and industry, are anticipated to provide a
better understanding of the toxicity of well emissions. Staff met with the faculty associated with this study, as well as
others at CSU who are examining air emissions and regional impacts from oil and gas operations, and will utilize the
lessons learned from these research efforts to recommend changes to local regulations.
Local
The local solutions include at least five mechanisms to address oil and gas operations to ensure community concerns
are addressed and residents’ quality of life is protected:
• Local Government Designee – This tool establishes a staff representative who participates in the state’s
review of oil and gas applications and provides local comments onto the oil and gas applications at the state
level.
• Operator Agreements – A negotiated agreement between the City and any operator wishing to conduct oil
and gas operations in the City. The agreement could include additional, prescriptive requirements such as
enhanced baseline and ongoing monitoring.
• Intergovernmental Agreement with the state – An IGA could allow for the City to have inspection authority,
which would increase the oversight of oil and gas operations within city limits. It also provides opportunities
for partnering with our surrounding municipalities on a regional basis for inspection authority.
• Surface Use Agreements –A negotiated agreement between the landowner and any operator wishing to
conduct oil and gas operations providing another mechanism to obtain enhanced conditions.
• Land Use Regulations – A set of regulations and control mechanisms that are protective of public health and
the environment. The Land Use Code amendments before Council include Option A (a dual-track
development review process) and Option B (a single-track development review process). The regulatory
options are described in greater depth below.
Land Use Regulations – Review Processes
Two options are presented related to Land Use Code regulations:
• Option A: Dual-track development review process, which includes both an expedited and standard review
process
• Option B: Single-track development review process – This option combines the prescriptive criteria in the
expedited review track with the standard review process. Under this option, all development review
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applications would be processed under a single review track and required to meet the same criteria. All
decisions would be made by the Planning and Zoning Board.
The review processes for the dual-track development review processes are outlined in Table 1 below (see Table 2 for
the single-track review process). The Standard Review process requires the operator to locate a well and operate in
a manner that does not degrade quality of life (e.g., adjacent land uses, natural resources, water quality, air quality,
visual and scenic resources, etc.). The Standard Review process also requires operators to attend a neighborhood
meeting and a hearing in front of the Planning and Zoning Board, pursuant to the Type 2 standards currently outlined
in the Land Use Code. The regulations outlined in the Standard Review process however, are more goal-based than
prescriptive.
Alternatively, the Expedited Review process requires operators (who voluntarily choose this option) to meet specific,
objective criteria prescribed in the review process. By meeting these more prescriptive standards, staff proposes that
public comments only be taken in a written format and that the Director of Community Development and Neighborhood
Services has the final decision-making authority.
This dual-track review process is a model utilized by other local governments to address oil and gas development and
has achieved some success in engaging operators in meeting specific objective criteria.
Table 1: Option A: Dual-track review process, including the standard and expedited review processes, notice
requirements, and decision-making authority.
Element Standard Review Process
(Type 2 Review)
Expedited Review Process
(Basic Development Review)
Regulations Must locate a well and operate in a
manner that does not degrade
quality of life
Must meet ALL specific, prescriptive criteria
Notice
Requirements
Notification sent when an
application is received, prior to a
neighborhood meeting and prior to
the hearing
Notification sent when an application is received and
if an application is approved
Public Comments Written comments can be provided
prior to or at the public hearing
Residents and affected parties can
testify at the public hearing
Written comments can be provided after the
notification that an application has been received
Decision-making
authority
Planning and Zoning Board
approval
Director approval
Setbacks If not located on an existing well pad, all operations
must be 500’ from an occupied structure, water well,
Natural Area or City Park and 150’ from any property
line
Appeals Decisions are appealable to City
Council
Decisions can be appealed in District Court
Table 2: Option B: Single-track review process
Element Review Process
Regulations Must meet ALL specific, prescriptive criteria
Notice Requirements Notification sent when an application is received, prior to a neighborhood meeting and
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Appeals Decisions are appealable to City Council
Land Use Regulations – Proposed Standards
All new oil and gas operations will be subject to the requirements in either the standard review or expedited review
track, (Table 3) unless Option B is adopted by Council and then the standards in expedited review will prevail.
Common areas for oil and gas operators to address in submittals include air quality, water quality, and natural resource
protection. Within each area the standards differ based upon the review process. The conditions offered for standard
review consist largely of plans and information about proposals for preventing or mitigating community impacts.
Table 3: This table outlines the standards for air quality, water quality, natural resources standards, general
standards and reciprocal setbacks associated with both the standard and expedited reviews.
Regulation
Option A Option B
Standard Review Expedited Review
Air Quality
Minimize all emissions 95% VOC
(Volatile Organic
Compounds)
destruction
98% VOC destruction 98% VOC destruction
Flares and combustion
devices
-No open flares
-Automatic flame
ignition system
-No open flares
-Automatic flame ignition system
with surveillance
-No open flares
-Automatic flame ignition system
with surveillance
Pollution Prevention -Leak Detection
Program Required
-Air Quality Mitigation plan
required
- Leak Detection Program required
-Reduce methane emissions
during maintenance
-Air Quality Mitigation plan
required
- Leak Detection Program
required
-Reduce methane emissions
during maintenance
Containment Must ensure no
significant
degradation
Require Closed Loop Pitless
systems
Require Closed Loop Pitless
systems
Pneumatic Controllers Must ensure no
significant
degradation
Use no or low bleed devices Use no or low bleed devices
Electric Engines Required for
pumping units and
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Regulation
Option A Option B
Standard Review Expedited Review
Water Quality
Water Quality
Monitoring Plan
Must ensure no
significant
degradation of
water quality
Baseline monitoring within ½ mile:
-Sample four sites
-Sample multiple aquifers
-Sample up and down gradient
Baseline monitoring within ½
mile:
-Sample four sites
-Sample multiple aquifers
-Sample up and down gradient
Conduct Subsequent
Monitoring
Must ensure no
significant
degradation of
water quality
Monitor at same locations 1, 3, and
6 years after well completion
Monitor at same locations 1, 3,
and 6 years after well completion
Soil Gas Monitoring Must ensure no
significant
degradation of
water quality
-Monitor soil gas within 90 days of
well completion
-Results may trigger additional
groundwater monitoring
-Monitor soil gas within 90 days
of well completion
-Results may trigger additional
groundwater monitoring
Natural Resources
Natural Resources
Protection
Must ensure no
significant
degradation
-Must be set back 500 feet from a
waterbody, stream, wetland,
Natural Area or Park
-Compliance with all buffer
standards
-Cannot qualify if within 500 feet
of a waterbody, stream, wetland,
Natural Area or Park
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Regulation
Option A Option B
Standard Review Expedited Review
Noise Use an acoustically insulated cover to enclose the motor or engine
All production equipment used shall comply with the noise levels in our Municipal Code
in residential zones
Reciprocal setbacks – applies to future residential development proposals in proximity of oil and gas
operations
Abandoned and
plugged wells
Setback ranges from 20-50 feet from the abandoned and plugged well, based on
screening, berming, and fencing options
Any oil and gas well
that has not been
plugged and
abandoned
Setback ranges from 150-250 feet from all other wells, based on screening, berming
and fencing options
From a safety perspective, the minimum setback should never be less than 150’
FINANCIAL / ECONOMIC IMPACTS
Adoption of the Land Use Code regulations, in either Option A or Option B will require interdisciplinary oversight in the
development review process beyond the typical development review process. For example, additional staff time from
representatives from Environmental Sustainability and Utilities will be required to evaluate the air and water quality
elements of any proposed oil and gas operation.
If Council indicates staff should continue to pursue the non-regulatory options, e.g., the Local Government Designee,
Intergovernmental Agreements for inspection authority, etc., then the financial requirements from the City will increase.
Funds for these efforts have been allocated through the 2013-2014 Budget (Offer 197.2 Oil and Gas Liaison).
ENVIRONMENTAL IMPACTS
While the proposed Land Use Code regulations are designed to protect the City’s quality of life, sense of place, and
public health, oil and gas drilling within the city still could have significant impacts on air quality and water quality, and
there is also concern about the increased risk of spills and releases of hazardous materials due to an increase in use,
storage and transportation of such materials. In addition, there are high volumes of truck and heavy equipment
associated with oil fields.
In addition to these impacts, well pads and service roads are fragmenting wildlife habitat, on a massive scale in
northeastern Colorado and in other communities throughout the western United States. The City’s Natural Areas, both
within and outside of the City, are threatened by this fragmentation. While there is conflicting technical information
regarding air and water quality threats, there is little doubt that oil and gas drilling would negatively affect the
environment in the community and does not support the City’s goals for sustainability.
STAFF RECOMMENDATION
Staff presents the following options to the Council for consideration:
Option A: Dual-track development review process
This option includes both expedited and standard review.
• The expedited review track requires operators to meet specific, objective criteria and agree to increased
setbacks, e.g., 500 feet from an occupied structure, water body, natural area, or City park and 150 feet from
any property line. By electing to meet these more prescriptive standards, a public hearing and neighborhood
meeting are not required. Instead, notification is provided when an application is received, and if an
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application is approved. Written comments can be submitted to the Director during the review process. The
Director has the final decision-making authority.
• The standard review track requires the operator to locate a well and operate in a manner that does not
significant degrade our quality of life. All standard review applications are subject to a neighborhood meeting
and a public hearing before the Planning and Zoning Board. All Board decisions are appealable to the City
Council.
Option B: Single-track development review process
This option combines the prescriptive criteria in the expedited review track with the standard review process. Under
this option, all development review applications would be processed under a single review track and be required to
meet the same criteria. All decisions would be made by the Planning and Zoning Board.
Option C: Moratorium
Local governments have considered the use of moratoriums to prevent new oil and gas operations within their
jurisdictions, citing the need to craft and adopt local land use regulations and/or to allow the state to address its
rulemaking process as it relates to setbacks and water quality regulations.
Current State Efforts Related to Oil and Gas regulation
The Colorado Oil and Gas Conservation Commission is currently addressing its rules by considering amendments to
water sampling and monitoring as well as addressing well setbacks and noise. The City secured Party Status for both
rulemaking hearings, making Fort Collins the only city with such status and providing the City with an opportunity to
submit comments on the state’s proposals, recommend alternatives, and a greater length of time to speak before the
Commission.
The state is reviewing its existing setback rules. New rules are anticipated to be in place early in 2013. Setbacks for
new wells from existing homes are an important consideration for several reasons – there is uncertainty about
emissions from well sites and the process of drilling and maintaining a well site could cause noise, traffic and light
impacts. The current setbacks for new wells are 150 feet from an occupied structure, 350 feet from a high density area
and 500 feet from some structures like hospitals, schools, and nursing homes. Many groups recommend increasing
the state setbacks from homes to 1,000 or even 2,000 feet. The City of Fort Collins will seek additional setback
distance, greater powers for residents in influencing site location proposals, and protection for community assets like
natural areas and parks.
Water quality is another area that the Commission is currently addressing. The proposal under consideration adopts
an industry-sponsored voluntary program and makes that program mandatory. Under the program, baseline
groundwater quality samples will be collected from two existing groundwater features, such as permitted and registered
groundwater wells or groundwater seeps and springs, which are located within 1/2 mile of the surface location of new
oil and gas well pads, or additional wells on existing well pads. These samples will be collected before drilling begins.
A second sample will be collected from each groundwater feature within one to three years after drilling is completed.
If the state’s rules on water quality monitoring are amended, the City may also need to modify proposed Land Use
Code regulations as presented in Option A or B or in development submittal requirements.
Staff also requests direction on suggested state, regional, and “other” local options, including:
• Engage in stakeholder processes
• Continue with Local Government Designee
• Pursue an intergovernmental agreement with the State for inspection authority
• Pursue an intergovernmental agreement with the County for the GMA
• Advocate for more legislative change
• Consider entering into an operator agreement with the producer of the Fort Collins Field
• Develop a “model” surface use agreement that can be used for any city-owned lands
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BOARD / COMMISSION RECOMMENDATION
City staff presented the proposed Land Use Code regulations and associated non-regulatory options to numerous City
boards and commissions.
Formal recommendations were made by the Water Board (8-1), the Natural Resources Advisory Board (6-1), and the
Air Quality Advisory Board (7-0) to support the Standard (Type II) and Expedited (Basic Development Review)
processes and associated regulations.
The Land Conservation and Stewardship Board voted 6-0 to support the use of standard review when considering
applications on City-owned Natural Areas. The Board further recommended a six month temporary moratorium on new
oil and gas applications to provide staff with additional time to develop additional options.
While the Air Quality Advisory Board indicated support for the Standard and Expedited review, the Board also
expressed additional non-regulatory options that staff should pursue. These recommendations are included in
Attachment 14.
PUBLIC OUTREACH
A multidisciplinary City staff team worked to develop an understanding of the oil and gas industry, community concerns
related to industry practices, and the statewide regulatory processes in place. This group researched industry
exploration and extraction practices, working closely with peer municipalities throughout the Front Range to identify
and incorporate the best practices of other Colorado municipalities into local regulation of the industry. The research
process included local focus group meetings, formation of an Oil and Gas Advisory Committee that included
representatives from eight City boards and commissions, talking with state experts and meetings with Colorado State
University professors and researchers, Colorado Oil and Gas Conservation Commission staff, and the local oil and
gas operators.
The Oil and Gas Advisory Committee was created to gather input from a diverse group of boards and commissions.
The group met three times as public meetings and provided input to staff on draft regulations. The Committee included
self-selected representatives from eight City boards and commissions, including the Air Quality Advisory Board,
Economic Advisory Commission, Energy Board, Land Conservation and Stewardship Board, Natural Resources
Advisory Board, Parks and Recreation Board, Planning and Zoning Board, and Water Board.
Staff conducted meetings with small groups of interested citizens. Residents of the Hearthfire subdivision met with
staff and continued to communicate over the course of the project. Outreach included a focus group with
representatives of local environmental groups before and after the development of draft regulations. Staff met with
Don’t Frack the Fort, a group generated by mutual concern over hydraulic fracturing in the community, four times.
Staff attended numerous public meetings on the subject of oil and gas development hosted by other groups.
ATTACHMENTS
1. Maps associated with Oil and Gas activity
2. Council Work Session Summary, August 14, 2012
3. Matrix comparing best practices of communities
4. Oil and Gas Manual*
5. Oil and Gas Development Review Guide*
6. Advisory Group Summary
7. Letter to Larimer County
8. Public Comments
9. Planning and Zoning Board minutes, November 1, 2012
10. Water Board minutes, October 18, 2012
11. Water Board memo re: proposed Land Use Code regulations
12. Land Conservation and Stewardship Board minutes, October 10, 2012
13. Land Conservation and Stewardship Board minutes, November 14, 2012
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14. Natural Resources Advisory Board minutes, October 17, 2012
15. Air Quality Advisory Board minutes, October 15, 2012
16. Air Quality Advisory Board minutes, November 19, 2012
17. Powerpoint Presentation
(*NOTE: Attachment 4, Oil and Gas Manual, and Attachment 5, Oil and Gas Development Review Guide, are
draft documents and only illustrate Option A, the dual-track review process. If Option B is adopted by Council,
the documents will be revised accordingly.)
ATTACHMENT 3
ATTACHMENT 4
OPTION 1
ORDINANCE NO. 057, 2013
OF THE COUNCIL OF THE CITY OF FORT COLLINS
TERMINATING THE MORATORIUM IMPOSED BY ORDINANCE NO. 145, 2012
WITH RESPECT TO OIL AND GAS OPERATIONS CONDUCTED
UNDER AN AMENDED OIL AND GAS OPERATOR AGREEMENT BETWEEN THE CITY
AND PROSPECT ENERGY, LLC, AND EXEMPTING SUCH OPERATIONS FROM
THE PROHIBITIONS CONTAINED IN SECTION 12-135 OF THE CITY CODE
WHEREAS, by Ordinance No. 145, 2012, the City Council established a moratorium on the
acceptance or processing of land use applications, permit applications and other applications seeking
approval to conduct oil and gas extraction or related operations within the City (the Moratorium”);
and
WHEREAS, Section 12-135 of the City Code prohibits hydraulic fracturing and open pit
storage in the City; and
WHEREAS, by Resolution 2013-024 of the Council of the City of Fort Collins, the City
Council has approved an Oil and Gas Operator Agreement between the City and Prospect Energy,
LLC dated March 19, 2013; that applies to all existing and future operations of the City during the
term of the Agreement, and by Resolution 2013-036 the City Council has adopted certain
amendments thereto (the “Amended Agreement”); and
WHEREAS, the City Council has determined that the oil and gas operations of Prospect
Energy, LLC should be exempted from the Moratorium and the prohibitions contained in Section
12-135 of the City Code as long as such operations are conducted in conformance with the terms and
conditions of saidthe Amended aAgreement.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. The moratorium imposed by Ordinance No. 145, 2012 is hereby terminated
with respect to all oil and gas operations conducted in conformance with the terms and conditions
of that certain Oil and Gas Operatorthe Amended Agreement between the City and Prospect Energy,
LLC dated March 19, 2013.
Section 2. The prohibitions contained in Section 12-135 of the City Code shall not apply
to oil and gas operations conducted by Prospect Energy, LLC as long as Prospect Energy, LLC
conducts its operations in conformance with the terms and conditions of that certain Oil and Gas
Operatorthe Amended Agreement between the City and Prospect Energy, LLC, dated March 19,
2013, and provided further that in the event that a conflict exists between the provisions contained
in Section 12-135 of the City Code and this ordinance, this ordinance shall control.
OPTION 1
Introduced, considered favorably on first reading, and ordered published this 19th day of
March, A.D. 2013, and to be presented for final passage on the 23rd day of April, A.D. 2013.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
Passed and adopted on final reading on the 23rd day of April, A.D. 2013.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
OPTION 1
RESOLUTION 2013-036
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROVING AN AMENDED OIL AND GAS OPERATOR AGREEMENT
BETWEEN THE CITY AND PROSPECT ENERGY, LLC
WHEREAS, on March 19, 2013, the City Council adopted Resolution 2013-024, approving
an Oil and Gas Operator Agreement (the “Agreement”) between the City and Prospect Energy, LLC
(“Prospect”), which Agreement has been fully executed by both parties; and
WHEREAS, the purpose of the Agreement is to authorize Prospect to conduct oil and gas
operations in the City on identified lands under lease by Prospect, specifically described as
undeveloped acreage (the “UDA” as shown on Exhibit “B” of the Amended Oil Gas Operator
Agreement) as long as Prospect conforms to certain air quality rules and the rules of the Colorado
Oil and Gas Conservation Commission (the “COGCC”); and
WHEREAS, the Agreement governs Prospect's operation of existing facilities in the “Fort
Collins Field,” as well as all new wells that may be operated by Prospect within the City during the
term of the Agreement; and
WHEREAS, the City Council has determined that the Agreement should be amended to
clarify that: (1) Prospect, in the course of its operations, will not re-enter any plugged or abandoned
wells within the area of its operation; (2) any new wells drilledall exploration and drilling activities
conducted by Prospect under the Agreement must, as of the effective date of the Agreement, comply
with the new rules of the COGCC, which will officially take effect on August 1, 2013; and(3) along
the west and southern boundaries of the UDA, a 1,000 foot setback shall be required from any
residential area in accordance with COGCC standards of measurement; and (34) the Amended
Agreement must be executed by both parties on or before May 1June 15, 2013; and
WHEREAS, the City Manager has presented a proposed amended Agreement between the
City and Prospect to the City Council for its consideration that makes the foregoing changes (the
“Amended Agreement”); and
WHEREAS, the Amended Agreement continues to contain strict controls on methane release
and adequately protects the public health, safety and welfare; and
WHEREAS, the City Council has determined that the approval and execution of the
Amended Agreement between the City and Prospect is in the best interests of the City.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
OPTION 1
Section 1. That the Amended Agreement, a copy of which is attached hereto as Exhibit
“A,” is hereby determined by the City Council to include strict controls on methane release and to
adequately protect the public health, safety and welfare of the City, and is hereby approved.
Section 2. That the City Manager is hereby authorized and directed to execute the
Amended Agreement on substantially the same terms and conditions as shown on Exhibit “A,”
subject to such minor modifications in form or substance as the City Manager, in consultation with
the City Attorney, determines to be necessary and appropriate to protect the interests of the City or
effectuate the purpose of this Ordinance.
Section 3. That the Amended Agreement may only be further amended by the City
Council by resolution.
Passed and adopted at an adjourned meeting of the Council of the City of Fort Collins this
23rd day of April , A.D. 2013.
Mayor
ATTEST:
City Clerk
OPTION 1
1
AMENDED OIL AND GAS OPERATOR AGREEMENT
THIS OIL AND GAS OPERATOR AGREEMENT (“Agreement”) is made and entered
into this _____ day of ___________, 2013 , by and through Prospect Energy, LLC, whose
address is 1600 Stout Street, Suite 1710, Denver, CO 80202 (referred to hereinafter as the
“Company”), and The City of Fort Collins (referred to hereinafter as the “City”) with an address
of 300 LaPorte Avenue, Fort Collins, CO 80522, which may be collectively referred to herein as
the “Parties”, or individually as a “Party”.
WHEREAS, the Company and its affiliates, namely, Black Diamond Minerals, LLC
(“BDM”), the parent of the Company, engage in the exploration, development, production and
marketing of natural gas, oil and natural gas liquids in the Rocky Mountains, including the State
of Colorado. The Company currently operates the Fort Collins Field (the “Field”) located in
Larimer County, with certain portions of the Field located within the City, as depicted in Exhibit
A, and, as such, is the only operator with active oil and gas operations within the City. The
Company through its parent BDM, also holds certain leasehold interests within the City
described as the Undeveloped Area (the “UDA”), as depicted in Exhibit B.
WHEREAS, the Field was discovered in 1924, and has continually produced oil and
associated hydrocarbons to this day. As is common with other older, once remote, oil and gas
developments around the state, urban growth and subsequent annexation of certain lands by the
City have encroached upon the Field. These annexations, including the Richard’s Lake
subdivision (developed in the late 1990’s) and the Hearthfire subdivision (developed in the mid
2000’s), have allowed developers to place residential areas in the vicinity of active oil and gas
operations. Some property lines are now within 150 feet of oil wells constructed on then-rural
well pads.
WHEREAS, the Field is an oil producing field unitized for waterflood operations from
the Muddy Sandstone Formation (which yields the majority of the Field’s production), but the
Field also produces oil from the Niobrara, Codell, Dakota, and Lyons Formations, all of which
may need future development.
WHEREAS, recent engineering and geological analysis indicates that certain parts of the
Field may yield substantial incremental resource recovery by expanding the secondary recovery
waterflood project by drilling and hydraulic fracturing new wells drilled from lands currently
called Waters Edge, Richard’s Lake and Hearthfire subdivisions (the “Subdivisions”). The
Company is presently studying the UDA to assess whether it would support the development of
mineral resources.
WHEREAS, in the Field and UDA, the Company has entered into Surface Use
Agreements with the surface owners, dated December 19, 1988, as amended April 19, 2001, and
OPTION 1
2
March 17, 2011, respectively, which expressly govern the locations of wells and associated
facilities within the Subdivisions, and other specified terms, including, but not limited to,
landscaping and fencing around wells and associated production equipment.
WHEREAS, the City and the Company value a balanced approach to oil and gas
development that is protective of public health, safety and welfare, including the environment
and wildlife resources. To that end, in order to achieve those goals in a cooperative manner, the
City and the Company enter into this Agreement to identify best management practices
(“BMPs”) for the Company’s future drilling operations within the City’s boundaries.
WHEREAS, the Field extends beyond the City limits and the Company, as a responsible
oil and gas operator, has installed a vapor recovery unit at its existing production facility located
just south of Douglas Road (the “Fort Collins Tank Battery”) as shown in the Exhibit A attached
hereto which lies outside of the City limits. All water, oil and gas produced from any New Well,
as defined herein, and located in the Field, will flow into existing or future pipelines to the Fort
Collins Tank Battery where gas will be captured and sent to the thermal oxidizer for destruction.
Equipment, both at the Fort Collins Tank Battery and within City limits, will capture and destroy
at least 98% of any methane and volatile organic compounds (VOC).
WHEREAS, the Colorado Oil and Gas Conservation Act, C.R.S. §34-60-101 et. seq. (the
“Act”), authorizes the Colorado Oil and Gas Conservation Commission (“COGCC” or
“Commission”) to adopt statewide rules and regulations, which the Commission has done.
Further, the Commission continues to consider changes to the rules and regulations.
WHEREAS, on December 18, 2012, by the adoption of Ordinance 145, 2012, the City
Council imposed a temporary moratorium until July 31, 2013 on the acceptance, processing and
approval of any land use applications relating to new oil and gas development (the
“Moratorium”).
WHEREAS, on March 5, 2013, by the adoption of Ordinance No. 032, 2013, the City
Council enacted Sec. 12-135 of the City Code prohibiting the use of hydraulic fracturing in the
City, as well as the storage in open pits of solid or liquid wastes and /or flowback (the “Ban”)
and, through the enactment of City Code Sec. 12-136, exempted from the Ban any oil or gas
wells or pad sites existing within the City as of February 19, 2013, that become the subject of an
operator agreement between the operator of the same and the City, as long as such agreement
includes strict controls on methane release and, in the judgment of the City Council, adequately
protects the public health, safety and welfare.
OPTION 1
3
WHEREAS, by Resolution ______, the City Council has approved this Oil and Gas
Operator Agreement with the Company, and the Parties agree to the terms and conditions
contained below.
NOW THEREFORE, in consideration of the covenants and mutual promises set forth in
this Agreement, including in the recitals, the Parties agree as follows:
1. Effective Date. When this Agreement is presented to the City Council for its
consideration, City staff will also present to the City Council an ordinance exempting all
Company operations within the areas described in Exhibits “A” and “B” from the Moratorium
and the Ban, which exemption will continue in effect as long as the Company’s operations are
conducted in accordance with this Agreement. The Effective Date of such ordinance shall be
the “Effective Date” of this Agreement. Notwithstanding the foregoing, this Agreement shall be
void and of no effect as of August May 1June 15, 2013, unless this Agreement is fully executed
by the Parties on or before such date such ordinance has been approved by the City Council and
has taken effect on or before said date.
2. The Company’s Best Management Practices (“BMPs”) within City Limits. The
Company shall include the BMPs listed in Appendix A, attached hereto and by reference made a
part hereof, on all Applications for Permit-to-Drill, Form 2, and Oil and Gas Location
Assessments, Form 2A, submitted to the Commission for a ”New Well”. For the purposes of
this provision, “New Well” shall mean any Company-operated well spudded during the term of
this Agreement, and located on either a currently existing well pad or a New Well pad that is
located within the City limits, and a “New Well Pad” shall mean any area that is directly
disturbed during the drilling and subsequent operation of a New Well, including any production
facilities directly associated with such well, and its associated Well Pad, insofar as it covers
lands located in the City limits. The BMPs shall apply to all New Wells drilled by the Company
while this Agreement is effective. The Company shall not drill on any plugged and abandoned
well pad sites. For the purposes of this Agreement, a New Well shall not include the re-entry of a
previously plugged and abandoned well; accordingly, the re-entry of a previously plugged and
abandoned well is not allowed.
3. City Regulatory Approvals. The Company shall not be required to obtain any project
development plan or final plan approval from the City to conduct its oil and gas operations
within the City limits, as long as the Company complies with the terms and conditions contained
herein, and this Agreement shall control all oil and gas operations conducted by the Company
within the City limits. Prior to the submission of a COGCC Form 2 and/or Form 2A to the
COGCC, the Company shall meet with the City to review the proposed oil and gas operation to
ensure compliance with this Agreement, all applicable state and federal regulations, and any site-
specific concerns, which concerns may include overall project impacts and economically and
technically feasible mitigation measures or BMPs related to field design and infrastructure
OPTION 1
4
construction to minimize potential adverse impacts to public health, safety and welfare. At such
time, if at all, that the City and Larimer County, Colorado (the “County”) enter into a written
agreement that authorizes the City to regulate the oil and gas operations of the Company within
the Growth Management Area, such operations shall thereafter be governed by the terms and
conditions of this Agreement and shall be subject to the City’s regulatory authority as provided
in this Agreement. “Growth Management Area” shall be as described in that certain
Intergovernmental Agreement entered into by the City of Fort Collins and Larimer County on
June 24,2008, nunc pro func [sic] October 17, 2006.
4. Operations on Existing Facilities. For any Facility owned by the Company and existing
prior to the Effective Date and located within the City limits, the Parties hereby agree that the
Company may perform routine maintenance operations on said Facility and perform such
operations the Company deems prudent and necessary, including, but not limited to, stimulating
existing wells through hydraulic fracturing and temporarily storing chemicals on existing well
pads for that purpose. The Company agrees to conduct such operations as a prudent operator in
accordance with the rules and regulation of the COGCC; however, the Company shall not be
subject to the BMP’s as attached hereto, except for Appendix A paragraphs 201(j) and 201(k)
thereof. “Facility” as used in this provision shall include wells, pipelines, and all equipment
necessary and appurtenant to such wells and pipelines.
5. Term. This Agreement is effective upon the Effective Date and shall remain in effect for
five (5) years from the Effective Date, at which time the Agreement shall be automatically
renewed and extended for successive five (5) year terms, unless and until either Party elects to
terminate the Agreement at the end of the then current five (5) year term by providing written
notice of such intent to the other party at least thirty (30) days before the expiration of said term.
6. Force Majeure. Neither Party will be liable for any delay or failure in performing under
this Agreement in the event and to the extent that the delay or failure arises out of causes beyond
a Party’s reasonable control, including, without limitation, war, civil commotion, act of God,
strike or other stoppage (whether partial or total) of labor, or any law, decree, regulation, or order
of any government or governmental body (including any court or tribunal).
7. Authority to Execute Agreement. Each Party represents that the undersigned have the
full right and authority to enter into this Agreement and bind the Parties to the terms and
conditions contained herein. This Agreement may be amended only by an instrument executed
by both Parties hereto.
8. Successors and Assigns. The terms and conditions of this Agreement shall bind and
extend to the City and the Company, and the Company’s successors and assigns.
OPTION 1
5
9. No Third Party Beneficiaries. Except for the rights of enforcement by the Commission
with respect to the BMPs, this Agreement is not intended to, and does not create, any right,
benefit, responsibility or obligation that may be enforced by any non-party. Additionally,
nothing in the Agreement shall entitle any third party to any claims, rights or remedies of any
kind.
10. Notices. All notices and other correspondence related to this Agreement shall be in
writing and shall be delivered by: (i) certified mail with return receipt, (ii) hand delivery with
signature or delivery receipt provided by a third party courier service (such as FedEx, UPS, etc.),
(iii) fax transmission if verification of receipt is obtained, or (iv) email with return receipt, to the
designated representative of the Party as indicated below. A Party may change its designated
representative for notice purposes at any time by written notice to the other Party. The initial
representatives of the Parties are as follows:
11.
City: City of Fort Collins
300 LaPorte Avenue
P.O. Box 580
Fort Collins, CO 80522
Attn: City Manager
Telephone: 970-416-2253
Fax: 970-224-6107
Email: datteberry@fcgov.com
Company: Prospect Energy, LLC
1600 Stout Street, Suite 1710
Denver, CO 80202
Attn: Scott D. Hall, Manager
Telephone: 303-973-3228, ext. 223
Fax: 303-346-4893
Email: sdhall@bdminerals.com
12. Default; Remedies. If either party believes that the other Party has failed to comply with
any provision of this Agreement, or if any other kind of dispute arises under any provision of this
Agreement that cannot be resolved by good faith negotiation between the Parties, the Party
claiming that a breach of this Agreement has occurred or seeking resolution of any other dispute
under this Agreement shall send written notice to the other Party, specifying its position in the
matter and invoking the dispute resolution process in this section. Within fifteen (15) days of the
date of delivery of such notice, the Parties shall meet to resolve the matter described in the
notice. If either Party believes that mediation would be advantageous in connection with such
meeting, or if a resolution of the matter cannot be achieved at the meeting, both parties agree to
make a reasonable effort to work through and with a mutually acceptable mediator to attempt to
resolve the dispute. Notwithstanding the foregoing, if either Party believes that the dispute will
OPTION 1
6
not otherwise be resolved in a sufficiently prompt and effective manner, such Party may, at its
discretion, take such legal action and seek such legal or equitable remedies as it determines to be
appropriate or necessary to protect and enforce its rights under this Agreement. Such remedies
may include, without limitation, an injunction to stop an alleged violation or an order requiring
the performance of all acts and things required to be performed hereunder by the other Party.
13. Integration Clause: This Agreement, along with all exhibits and appendices attached
hereto encompasses the entire agreement of the Parties and supersedes all previous
understandings and agreements between the Parties, whether oral or written.
14. Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of Colorado without reference to its conflicts of laws provisions.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by a
duly authorized representative on the day and year first written above.
THE CITY:
CITY OF FORT COLLINS, COLORADO
A MUNICIPAL CORPORATION
By: _____________________________________
Darin Atteberry, City Manager
ATTEST:
__________________________
City Clerk
APPROVED AS TO FORM:
_________________________
Deputy City Attorney
THE COMPANY:
PROSPECT ENERGY, LLC
By (signature):
_________________________________________
Scott Hall, CEO
OPTION 1
7
List of Exhibits
Exhibit A - Map of the Fort Collins Field and City boundaries
Exhibit B - Map of the Undeveloped Acreage (UDA) and City Boundaries
Appendix A – List of BMP’s
Appendix B – Submittal Requirements
OPTION 1
8
APPENDIX A
BEST MANAGEMENT PRACTICES FOR LOCATIONS
WITHIN THE CITY LIMITS OF FORT COLLINS
Pursuant to the terms of this Agreement, the Company shall include the best management
practices listed below on all Applications for Permit-to-Drill, Form 2, and Oil and Gas Location
Assessments, Form 2A, (for New Well Pads only), submitted to the Commission for New Wells
the Company drills after the Effective Date within the city limits of Fort Collins.
1. Regulations. The Company shall comply with all applicable state, and federal regulations
in addition to the terms of this agreement and the Best Management Practices included
below. For aAny exploration or drilling activity conducted by the Company must comply
with the revised rules adopted by the COGCC on January 9, 2013, even though such rules
will not officially take effect until August 1, 2013.; provided, however, that along the
south and west boundaries of the UDA, a 1,000 foot setback from residential areas shall
be required. Whichever regulation is most stringent shall apply.
2. Setbacks for New Wells. It is the intent of the Company to maximize equipment and
wellhead setbacks from occupied buildings and residences beyond the setbacks required
by the COGCC to the extent feasible and practicable.
The Parties recognize that a portion of the Field is within the Fort Collins City Limits and
as such, development has occurred within the already established Field. The surface
owner has obtained permitted plats for residential areas in the vicinity of existing oil and
gas activities, including a constructed city park and contemplated building units and
public roads within three hundred fifty (350) feet of an existing well. Further, the Parties
acknowledge that the Commission rules require a minimum of five hundred (500) feet
safety setback for New Well construction from a building unit and one thousand feet
(1,000) from a high occupancy building.
Any New Wells drilled shall conform to the Commission setback rules then in effect. In
the Fort Collins Field, New Wells shall be constructed on existing Well Pads, which due
to previous setback requirements, and City approval of residential development, do not
conform to five hundred (500) feet setbacks, and are given an exemption from the
Commission in the Rules now in effect.
The Parties recognize the existence of a Surface Use Agreement (the “SUA”) between
the Company and the surface owner which expressly governs the locations of wells and
associated facilities within the Water’s Edge, Richard’s Lake and Hearthfire subdivisions
OPTION 1
9
(the “Subdivisions”), and that certain terms found in the SUA may affect Commission
setbacks and other Commission rules.
3. Conceptual Review. No less than thirty (30) days prior to the submission of an
Application for a Permit to Drill, the Company agrees to schedule a meeting with the City
to review the proposed new well or drilling activity. The goal of this meeting shall be for
staff and the applicant to review the proposed oil and gas operation in a manner that
ensures compliance with the operator agreement and applicable state and federal
regulations. This pre-submittal meeting shall also allow the applicant and staff to explore
site-specific concerns, to discuss project impacts and potential mitigation methods
including field design and infrastructure construction to minimize impacts, to discuss
coordination of field design with other existing or potential development and operators,
to identify sampling and monitoring plans for air and water quality, and other elements of
the operator agreement as contained in Appendices A and B. Based upon the foregoing,
applicants are encouraged to conduct the pre-submittal meeting with the City prior to
completing well siting decisions, to the extent reasonably feasible.
4. Mailed Notice. The City shall mail notice of the pending Application for a Permit to Drill
no more than ten (10) days after the conceptual review meeting has taken place. The
Company shall reimburse the City for the costs of the mailing. Owners of record shall be
ascertained according to the records of the Larimer County Assessor’s Office, unless
more current information is made available in writing to the City prior to the mailing of
the notices. Notice of the pending application shall include reference to the neighborhood
meeting, if applicable, and be made as follows:
⼀ To the surface owners of the parcels of land on which the oil and gas operation is
proposed to be located;
⼀ To the surface owners of the parcels of land within five hundred (500) feet of a
proposed gathering line;
⼀ To the surface owners of the parcels of land within two thousand six hundred
forty (2,640) feet of the parcel on which the oil and gas operation is proposed to be
located; and
⼀ To persons registered in writing with the City as representing bona fide
neighborhood groups and organizations and homeowners' associations within the area
of notification.
5. Posted Notice. The real property proposed to be developed shall also be posted with a
sign, giving notice to the general public of the proposed development. For parcels of land
exceeding ten (10) acres in size, two (2) signs shall be posted. The size of the sign(s)
required to be posted shall be as established in the Supplemental Notice Requirements of
Section 2.2.6(D) of the City’s Land Use Code. Such signs shall be provided by the City
and shall be posted on the subject property in a manner and at a location or locations
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reasonably calculated by the City to afford the best notice to the public, which posting
shall occur within ten (10) days following the Conceptual Review meeting.
6. Neighborhood Meetings. A neighborhood meeting shall be required on any New Well,
even on existing Well Pads, that requires an Application for a Permit to Drill. Notice of
the neighborhood meeting shall be provided in accordance with Sections 4 and 5 above.
The Company shall attend the neighborhood meeting. The City shall be responsible for
scheduling and coordinating the neighborhood meeting and shall hold the meeting in the
vicinity of the proposed development. A written summary of the neighborhood meeting
shall be prepared by the City. The written summary shall be included in the Local
Government Designee (LGD) comments provided to the COGCC at the time of the
public hearing or permit review to consider the Application for a Permit to Drill.
7. Notification to the City and the public regarding commencement of operations. Prior to
the commencement of any new drilling operations, the Company shall provide to the City
Manager for posting on the website the information outlined in Appendix B regarding
commencement of operations, which the Company may revise from time-to-time during
operations, with prior approval from the City.
8. Inspections. The City shall have the right to inspect the Company’s operations and its
sites during business hours, upon the giving of twenty-four (24) hour advance written
notice to the Company.
9. Containment berms. The Company shall utilize steel-rim berms around tanks and
separators at new Well Pads. All berms and containment devices shall be inspected at
regular intervals and maintained in good condition. No potential ignition sources shall be
installed inside the secondary containment area unless the containment area encloses a
fired vessel. Refer to American Petroleum Institute Recommended Practices, API RP -
D16.
a) Containment berms shall be constructed of steel rings, designed and installed to
prevent leakage and resist degradation from erosion or routine operation.
b) Secondary containment for tanks shall be constructed with a synthetic or engineered
liner that contains all primary containment vessels and flowlines and is mechanically
connected to the steel ring to prevent leakage.
c) For locations within five hundred (500) feet and upgradient of a surface water body,
tertiary containment, such as an earthen berm, is required around production facilities.
10. Closed Loop Pitless Systems for the Containment and/or Recycling of Drilling and
Completion Fluids. Wells shall be drilled, completed and operated using closed loop
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pitless systems for containment and/or recycling of all drilling, completion, flowback and
produced fluids.
11. Anchoring. All equipment at drilling and production sites shall be anchored to the extent
necessary to resist flotation, collapse, lateral movement, or subsidence. All guy line
anchors left buried for future use shall be identified by a marker of bright color not less
than four (4) feet in height and not greater than one (1) foot east of the guy line anchor.
12. Burning. No open burning shall occur on the site of any oil and gas operation.
13. Chains. Traction chains from heavy equipment shall be removed before entering a City
street.
14. Chemical disclosure and storage. The City shall be provided, in table format, the name,
Chemical Abstracts Service (CAS) number, volume, storage, containment and disposal
method for all drilling and completion chemicals (solids, fluids, and gases) used on
the Well Pad. Fracture chemicals shall be uploaded onto the Frac Focus website. The
Company shall not permanently store hydraulic fracturing chemicals, flowback from
hydraulic fracturing, or produced water in the City limits.
15. Color. Facilities shall be painted in a uniform, non-contrasting, non- reflective color, to
blend with the surrounding landscape and, with colors that match the land rather than the
sky. The color should be slightly darker than the surrounding landscape.
16. Cultural and Historical Resource Protection. If a significant surface or sub-surface
archaeological site is discovered during construction, the Company shall be responsible
for immediately contacting the City to report the discovery. If any disturbance of the
resource occurs, the Company shall be responsible for mitigating the disturbance to the
cultural or historical property through a data recovery plan approved by the City.
17. Discharge valves. Open-ended discharge valves on all storage tanks, pipelines and other
containers shall be secured where the operation site is unattended or is accessible to the
general public. Open-ended discharge valves shall be placed within the interior of the
tank secondary containment.
18. Dust suppression. Dust associated with on-site activities and traffic on access roads
shall be minimized throughout construction, drilling and operational activities such that
there are no visible dust emissions from access roads or the site to the extent practical
given wind conditions. No produced water or other process fluids shall be used for dust
suppression. The Company will avoid dust suppression activities within three hundred
(300) feet of the ordinary high water mark of any waterbody, unless the dust suppressant
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is water. Material Safety Data Sheets (MSDS) for any chemical based dust suppressant
shall be submitted to the City for approval prior to use.
19. Electric equipment. Electric-powered engines for motors, compressors, and drilling
equipment and for pumping systems shall be used in order to mitigate noise and to
reduce emissions when feasible.
20. Emergency preparedness plan. The Company is required to develop an emergency
preparedness plan for each specific facility site, which shall be in compliance with the
International Fire Code. The plan shall be filed with the Poudre Fire Authority and
the City of Fort Collins Office of Emergency Management and updated on an annual
basis or as conditions change (responsible field personnel change, ownership changes,
etc.). The emergency preparedness plan shall consist of at least the following
information:
a) Name, address and phone number, including twenty-four (24)-hour emergency
numbers for at least two persons responsible for emergency field operations.
b) An as-built facilities map in a format suitable for input into the City’s GIS system
depicting the locations and type of above and below ground facilities including
sizes, and depths below grade of all oil and gas gathering and transmission lines and
associated equipment, isolation valves, surface operations and their functions, as well
as transportation routes to and from exploration and development sites, for
emergency response and management purposes. The information concerning
pipelines and isolation valves shall be held confidentially by the City's Office of
Emergency Management and the Battalion Chief, and shall only be disclosed in the
event of an emergency or to emergency responders. The City shall deny the right of
inspection of the as-built facilities maps to the public or for the training of emergency
responders pursuant to C.R.S. § 24-72-204.
c) Detailed information addressing each reasonable potential emergency that may be
associated with the operation. This may include any or all of the following:
explosions, fires, gas, oil or water pipeline leaks or ruptures, hydrogen sulfide or
other toxic gas emissions, or hazardous material vehicle accidents or spills. A
provision that any spill outside of the containment area, that has the potential to
leave the facility or to threaten waters of the state, or as required by the City-
approved Emergency Preparedness Plan shall be reported to the local emergency
dispatch and the COGCC Director in accordance with COGCC regulations.
d) Detailed information identifying access or evacuation routes, and health care
facilities anticipated to be used.
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e) A project specific emergency preparedness plan for any project that involves
drilling or penetrating through known zones of hydrogen sulfide gas.
f) Detailed information showing that the Company has adequate personnel, supplies,
and training to implement the emergency response plan immediately at all times
during construction and operations.
g) The Company shall have current Material Safety Data Sheets (MSDS) for all
chemicals used or stored on a site. The MSDS sheets shall be provided
immediately upon request to City officials, a public safety officer, or a health
professional.
h) The plan shall include a provision establishing a process by which the Company
engages with the surrounding neighbors to educate them on the risks of the on-site
operations and to establish a process for surrounding neighbors to communicate with
the Company.
i) All training associated with the Emergency Preparedness plan shall be coordinated
with the City’s Office of Emergency Management and Poudre Fire Authority.
j) A provision obligating the Company to reimburse the appropriate emergency
response service providers for costs incurred in connection with any emergency in
accordance with Colorado State Statutes.
21. Air quality. The Company must comply with emissions regulations governed by the
Colorado Department of Public Health and Environment (CDPHE), Air Pollution
Control Division (APCD). Air emissions from wells shall be in compliance with the
permit and control provisions of the Colorado Air Quality Control Program, Title 25,
Section 7, C.R.S., COGCC Rule 805, and all state and federal regulations for the
control of fugitive dust, and control of ozone, ozone precursors, methane, and hazardous
air pollutants by the Larimer County Public Health Department, and the CDPHE-APCD.
The Company must comply with 40 CFR Subpart OOOO as published on August 16, 2012
(Quad O).
a) General Duty to Minimize Emissions. The Company shall incorporate in the
development plan; operations, procedures, and field design features to the
maximum extent feasible that minimize air pollutant emissions including but not
limited to:
1) Consolidation of product treatment and storage facilities
2) Centralization of compression facilities
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3) Liquids gathering and water delivery systems
4) Telemetric control and monitoring systems
5) Pipeline infrastructure prior to well completion.
b) In the UDA, the Company shall utilize a high-low pressure vessel (HLP) and
vapor recovery unit (VRU) for New Wells that are placed on production. The
Company may remove the VRU at such time it determines that the VRU system is
no longer necessary due to reduced emission recoveries and/or efficiencies, but no
earlier than one (1) year after the New Well is placed on production. The
Company may opt to capture gas and send through a thermal oxidizer in lieu of a
HLP and VRU.
c) Plunger lifts are not typically used in the Fort Collins Field due to insufficient gas.
However if there is future use of plunger lifts, emissions shall be controlled from
the motor control valve using low bleed pneumatic controllers.
d) There will be no uncontrolled venting of methane. All gas vapors shall be
captured to the extent practicable. Vapor capture equipment shall operate at
ninety-eight percent (98%) efficiency or better. There are no gas sales lines in the
Fort Collins field because the quantity and quality of gas is low and not
marketable. If salable gas were to occur in the UDA, a sales line shall be
constructed.
e) Flaring during drilling and completions:
During well completion, the capture and beneficial use of natural gas is preferred
over flaring. Minimal flaring may occur in the Fort Collins field, because there is
minimal gas in the field. Flaring shall be continuously monitored on-site by the
Company, under twenty-four (24) hour watch and is regulated by COGCC Rules
317, 805B(3)B, and 912. No venting of gas may occur, except under COGCC
Green Completion Practices (Rule 805 B(3)B), or in very limit cases under Rule
912 with the COGCC Director approval.
f) Flaring during production operations:
1) The flare shall be fired with natural gas and shall be operated with a
ninety eight (98) percent or higher VOC destruction efficiency.
2) The flare shall be designed and operated in a manner that shall
ensure no visible emissions, pursuant to the provisions of 40 CFR
60.18(f), except for periods not to exceed a total of five (5) minutes during
any two (2) consecutive hours. Where applicable, flares shall also be in
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compliance with 5 CCR 1001-9 Regulation 7 Section XVIIB for non-
condensate oil.
3) The flare shall be operated with a flame present at all times when
emissions may be vented to it, pursuant to the methods specified in 40
CFR 60.18(f).
4) An automatic pilot system shall be used when feasible. Other ignition
systems may include the installation and operation of a telemetry alarm
system or an on-site visible indicator showing proper function.
g) Leak Detection and Repair (LDAR) – The Company shall develop and maintain
a leak detection and component repair program according to EPA Method 21 for
equipment used in permanent operations. LDAR shall be performed on newly
installed equipment, and then on an annual basis. A Forward-Looking Infrared
(FLIR) camera shall be used as the preferred implementation method of EPA
Method 21 as available from the state; if unavailable, other methods shall be used
in compliance with this method. Upon request from the City, the Company shall
implement EPA Method 21 upon additional concerns. At least once per year, the
Company shall notify the City prior to FLIR camera use in case the City wishes
to observe the method.
h) One Time Baseline Air Quality Monitoring - the Company and the City shall split
the cost for a one time Baseline Sampling and Analytical. The work shall be done
by a third party consultant agreeable to both parties over a five day sampling
period with each location sampled per day. The sampling locations shall be as
follows:
1) Upwind of Tank Battery
2) Downwind of Tank Battery
3) City Park
4) One location downtown, such as New Belgium Brewery or Wild Boar
Coffee
i) One Time Air Sampling During Well Completion – The Company shall conduct
air sampling during well completion. The work shall be done by a third party
consultant agreeable to both parties. This shall be done over a five day sampling
period with each location sampled per day. The sampling shall be for one well
completion in the City (City’s choice of which well completion). The sampling
locations shall be as follows:
1) Upwind of well
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2) Downwind of well
j) Ongoing Air Quality Monitoring - Periodic air monitoring shall be performed for
hydrogen sulfide (H2S), a hazardous air pollutant (HAP). The Company shall
perform field monitoring using the Jerome 631 XC or equivalent instrument
annually, or until such time that odors are not detected past the Fort Collins Tank
Battery fence line in City Limits.
k) The City may require the Company to conduct additional air monitoring as
needed to respond to emergency events such as spill, process upsets, or accidental
releases or in response to odor complaints in City Limits.
1) In response to emergency events that involve the potential release of
hazardous air pollutants, the Company may be required to conduct air
sampling in accordance with Subsection i. above.
2) In response to odor complaints, the Company may be required to conduct
air sampling in accordance with subsection j above or use a photo-
ionization detector (PID) to measure detected levels of VOCs that exceed
acute health-based exposure thresholds, or other air sampling
methodology depending on the nature of the complaint.
l) Air Quality Action Days. The Company shall respond to air quality Action Day
advisories posted by the Colorado Department of Public Health and Environment
for the Front Range Area by implementing air emission reduction measures
committed to in the Air Quality Mitigation Plan. Emission reduction measures
shall be implemented for the duration of an air quality Action Day advisory and
may include measures such as:
1) Minimize vehicle and engine idling
2) Reduce truck traffic and worker traffic
3) Delay vehicle refueling
4) Suspend or delay use of fossil fuel powered ancillary equipment
5) Postpone construction activities
22. Green completions.
a) Gas gathering lines, separators, and sand traps capable of supporting green
completions as described in COGCC Rule 805 shall be installed at any location at
which commercial quantities of gas are reasonably expected to be produced based on
existing adjacent wells within one (1) mile or well in the Fort Collins Field,
whichever is greater.
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b) Uncontrolled venting is prohibited.
c) Temporary flowback flaring and oxidizing equipment shall include the following:
1) Adequately sized equipment to handle 1.5 times the largest flowback volume of
gas experienced in a one (1) mile radius (or well in the Fort Collins Field),
whichever is greater;
2) Valves and porting available to divert gas to flaring and oxidizing equipment; and
3) Auxiliary fueled with sufficient supply and heat to combust or oxidize non-
combustible gases in order to control odors and hazardous gases. The flowback
combustion device shall be equipped with a reliable continuous ignition source
over the duration of flowback, except in conditions that may result in a fire
hazard or explosion.
4) The Company has a general duty to safely maximize resource recovery and
minimize releases to the atmosphere during flowback and subsequent
recovery/operation.
23. Exhaust. The exhaust from all engines, motors, coolers and other mechanized equipment
shall be vented up or in a direction away from the closest existing residences.
24. Fencing. Permanent perimeter fencing shall be installed around production equipment,
and shall be secured. The main purpose of the fencing is to deter entrance by
unauthorized people. The Company shall use visually interesting fencing, when feasible,
but the parties recognize that there is a need for air circulation, and for the field personnel
who regularly inspect the facilities to be able to identify visual operational deficiencies
when driving by. Landscaping may be used for screening. If a chain link fence is required
to achieve safety requirements set by the COGCC, then landscaping and other screening
mechanisms shall be required that comply with the City’s Land Use Code regulations and
the Company’s safety requirements.
25. Flammable material. All land within twenty five (25) feet of any tank, or other structure
containing flammable or combustible materials shall be kept free of dry weeds, grass or
rubbish, and shall conform to Section 315 of the International Fire Code.
26. Floodplains. All oil and gas operations shall comply with Chapter 10 of the City
Code.
27. Water Quality Monitoring Plan. The Company shall comply with COGCC Rule 609.
In summary, this requires pre- and post-drilling testing. The rules require oil and gas
operators to sample all “Available Water Sources” (owner has given consent for sampling
and testing and has consented to having the sample data obtained made available to the
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public), with a cap of four (4) water sources, within one-half (1/2) mile radius of a
proposed well, multi-well site, or dedicated injection well. Water sources include
registered water wells, permitted or adjudicated springs, and certain monitoring wells.
The Company agrees to the following requirements above and beyond the COGCC
requirements: analyzing for dissolved metals as indicated in the Land Use Code and
sampling intervals to be baseline (before drilling), post-drilling at one, three, and six
years. Analytical results shall be shared with the COGCC, the City, and the landowner.
All spills, for new and existing wells, shall be managed in accordance with COGCC
regulations.
28. Landscaping. In the Fort Collins Field, existing Well Pads shall be used for any
New Wells and all landscaping shall be in compliance with the City of Fort Collins
Land Use Code standards and in compliance with the safety requirements of the
Company. Existing vegetation shall be minimally impacted. In the UDA,
motorized equipment shall be restricted to the Well Pad and access roads to the
Well Pads. A Visual Mitigation Plan, along with fencing and landscaping shall be
developed for new construction.
29. Lighting. Except during drilling, completion or other operational activities requiring
additional lighting, down-lighting is required, meaning that all bulbs must be fully
shielded to prevent light emissions above a horizontal plane drawn from the bottom of
the fixture. A lighting plan shall be developed to establish compliance with this
provision. The lighting plan shall indicate the location of all outdoor lighting on the site
and any structures, and include cut sheets (manufacturer's specifications with picture or
diagram) of all proposed fixtures.
30. Maintenance of machinery. Routine field maintenance of vehicles or mobile
machinery shall not be performed within three hundred (300) feet of any water body.
31. Mud Tracking. The Company shall take all practicable measures to ensure that vehicles
do not track mud or debris onto City streets. If mud or debris is nonetheless deposited
on City streets, the streets shall be cleaned immediately by the Company using
pressured water from a water truck. This shall be done as part of maintenance. If for
some reason it cannot be done, or needs to be postponed, the LGD shall be notified of
the Company’s plan for mud removal.
32. Natural Resources – An Ecological Characterization Study shall be provided if any New
Well is within 500 feet of a Natural Habitat or Feature, and if impacting these resources,
mitigation plans to ensure no net resource loss per Fort Collins Land Use Code 3.4.1.
33. Noise mitigation. Noise mitigation measures shall be constructed along any edge of any
oil and gas operation site if such edge is between the oil and gas operation and existing
residential development or land which is zoned for future residential development. The
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noise mitigation measures shall, to the maximum extent feasible, decrease noise from the
oil and gas operations to comply with the sound limitation regulations set forth in
Commission Rule 802. A noise mitigation study shall be submitted with the application
to demonstrate that noise will be decreased to the maximum extent feasible.
34. Pipelines. Any newly constructed or substantially modified pipelines on site shall meet the
following requirements:
(a) To the maximum extent feasible, all flow lines, gathering lines, and transmission lines
shall be sited a minimum of fifty (50) feet away from general residential, commercial,
and industrial buildings, as well as the high-water mark of any surface water body.
This distance shall be measured from the nearest edge of the pipeline. Pipelines and
gathering lines that pass within 150 feet of general residential, commercial, and
industrial buildings or the high water mark of any surface water body shall incorporate
leak detection, secondary containment, or other mitigation, as appropriate.
(b) To the maximum extent feasible, pipelines shall be aligned with established roads in
order to minimize surface impacts and reduce habitat fragmentation and disturbance.
(c) To the maximum extent feasible, operators shall share existing pipeline rights-of-way
and consolidate new corridors for pipeline rights-of-way to minimize surface impacts.
(d) To the maximum extent feasible, operators shall use boring technology when crossing
streams, rivers, or irrigation ditches with a pipeline to minimize negative impacts to
the channel, bank, and riparian areas.
35. Recordation of flowlines. All new flowlines, including transmission and gathering
systems, shall have the legal description of the location recorded with the City Clerk and
the Larimer County Clerk and Recorder within thirty (30) days of completion of
construction. Abandonment of any recorded flowlines shall be recorded with the
Larimer County Clerk and Recorder’s office within thirty (30) days after
abandonment.
36. Recreational Activity Standards. The installation and operation of any oil and gas
operation shall not cause significant degradation to the quality and quantity of
recreational activities in the City. Methods to achieve compliance with this standard
include, but are not limited to locating operations away from trails and from property
used for recreational purposes, or by using existing Well Pads.
37. Removal of debris. When an oil and gas operation becomes operational, all
construction-related debris shall be removed from the site for proper disposal. The site
shall be maintained free of debris and excess materials at all times during operation.
Materials shall not be buried or burned on-site.
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38. Removal of equipment. All equipment used for drilling, re-completion and maintenance
of the facility shall be removed from the site within thirty (30) days of completion of
the work, unless otherwise agreed to by the surface owner. Permanent storage of
equipment on Well Pad sites shall not be allowed.
39. Soil Gas Monitoring – The City, at its discretion, may conduct soil gas monitoring to
assess well casing integrity. This shall be typically completed within ninety (90) days of
New Well completion. The City shall notify the Company prior to entering the site for soil
gas monitoring.
40. Spills. Chemical spills and releases shall be reported in accordance with applicable
state and federal laws, including the Emergency Planning and Community Right To
Know Act, the Comprehensive Environmental Response, Compensation and Liability
Act, the Oil and Pollution Act, the Clean Water Act, the Resource Conservation and
Recovery Act and the Spill Control Prevention and Countermeasure plan, as
applicable. If a spill or release impacts or threatens to impact surface water or a
water well, the Company shall notify the affected or potentially affected owner
immediately following discovery of the release, and the spill or release shall be reported
to the City and to the surface water or water well owner within twenty-four (24) hours of
becoming aware of the spill or release.
41. Stormwater control plan. All oil and gas operations shall comply and conform with the
Fort Collins Storm Criteria Manual (FCSCM), including submission of an Erosion
Control Report and Plan.
42. Temporary access roads. Temporary access roads associated with oil and gas operations
shall be reclaimed and re-vegetated to the original state.
43. Trailers. A construction trailer or office is permitted as an accessory use during active
drilling and well completion only.
44. Transportation and circulation. All applicants for drilling and completion operations
(New Wells) shall include in their applications detailed descriptions of all proposed
access routes for equipment, water, sand, waste fluids, waste solids, mixed waste, and
all other material to be hauled on the public streets and roads of the City. The
submittal shall also include the estimated weights of vehicles when loaded, a description
of the vehicles, including the number of wheels and axles of such vehicles, trips per
day and any other information required by the Traffic Engineer. Preliminary information
is required for this item for the Conceptual Review meeting, in accordance with Appendix
B. The Company shall comply with all Transportation and Circulation requirements as
contained in the Land Use Code as may be reasonably required by the City’s Traffic
Engineer.
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45. Wastewater and Waste Management. In the Fort Collins Field, all fluids shall be
contained and there shall be no discharge of fluids, as described in the Closed Loop
System and Green Completions section of this Appendix. Waste shall be stored in tanks,
transported by tanker trucks, and disposed of at licensed disposal fields. In the UDA, new
secondary containment shall be constructed of steel, with sufficient perimeter and height
to hold one and one-half (1.5) times the volume of the largest tank and sufficient freeboard
to prevent overflow. No potential ignition sources shall be installed inside the secondary
containment area unless the containment enclosed a fired vessel. The requirements for
secondary containment will meet the Fort Collins Stormwater Criteria Manual. No land
treatment of oil impacted or contaminated drill cuttings are permitted. The use of a closed
loop drilling system precludes discharge of produced water or flowback to the ground or
the use of pits. Produced water or flowback will not be used for dust suppression. A copy
of the field’s Spill Prevention, Control, and Countermeasure Plan (SPCC) will be given to
the City, which describes spill prevention and mitigation practices. The Company will
provide the City documentation of waste disposal and its final disposition.
46. Water supply. The Company shall identify in the site plan its source for water used
in both the drilling and production phases of operations. The sources and amount of
water used in the City shall be documented and this record shall be provided to the
City annually or sooner, if requested by the City Manager. The disposal of water used
on site shall also be detailed including anticipated haul routes, approximate number of
vehicles needed to supply and dispose of water and the final destination for water used in
operation.
47. Weed control. The Company shall be responsible for ongoing weed control at oil and
gas operations, pipelines, and along access roads during construction and operation, until
abandonment and final reclamation is completed per City, Larimer County or other
applicable agency regulations. The appropriate weed control methods and species to be
controlled shall be determined through review and recommendation by the County Weed
Coordinator by reference to the Larimer County Noxious Weed Management Plan and in
coordination with the requirements of the surface owner.
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APPENDIX B
SUBMITTAL REQUIREMENTS FOR THE COMPANY FOR NEW WELL
LOCATIONS WITHIN THE CITY LIMITS OF FORT COLLINS
1. Conceptual Review Submittal Requirements. The following documents shall be submitted
prior to the Conceptual Review meeting outlined in Appendix A:
a) A preliminary summary of planned operations, including identified access points and
operational timeline for posting to a local community information web-page;
b) A preliminary site plan for site preparation, mobilization and demobilization;
c) A preliminary plan for interim reclamation and revegetation of the well pad and final
reclamation of the well pad;
d) A preliminary plan for noise, light and dust mitigation;
e) A preliminary traffic management plan;
f) A preliminary Visual Mitigation Plan, including but not limited to, a list of the
proposed colors for the operations’ equipment, proposed fencing and screening in
accordance with Appendix A.
g) A preliminary list of permits that shall be submitted in conjunction with the APD and
any exceptions proposed to be requested.
h) A draft air quality mitigation plan in accordance with Appendix A.
i) A draft emergency response preparedness plan in accordance with Appendix A.
j) Preliminary list of chemicals proposed to be disclosed through the “Frac Focus”
uploading mechanism and regulated through the COGCC Rule 205.
k) Proposed sampling locations in accordance with the water quality monitoring plan
outlined in Appendix A.
2. Submittal Requirements Prior to Commencement. The following documents shall be
submitted by the Company prior to the commencement of drilling and completion:
a) A response letter that outlines how staff comments from the Conceptual Review were
addressed during the APD permitting process.
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b) A summary of planned operations, including identified access points and operational
timeline for posting to a local community information web-page;
c) A site plan for site preparation, mobilization and demobilization;
d) A plan for interim reclamation and revegetation of the well pad and final reclamation
of the well pad;
e) A plan for noise, light and dust mitigation, to the extent reasonably feasible;
f) A traffic management plan, if applicable, and a reasonable bond to cover any damage
to public infrastructure during active drilling and completion;
g) A Visual Mitigation Plan, including but not limited to, a list of the proposed colors
for the operations’ equipment, proposed fencing and screening in accordance with
Appendix A.
h) Copies of all permits requested, including any exceptions.
i) A final air quality mitigation plan in accordance with Appendix A.
j) A final emergency response preparedness plan in accordance with Appendix A.
k) Updated preliminary Chemical disclosure using the “Frac Focus” uploading
mechanism, and Chemical Inventory per COGCC Rule 205.
l) Baseline water quality data collected in accordance with the Water Quality
Monitoring Plan.
3. Submittal Requirements Post Well-Completion. The following documents shall be
submitted by the Company after well-completion:
a) Chemical disclosure using the “Frac Focus” uploading mechanism, and Chemical
Inventory per COGCC Rule 205.
b) Water quality data collected at 1, 3, and 6 year post-completion intervals, as described
in Appendix A.
c) Air quality and other data collected throughout the post-completion phase, as
identified in Appendix A.
Option 2
ORDINANCE NO. 057, 2013
OF THE COUNCIL OF THE CITY OF FORT COLLINS
TERMINATING THE MORATORIUM IMPOSED BY ORDINANCE NO. 145, 2012
WITH RESPECT TO OIL AND GAS OPERATIONS CONDUCTED
WITHIN CERTAIN AREAS OF THE CITY
UNDER AN AMENDED OIL AND GAS OPERATOR AGREEMENT BETWEEN
THE CITY AND PROSPECT ENERGY, LLC,
UNDER AN OIL AND GAS OPERATOR AGREEMENT BETWEEN THE CITY
AND PROSPECT ENERGY, LLC AND EXEMPTING SUCH OPERATIONS FROM
THE PROHIBITIONS CONTAINED IN SECTION 12-135 OF THE CITY CODE
WHEREAS, by Ordinance No. 145, 2012, the City Council established a moratorium on the
acceptance or processing of land use applications, permit applications and other applications seeking
approval to conduct oil and gas extraction or related operations within the City (the “Moratorium”);
and
WHEREAS, Section 12-135 of the City Code prohibits hydraulic fracturing and open pit
storage in the City; and
WHEREAS, by Resolution 2013-024 of the Council of the City of Fort Collins, the City
Council has approved an Oil and Gas Operator Agreement (the “Agreement”) between the City and
Prospect Energy, LLC dated March 19, 2013, that applies to all existing and future operations of
Prospect Energy within the City during the term of the Agreement, and by Resolution 2013-036, the
City Council has adopted certain amendments thereto (the “Amended Agreement'”); and
WHEREAS, the City Council has determined that only those the oil and gas operations of
Prospect Energy, LLC that are conducted within the geographic area described in the Amended
Agreement and shown on Exhibit “A,” attached hereto and incorporated herein by this reference,
should be exempted from the Moratorium and from the prohibitions contained in Section 12-135 of
the City Code, and that such exemptions should continue only as long as such operations are
conducted in conformance with the terms and conditions of said the Amended aAgreement.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. The moratorium imposed by Ordinance No. 145, 2012 is hereby terminated
with respect to all oil and gas operations conducted by Prospect Energy, LLC within the geographic
area described on Exhibit “A,” provided that such operations are conducted in conformance with the
Amended Agreementin conformance with the terms and conditions of that certain Oil and Gas
Operator Agreement between the City and Prospect Energy, LLC dated March 19, 2013.
Section 2. The prohibitions contained in Section 12-135 of the City Code shall not apply
to oil and gas operations conducted by Prospect Energy, LLC within the geographic area described
Option 2
on Exhibit “A” as long as Prospect Energy, LLC conducts its operations in conformance with the
terms and conditions of the Amended Agreement that certain Oil and Gas Operator Agreement
between the City and Prospect Energy, LLC, dated March 19, 2013, and provided and further
provided that, in the event that a conflict exists between the provisions contained in Section 12-135
of the City Code and this ordinance, this ordinance shall control.
Introduced, considered favorably on first reading, and ordered published this 19th day of
March, A.D. 2013, and to be presented for final passage on the 23rd day of April, A.D. 2013.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
Passed and adopted on final reading on the 23rd day of April, A.D. 2013.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
OPTION 2
RESOLUTION 2013-036
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROVING AN AMENDED OIL AND GAS OPERATOR AGREEMENT
BETWEEN THE CITY AND PROSPECT ENERGY, LLC
WHEREAS, on March 19, 2013, the City Council adopted Resolution 2013-024, approving
an Oil and Gas Operator Agreement (the “Agreement”) between the City and Prospect Energy, LLC
(“Prospect”), which Agreement has been fully executed by both parties; and
WHEREAS, the purpose of the Agreement is to authorize Prospect to conduct oil and gas
operations in the City on identified lands under lease by Prospect as long as Prospect conforms to
certain air quality rules and the rules of the Colorado Oil and Gas Conservation Commission (the
“COGCC”); and
WHEREAS, the Agreement governs Prospect's operation of existing facilities in the “Fort
Collins Field,” as well as all new wells that may be operated by Prospect within the City during the
term of the Agreement; and
WHEREAS, the City Council has determined that the Agreement should be amended to
clarify that: (1) Prospect, in the course of its operations, will not re-enter any plugged or abandoned
wells within the area of its operation; (2) any new wells drilled all exploration and drilling actions
conducted by Prospect under the Agreement must, as of the effective date of the Agreement, comply
with the new rules of the COGCC, which will officially take effect on August 1, 2013; and (3) the
Amended Agreement must be executed by both parties on or before May 1June 15, 2013; and
WHEREAS, the City Council has also determined that the Agreement should be limited to
the Fort Collins Field only; and
WHEREAS, the City Manager has presented a proposed amended Agreement between the
City and Prospect to the City Council for its consideration that makes the foregoing changes (the
“Amended Agreement”); and
WHEREAS, the Amended Agreement continues to contain strict controls on methane release
and adequately protects the public health, safety and welfare; and
WHEREAS, the City Council has determined that the approval and execution of the
Amended Agreement between the City and Prospect is in the best interests of the City.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
OPTION 2
Section 1. That the Amended Agreement, a copy of which is attached hereto as Exhibit
“A,” is hereby determined by the City Council to include strict controls on methane release and to
adequately protect the public health, safety and welfare of the City, and is hereby approved.
Section 2. That the City Manager is hereby authorized and directed to execute the
Amended Agreement on substantially the same terms and conditions as shown on Exhibit “A,”
subject to such minor modifications in form or substance as the City Manager, in consultation with
the City Attorney, determines to be necessary and appropriate to protect the interests of the City or
effectuate the purpose of this Ordinance.
Section 3. That the Amended Agreement may only be further amended by the City
Council by resolution.
Passed and adopted at an adjourned meeting of the Council of the City of Fort Collins this
23rd day of April , A.D. 2013.
Mayor
ATTEST:
City Clerk
OPTION 2
1
AMENDED OIL AND GAS OPERATOR AGREEMENT
THIS OIL AND GAS OPERATOR AGREEMENT (“Agreement”) is made and entered
into this _____ day of ___________, 2013 , by and through Prospect Energy, LLC, whose
address is 1600 Stout Street, Suite 1710, Denver, CO 80202 (referred to hereinafter as the
“Company”), and The City of Fort Collins (referred to hereinafter as the “City”) with an address
of 300 LaPorte Avenue, Fort Collins, CO 80522, which may be collectively referred to herein as
the “Parties”, or individually as a “Party”.
WHEREAS, the Company and its affiliates, namely, Black Diamond Minerals, LLC
(“BDM”), the parent of the Company, engage in the exploration, development, production and
marketing of natural gas, oil and natural gas liquids in the Rocky Mountains, including the State
of Colorado. The Company currently operates the Fort Collins Field (the “Field”) located in
Larimer County, with certain portions of the Field located within the City, as depicted in Exhibit
A, and, as such, is the only operator with active oil and gas operations within the City. The
Company through its parent BDM, also holds certain leasehold interests within the City
described as the Undeveloped Area (the “UDA”), as depicted in Exhibit B.
WHEREAS, the Field was discovered in 1924, and has continually produced oil and
associated hydrocarbons to this day. As is common with other older, once remote, oil and gas
developments around the state, urban growth and subsequent annexation of certain lands by the
City have encroached upon the Field. These annexations, including the Richard’s Lake
subdivision (developed in the late 1990’s) and the Hearthfire subdivision (developed in the mid
2000’s), have allowed developers to place residential areas in the vicinity of active oil and gas
operations. Some property lines are now within 150 feet of oil wells constructed on then-rural
well pads.
WHEREAS, the Field is an oil producing field unitized for waterflood operations from
the Muddy Sandstone Formation (which yields the majority of the Field’s production), but the
Field also produces oil from the Niobrara, Codell, Dakota, and Lyons Formations, all of which
may need future development.
WHEREAS, recent engineering and geological analysis indicates that certain parts of the
Field may yield substantial incremental resource recovery by expanding the secondary recovery
waterflood project by drilling and hydraulic fracturing new wells drilled from lands currently
called Waters Edge, Richard’s Lake and Hearthfire subdivisions (the “Subdivisions”). The
Company is presently studying the UDA to assess whether it would support the development of
mineral resources.
WHEREAS, in the Field and UDA, the Company has entered into Surface Use
Agreements with the surface owners, dated December 19, 1988, as amended April 19, 2001, and
OPTION 2
2
March 17, 2011, respectively, which expressly govern the locations of wells and associated
facilities within the Subdivisions, and other specified terms, including, but not limited to,
landscaping and fencing around wells and associated production equipment.
WHEREAS, the City and the Company value a balanced approach to oil and gas
development that is protective of public health, safety and welfare, including the environment
and wildlife resources. To that end, in order to achieve those goals in a cooperative manner, the
City and the Company enter into this Agreement to identify best management practices
(“BMPs”) for the Company’s future drilling operations within the Field.
WHEREAS, the Field extends beyond the City limits and the Company, as a responsible
oil and gas operator, has installed a vapor recovery unit at its existing production facility located
just south of Douglas Road (the “Fort Collins Tank Battery”) as shown in the Exhibit A attached
hereto which lies outside of the City limits. All water, oil and gas produced from any New Well,
as defined herein, and located in the Field, will flow into existing or future pipelines to the Fort
Collins Tank Battery where gas will be captured and sent to the thermal oxidizer for destruction.
Equipment, both at the Fort Collins Tank Battery and within City limits, will capture and destroy
at least 98% of any methane and volatile organic compounds (VOC).
WHEREAS, the Colorado Oil and Gas Conservation Act, C.R.S. §34-60-101 et. seq. (the
“Act”), authorizes the Colorado Oil and Gas Conservation Commission (“COGCC” or
“Commission”) to adopt statewide rules and regulations, which the Commission has done.
Further, the Commission continues to consider changes to the rules and regulations.
WHEREAS, on December 18, 2012, by the adoption of Ordinance 145, 2012, the City
Council imposed a temporary moratorium until July 31, 2013 on the acceptance, processing and
approval of any land use applications relating to new oil and gas development (the
“Moratorium”).
WHEREAS, on March 5, 2013, by the adoption of Ordinance No. 032, 2013, the City
Council enacted Sec. 12-135 of the City Code prohibiting the use of hydraulic fracturing in the
City, as well as the storage in open pits of solid or liquid wastes and /or flowback (the “Ban”)
and, through the enactment of City Code Sec. 12-136, exempted from the Ban any oil or gas
wells or pad sites existing within the City as of February 19, 2013, that become the subject of an
operator agreement between the operator of the same and the City, as long as such agreement
includes strict controls on methane release and, in the judgment of the City Council, adequately
protects the public health, safety and welfare.
OPTION 2
3
WHEREAS, by Resolution ______, the City Council has approved this Oil and Gas
Operator Agreement with the Company, and the Parties agree to the terms and conditions
contained below.
NOW THEREFORE, in consideration of the covenants and mutual promises set forth in
this Agreement, including in the recitals, the Parties agree as follows:
1. Effective Date. When this Agreement is presented to the City Council for its
consideration, City staff will also present to the City Council an ordinance exempting all
Company operations within the area described in Exhibits “A” and “B” from the Moratorium and
the Ban, which exemption will continue in effect as long as the Company’s operations are
conducted in accordance with this Agreement. The Effective Date of such ordinance shall be
the “Effective Date” of this Agreement. Notwithstanding the foregoing, this Agreement shall be
void and of no effect as of August May 1June 15, 2013, unless this Agreement is fully executed
by the Parties on or before such date such ordinance has been approved by the City Council and
has taken effect on or before said date.
2. The Company’s Best Management Practices (“BMPs”) within City Limits. The
Company shall include the BMPs listed in Appendix A, attached hereto and by reference made a
part hereof, on all Applications for Permit-to-Drill, Form 2, and Oil and Gas Location
Assessments, Form 2A, submitted to the Commission for a ”New Well”. For the purposes of
this provision, “New Well” shall mean any Company-operated well spudded during the term of
this Agreement, and located on either a currently existing well pad or a New Well pad that is
located within the City limits, and a “New Well Pad” shall mean any area that is directly
disturbed during the drilling and subsequent operation of a New Well, including any production
facilities directly associated with such well, and its associated Well Pad, insofar as it covers
lands located in the City limits. The BMPs shall apply to all New Wells drilled by the Company
while this Agreement is effective. The Company shall not drill on any plugged and abandoned
well pad sites. For the purposes of this Agreement, a New Well shall not include the re-entry of a
previously plugged and abandoned well; accordingly, the re-entry of a previously plugged and
abandoned well is not allowed.
3. City Regulatory Approvals. The Company shall not be required to obtain any project
development plan or final plan approval from the City to conduct its oil and gas operations
within the Field, as long as the Company complies with the terms and conditions contained
herein, and this Agreement shall control all oil and gas operations conducted by the Company
within the Field. Prior to the submission of a COGCC Form 2 and/or Form 2A to the COGCC,
the Company shall meet with the City to review the proposed oil and gas operation to ensure
compliance with this Agreement, all applicable state and federal regulations, and any site-
specific concerns, which concerns may include overall project impacts and economically and
technically feasible mitigation measures or BMPs related to field design and infrastructure
OPTION 2
4
construction to minimize potential adverse impacts to public health, safety and welfare. At such
time, if at all, that the City and Larimer County, Colorado (the “County”) enter into a written
agreement that authorizes the City to regulate the oil and gas operations of the Company within
the Growth Management Area, such operations shall thereafter be governed by the terms and
conditions of this Agreement and shall be subject to the City’s regulatory authority as provided
in this Agreement. “Growth Management Area” shall be as described in that certain
Intergovernmental Agreement entered into by the City of Fort Collins and Larimer County on
June 24,2008, nunc pro func [sic] October 17, 2006.
4. Operations on Existing Facilities. For any Facility owned by the Company and existing
prior to the Effective Date and located within the Field, the Parties hereby agree that the
Company may perform routine maintenance operations on said Facility and perform such
operations the Company deems prudent and necessary, including, but not limited to, stimulating
existing wells through hydraulic fracturing and temporarily storing chemicals on existing well
pads for that purpose. The Company agrees to conduct such operations as a prudent operator in
accordance with the rules and regulation of the COGCC; however, the Company shall not be
subject to the BMP’s as attached hereto, except for Appendix A paragraphs 201(j) and 201(k)
thereof. “Facility” as used in this provision shall include wells, pipelines, and all equipment
necessary and appurtenant to such wells and pipelines.
5. Term. This Agreement is effective upon the Effective Date and shall remain in effect for
five (5) years from the Effective Date, at which time the Agreement shall be automatically
renewed and extended for successive five (5) year terms, unless and until either Party elects to
terminate the Agreement at the end of the then current five (5) year term by providing written
notice of such intent to the other party at least thirty (30) days before the expiration of said term.
6. Force Majeure. Neither Party will be liable for any delay or failure in performing under
this Agreement in the event and to the extent that the delay or failure arises out of causes beyond
a Party’s reasonable control, including, without limitation, war, civil commotion, act of God,
strike or other stoppage (whether partial or total) of labor, or any law, decree, regulation, or order
of any government or governmental body (including any court or tribunal).
7. Authority to Execute Agreement. Each Party represents that the undersigned have the
full right and authority to enter into this Agreement and bind the Parties to the terms and
conditions contained herein. This Agreement may be amended only by an instrument executed
by both Parties hereto.
8. Successors and Assigns. The terms and conditions of this Agreement shall bind and
extend to the City and the Company, and the Company’s successors and assigns.
OPTION 2
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9. No Third Party Beneficiaries. Except for the rights of enforcement by the Commission
with respect to the BMPs, this Agreement is not intended to, and does not create, any right,
benefit, responsibility or obligation that may be enforced by any non-party. Additionally,
nothing in the Agreement shall entitle any third party to any claims, rights or remedies of any
kind.
10. Notices. All notices and other correspondence related to this Agreement shall be in
writing and shall be delivered by: (i) certified mail with return receipt, (ii) hand delivery with
signature or delivery receipt provided by a third party courier service (such as FedEx, UPS, etc.),
(iii) fax transmission if verification of receipt is obtained, or (iv) email with return receipt, to the
designated representative of the Party as indicated below. A Party may change its designated
representative for notice purposes at any time by written notice to the other Party. The initial
representatives of the Parties are as follows:
City: City of Fort Collins
300 LaPorte Avenue
P.O. Box 580
Fort Collins, CO 80522
Attn: City Manager
Telephone: 970-416-2253
Fax: 970-224-6107
Email: datteberry@fcgov.com
Company: Prospect Energy, LLC
1600 Stout Street, Suite 1710
Denver, CO 80202
Attn: Scott D. Hall, Manager
Telephone: 303-973-3228, ext. 223
Fax: 303-346-4893
Email: sdhall@bdminerals.com
11. Default; Remedies. If either party believes that the other Party has failed to comply with
any provision of this Agreement, or if any other kind of dispute arises under any provision of this
Agreement that cannot be resolved by good faith negotiation between the Parties, the Party
claiming that a breach of this Agreement has occurred or seeking resolution of any other dispute
under this Agreement shall send written notice to the other Party, specifying its position in the
matter and invoking the dispute resolution process in this section. Within fifteen (15) days of the
date of delivery of such notice, the Parties shall meet to resolve the matter described in the
notice. If either Party believes that mediation would be advantageous in connection with such
meeting, or if a resolution of the matter cannot be achieved at the meeting, both parties agree to
make a reasonable effort to work through and with a mutually acceptable mediator to attempt to
resolve the dispute. Notwithstanding the foregoing, if either Party believes that the dispute will
not otherwise be resolved in a sufficiently prompt and effective manner, such Party may, at its
OPTION 2
6
discretion, take such legal action and seek such legal or equitable remedies as it determines to be
appropriate or necessary to protect and enforce its rights under this Agreement. Such remedies
may include, without limitation, an injunction to stop an alleged violation or an order requiring
the performance of all acts and things required to be performed hereunder by the other Party.
12. Integration Clause: This Agreement, along with all exhibits and appendices attached
hereto encompasses the entire agreement of the Parties and supersedes all previous
understandings and agreements between the Parties, whether oral or written.
13. Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of Colorado without reference to its conflicts of laws provisions.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by a
duly authorized representative on the day and year first written above.
THE CITY:
CITY OF FORT COLLINS, COLORADO
A MUNICIPAL CORPORATION
By: _____________________________________
Darin Atteberry, City Manager
ATTEST:
__________________________
City Clerk
APPROVED AS TO FORM:
_________________________
Deputy City Attorney
THE COMPANY:
PROSPECT ENERGY, LLC
By (signature):
_________________________________________
Scott Hall, CEO
OPTION 2
7
List of Exhibits
Exhibit A - Map of the Fort Collins Field and City boundaries
Exhibit B - Map of the Undeveloped Acreage (UDA) and City Boundaries
Appendix A – List of BMP’s
Appendix B – Submittal Requirements
OPTION 2
8
APPENDIX A
BEST MANAGEMENT PRACTICES FOR LOCATIONS
WITHIN THE CITY LIMITS OF FORT COLLINSFIELD
Pursuant to the terms of this Agreement, the Company shall include the best management
practices listed below on all Applications for Permit-to-Drill, Form 2, and Oil and Gas Location
Assessments, Form 2A, (for New Well Pads only), submitted to the Commission for New Wells
the Company drills after the Effective Date within the Field.
1. Regulations. The Company shall comply with all applicable state, and federal regulations
in addition to the terms of this agreement and the Best Management Practices included
below. For aAny exploration or drilling activity conducted by the Company must comply
with the revised rules adopted by the COGCC on January 9, 2013, even though such rules
will not officially take effect until August 1, 2013. Whichever regulation is most
stringent shall apply.
2. Setbacks for New Wells. It is the intent of the Company to maximize equipment and
wellhead setbacks from occupied buildings and residences beyond the setbacks required
by the COGCC to the extent feasible and practicable.
The Parties recognize that a portion of the Field is within the Fort Collins City Limits and
as such, development has occurred within the already established Field. The surface
owner has obtained permitted plats for residential areas in the vicinity of existing oil and
gas activities, including a constructed city park and contemplated building units and
public roads within three hundred fifty (350) feet of an existing well. Further, the Parties
acknowledge that the Commission rules require a minimum of five hundred (500) feet
safety setback for New Well construction from a building unit and one thousand feet
(1,000) from a high occupancy building.
Any New Wells drilled in the UDA shall conform to the Commission setback rules then
in effect, except for and any New Well in the UDA drilled before August 1, 2013, which
well shall be subject to comply with the Commission setback rules to take effect that will
become effective on August 1, 2013. In the Fort Collins Field, New Wells shall be
constructed on existing Well Pads, which due to previous setback requirements, and City
approval of residential development, do not conform to five hundred (500) feet setbacks,
and are given an exemption from the Commission in the Rules now in effect.
The Parties recognize the existence of a Surface Use Agreement (the “SUA”) between
the Company and the surface owner which expressly governs the locations of wells and
associated facilities within the Water’s Edge, Richard’s Lake and Hearthfire subdivisions
OPTION 2
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(the “Subdivisions”), and that certain terms found in the SUA may affect Commission
setbacks and other Commission rules.
3. Conceptual Review. No less than thirty (30) days prior to the submission of an
Application for a Permit to Drill, the Company agrees to schedule a meeting with the City
to review the proposed new well or drilling activity. The goal of this meeting shall be for
staff and the applicant to review the proposed oil and gas operation in a manner that
ensures compliance with the operator agreement and applicable state and federal
regulations. This pre-submittal meeting shall also allow the applicant and staff to explore
site-specific concerns, to discuss project impacts and potential mitigation methods
including field design and infrastructure construction to minimize impacts, to discuss
coordination of field design with other existing or potential development and operators,
to identify sampling and monitoring plans for air and water quality, and other elements of
the operator agreement as contained in Appendices A and B. Based upon the foregoing,
applicants are encouraged to conduct the pre-submittal meeting with the City prior to
completing well siting decisions, to the extent reasonably feasible.
4. Mailed Notice. The City shall mail notice of the pending Application for a Permit to Drill
no more than ten (10) days after the conceptual review meeting has taken place. The
Company shall reimburse the City for the costs of the mailing. Owners of record shall be
ascertained according to the records of the Larimer County Assessor’s Office, unless
more current information is made available in writing to the City prior to the mailing of
the notices. Notice of the pending application shall include reference to the neighborhood
meeting, if applicable, and be made as follows:
⼀ To the surface owners of the parcels of land on which the oil and gas operation is
proposed to be located;
⼀ To the surface owners of the parcels of land within five hundred (500) feet of a
proposed gathering line;
⼀ To the surface owners of the parcels of land within two thousand six hundred
forty (2,640) feet of the parcel on which the oil and gas operation is proposed to be
located; and
⼀ To persons registered in writing with the City as representing bona fide
neighborhood groups and organizations and homeowners' associations within the area
of notification.
5. Posted Notice. The real property proposed to be developed shall also be posted with a
sign, giving notice to the general public of the proposed development. For parcels of land
exceeding ten (10) acres in size, two (2) signs shall be posted. The size of the sign(s)
required to be posted shall be as established in the Supplemental Notice Requirements of
Section 2.2.6(D) of the City’s Land Use Code. Such signs shall be provided by the City
and shall be posted on the subject property in a manner and at a location or locations
OPTION 2
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reasonably calculated by the City to afford the best notice to the public, which posting
shall occur within ten (10) days following the Conceptual Review meeting.
6. Neighborhood Meetings. A neighborhood meeting shall be required on any New Well,
even on existing Well Pads, that requires an Application for a Permit to Drill. Notice of
the neighborhood meeting shall be provided in accordance with Sections 4 and 5 above.
The Company shall attend the neighborhood meeting. The City shall be responsible for
scheduling and coordinating the neighborhood meeting and shall hold the meeting in the
vicinity of the proposed development. A written summary of the neighborhood meeting
shall be prepared by the City. The written summary shall be included in the Local
Government Designee (LGD) comments provided to the COGCC at the time of the
public hearing or permit review to consider the Application for a Permit to Drill.
7. Notification to the City and the public regarding commencement of operations. Prior to
the commencement of any new drilling operations, the Company shall provide to the City
Manager for posting on the website the information outlined in Appendix B regarding
commencement of operations, which the Company may revise from time-to-time during
operations, with prior approval from the City.
8. Inspections. The City shall have the right to inspect the Company’s operations and its
sites during business hours, upon the giving of twenty-four (24) hour advance written
notice to the Company.
9. Containment berms. The Company shall utilize steel-rim berms around tanks and
separators at new Well Pads. All berms and containment devices shall be inspected at
regular intervals and maintained in good condition. No potential ignition sources shall be
installed inside the secondary containment area unless the containment area encloses a
fired vessel. Refer to American Petroleum Institute Recommended Practices, API RP -
D16.
a) Containment berms shall be constructed of steel rings, designed and installed to
prevent leakage and resist degradation from erosion or routine operation.
b) Secondary containment for tanks shall be constructed with a synthetic or engineered
liner that contains all primary containment vessels and flowlines and is mechanically
connected to the steel ring to prevent leakage.
c) For locations within five hundred (500) feet and upgradient of a surface water body,
tertiary containment, such as an earthen berm, is required around production facilities.
10. Closed Loop Pitless Systems for the Containment and/or Recycling of Drilling and
Completion Fluids. Wells shall be drilled, completed and operated using closed loop
OPTION 2
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pitless systems for containment and/or recycling of all drilling, completion, flowback and
produced fluids.
11. Anchoring. All equipment at drilling and production sites shall be anchored to the extent
necessary to resist flotation, collapse, lateral movement, or subsidence. All guy line
anchors left buried for future use shall be identified by a marker of bright color not less
than four (4) feet in height and not greater than one (1) foot east of the guy line anchor.
12. Burning. No open burning shall occur on the site of any oil and gas operation.
13. Chains. Traction chains from heavy equipment shall be removed before entering a City
street.
14. Chemical disclosure and storage. The City shall be provided, in table format, the name,
Chemical Abstracts Service (CAS) number, volume, storage, containment and disposal
method for all drilling and completion chemicals (solids, fluids, and gases) used on
the Well Pad. Fracture chemicals shall be uploaded onto the Frac Focus website. The
Company shall not permanently store hydraulic fracturing chemicals, flowback from
hydraulic fracturing, or produced water in the City limits.
15. Color. Facilities shall be painted in a uniform, non-contrasting, non- reflective color, to
blend with the surrounding landscape and, with colors that match the land rather than the
sky. The color should be slightly darker than the surrounding landscape.
16. Cultural and Historical Resource Protection. If a significant surface or sub-surface
archaeological site is discovered during construction, the Company shall be responsible
for immediately contacting the City to report the discovery. If any disturbance of the
resource occurs, the Company shall be responsible for mitigating the disturbance to the
cultural or historical property through a data recovery plan approved by the City.
17. Discharge valves. Open-ended discharge valves on all storage tanks, pipelines and other
containers shall be secured where the operation site is unattended or is accessible to the
general public. Open-ended discharge valves shall be placed within the interior of the
tank secondary containment.
18. Dust suppression. Dust associated with on-site activities and traffic on access roads
shall be minimized throughout construction, drilling and operational activities such that
there are no visible dust emissions from access roads or the site to the extent practical
given wind conditions. No produced water or other process fluids shall be used for dust
suppression. The Company will avoid dust suppression activities within three hundred
(300) feet of the ordinary high water mark of any waterbody, unless the dust suppressant
is water. Material Safety Data Sheets (MSDS) for any chemical based dust suppressant
shall be submitted to the City for approval prior to use.
OPTION 2
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19. Electric equipment. Electric-powered engines for motors, compressors, and drilling
equipment and for pumping systems shall be used in order to mitigate noise and to
reduce emissions when feasible.
20. Emergency preparedness plan. The Company is required to develop an emergency
preparedness plan for each specific facility site, which shall be in compliance with the
International Fire Code. The plan shall be filed with the Poudre Fire Authority and
the City of Fort Collins Office of Emergency Management and updated on an annual
basis or as conditions change (responsible field personnel change, ownership changes,
etc.). The emergency preparedness plan shall consist of at least the following
information:
a) Name, address and phone number, including twenty-four (24)-hour emergency
numbers for at least two persons responsible for emergency field operations.
b) An as-built facilities map in a format suitable for input into the City’s GIS system
depicting the locations and type of above and below ground facilities including
sizes, and depths below grade of all oil and gas gathering and transmission lines and
associated equipment, isolation valves, surface operations and their functions, as well
as transportation routes to and from exploration and development sites, for
emergency response and management purposes. The information concerning
pipelines and isolation valves shall be held confidentially by the City's Office of
Emergency Management and the Battalion Chief, and shall only be disclosed in the
event of an emergency or to emergency responders. The City shall deny the right of
inspection of the as-built facilities maps to the public or for the training of emergency
responders pursuant to C.R.S. § 24-72-204.
c) Detailed information addressing each reasonable potential emergency that may be
associated with the operation. This may include any or all of the following:
explosions, fires, gas, oil or water pipeline leaks or ruptures, hydrogen sulfide or
other toxic gas emissions, or hazardous material vehicle accidents or spills. A
provision that any spill outside of the containment area, that has the potential to
leave the facility or to threaten waters of the state, or as required by the City-
approved Emergency Preparedness Plan shall be reported to the local emergency
dispatch and the COGCC Director in accordance with COGCC regulations.
d) Detailed information identifying access or evacuation routes, and health care
facilities anticipated to be used.
e) A project specific emergency preparedness plan for any project that involves
drilling or penetrating through known zones of hydrogen sulfide gas.
OPTION 2
13
f) Detailed information showing that the Company has adequate personnel, supplies,
and training to implement the emergency response plan immediately at all times
during construction and operations.
g) The Company shall have current Material Safety Data Sheets (MSDS) for all
chemicals used or stored on a site. The MSDS sheets shall be provided
immediately upon request to City officials, a public safety officer, or a health
professional.
h) The plan shall include a provision establishing a process by which the Company
engages with the surrounding neighbors to educate them on the risks of the on-site
operations and to establish a process for surrounding neighbors to communicate with
the Company.
i) All training associated with the Emergency Preparedness plan shall be coordinated
with the City’s Office of Emergency Management and Poudre Fire Authority.
j) A provision obligating the Company to reimburse the appropriate emergency
response service providers for costs incurred in connection with any emergency in
accordance with Colorado State Statutes.
21. Air quality. The Company must comply with emissions regulations governed by the
Colorado Department of Public Health and Environment (CDPHE), Air Pollution
Control Division (APCD). Air emissions from wells shall be in compliance with the
permit and control provisions of the Colorado Air Quality Control Program, Title 25,
Section 7, C.R.S., COGCC Rule 805, and all state and federal regulations for the
control of fugitive dust, and control of ozone, ozone precursors, methane, and hazardous
air pollutants by the Larimer County Public Health Department, and the CDPHE-APCD.
The Company must comply with 40 CFR Subpart OOOO as published on August 16, 2012
(Quad O).
a) General Duty to Minimize Emissions. The Company shall incorporate in the
development plan; operations, procedures, and field design features to the
maximum extent feasible that minimize air pollutant emissions including but not
limited to:
1) Consolidation of product treatment and storage facilities
2) Centralization of compression facilities
3) Liquids gathering and water delivery systems
4) Telemetric control and monitoring systems
5) Pipeline infrastructure prior to well completion.
OPTION 2
14
b) In the UDA, the Company shall utilize a high-low pressure vessel (HLP) and
vapor recovery unit (VRU) for New Wells that are placed on production. The
Company may remove the VRU at such time it determines that the VRU system is
no longer necessary due to reduced emission recoveries and/or efficiencies, but no
earlier than one (1) year after the New Well is placed on production. The
Company may opt to capture gas and send through a thermal oxidizer in lieu of a
HLP and VRU.
c)b) Plunger lifts are not typically used in the Fort Collins Field due to
insufficient gas. However if there is future use of plunger lifts, emissions shall be
controlled from the motor control valve using low bleed pneumatic controllers.
d)c) There will be no uncontrolled venting of methane. All gas vapors shall be
captured to the extent practicable. Vapor capture equipment shall operate at
ninety-eight percent (98%) efficiency or better. There are no gas sales lines in the
Fort Collins field because the quantity and quality of gas is low and not
marketable. If salable gas were to occur in the UDA, a sales line shall be
constructed.
e)d) Flaring during drilling and completions:
During well completion, the capture and beneficial use of natural gas is preferred
over flaring. Minimal flaring may occur in the Fort Collins fField, because there
is minimal gas in the field. Flaring shall be continuously monitored on-site by the
Company, under twenty-four (24) hour watch and is regulated by COGCC Rules
317, 805B(3)B, and 912. No venting of gas may occur, except under COGCC
Green Completion Practices (Rule 805 B(3)B), or in very limit cases under Rule
912 with the COGCC Director approval.
f)e) Flaring during production operations:
1) The flare shall be fired with natural gas and shall be operated with a
ninety eight (98) percent or higher VOC destruction efficiency.
2) The flare shall be designed and operated in a manner that shall
ensure no visible emissions, pursuant to the provisions of 40 CFR
60.18(f), except for periods not to exceed a total of five (5) minutes during
any two (2) consecutive hours. Where applicable, flares shall also be in
compliance with 5 CCR 1001-9 Regulation 7 Section XVIIB for non-
condensate oil.
OPTION 2
15
3) The flare shall be operated with a flame present at all times when
emissions may be vented to it, pursuant to the methods specified in 40
CFR 60.18(f).
4) An automatic pilot system shall be used when feasible. Other ignition
systems may include the installation and operation of a telemetry alarm
system or an on-site visible indicator showing proper function.
g)f) Leak Detection and Repair (LDAR) – The Company shall develop and
maintain a leak detection and component repair program according to EPA
Method 21 for equipment used in permanent operations. LDAR shall be
performed on newly installed equipment, and then on an annual basis. A
Forward-Looking Infrared (FLIR) camera shall be used as the preferred
implementation method of EPA Method 21 as available from the state; if
unavailable, other methods shall be used in compliance with this method. Upon
request from the City, the Company shall implement EPA Method 21 upon
additional concerns. At least once per year, the Company shall notify the City
prior to FLIR camera use in case the City wishes to observe the method.
h)g) One Time Baseline Air Quality Monitoring - the Company and the City
shall split the cost for a one time Baseline Sampling and Analytical. The work
shall be done by a third party consultant agreeable to both parties over a five day
sampling period with each location sampled per day. The sampling locations
shall be as follows:
1) Upwind of Tank Battery
2) Downwind of Tank Battery
3) City Park
4) One location downtown, such as New Belgium Brewery or Wild Boar
Coffee
i)h) One Time Air Sampling During Well Completion – The Company shall conduct
air sampling during well completion. The work shall be done by a third party
consultant agreeable to both parties. This shall be done over a five day sampling
period with each location sampled per day. The sampling shall be for one well
completion in the City (City’s choice of which well completion). The sampling
locations shall be as follows:
1) Upwind of well
2) Downwind of well
OPTION 2
16
j)i) Ongoing Air Quality Monitoring - Periodic air monitoring shall be performed for
hydrogen sulfide (H2S), a hazardous air pollutant (HAP). The Company shall
perform field monitoring using the Jerome 631 XC or equivalent instrument
annually, or until such time that odors are not detected past the Fort Collins Tank
Battery fence line in City Limits.
k)j) The City may require the Company to conduct additional air monitoring as
needed to respond to emergency events such as spill, process upsets, or accidental
releases or in response to odor complaints in City Limits.
1) In response to emergency events that involve the potential release of
hazardous air pollutants, the Company may be required to conduct air
sampling in accordance with Subsection i. above.
2) In response to odor complaints, the Company may be required to conduct
air sampling in accordance with subsection j above or use a photo-
ionization detector (PID) to measure detected levels of VOCs that exceed
acute health-based exposure thresholds, or other air sampling
methodology depending on the nature of the complaint.
l)k) Air Quality Action Days. The Company shall respond to air quality Action Day
advisories posted by the Colorado Department of Public Health and Environment
for the Front Range Area by implementing air emission reduction measures
committed to in the Air Quality Mitigation Plan. Emission reduction measures
shall be implemented for the duration of an air quality Action Day advisory and
may include measures such as:
1) Minimize vehicle and engine idling
2) Reduce truck traffic and worker traffic
3) Delay vehicle refueling
4) Suspend or delay use of fossil fuel powered ancillary equipment
5) Postpone construction activities
22. Green completions.
a) Gas gathering lines, separators, and sand traps capable of supporting green
completions as described in COGCC Rule 805 shall be installed at any location at
which commercial quantities of gas are reasonably expected to be produced based on
existing adjacent wells within one (1) mile or well in the Fort Collins Field,
whichever is greater.
b) Uncontrolled venting is prohibited.
OPTION 2
17
c) Temporary flowback flaring and oxidizing equipment shall include the following:
1) Adequately sized equipment to handle 1.5 times the largest flowback volume of
gas experienced in a one (1) mile radius (or well in the Fort Collins Field),
whichever is greater;
2) Valves and porting available to divert gas to flaring and oxidizing equipment; and
3) Auxiliary fueled with sufficient supply and heat to combust or oxidize non-
combustible gases in order to control odors and hazardous gases. The flowback
combustion device shall be equipped with a reliable continuous ignition source
over the duration of flowback, except in conditions that may result in a fire
hazard or explosion.
4) The Company has a general duty to safely maximize resource recovery and
minimize releases to the atmosphere during flowback and subsequent
recovery/operation.
23. Exhaust. The exhaust from all engines, motors, coolers and other mechanized equipment
shall be vented up or in a direction away from the closest existing residences.
24. Fencing. Permanent perimeter fencing shall be installed around production equipment,
and shall be secured. The main purpose of the fencing is to deter entrance by
unauthorized people. The Company shall use visually interesting fencing, when feasible,
but the parties recognize that there is a need for air circulation, and for the field personnel
who regularly inspect the facilities to be able to identify visual operational deficiencies
when driving by. Landscaping may be used for screening. If a chain link fence is required
to achieve safety requirements set by the COGCC, then landscaping and other screening
mechanisms shall be required that comply with the City’s Land Use Code regulations and
the Company’s safety requirements.
25. Flammable material. All land within twenty five (25) feet of any tank, or other structure
containing flammable or combustible materials shall be kept free of dry weeds, grass or
rubbish, and shall conform to Section 315 of the International Fire Code.
26. Floodplains. All oil and gas operations shall comply with Chapter 10 of the City
Code.
27. Water Quality Monitoring Plan. The Company shall comply with COGCC Rule 609.
In summary, this requires pre- and post-drilling testing. The rules require oil and gas
operators to sample all “Available Water Sources” (owner has given consent for sampling
and testing and has consented to having the sample data obtained made available to the
public), with a cap of four (4) water sources, within one-half (1/2) mile radius of a
proposed well, multi-well site, or dedicated injection well. Water sources include
OPTION 2
18
registered water wells, permitted or adjudicated springs, and certain monitoring wells.
The Company agrees to the following requirements above and beyond the COGCC
requirements: analyzing for dissolved metals as indicated in the Land Use Code and
sampling intervals to be baseline (before drilling), post-drilling at one, three, and six
years. Analytical results shall be shared with the COGCC, the City, and the landowner.
All spills, for new and existing wells, shall be managed in accordance with COGCC
regulations.
28. Landscaping. In the Fort Collins Field, eExisting Well Pads shall be used for any
New Wells and all landscaping shall be in compliance with the City of Fort Collins
Land Use Code standards and in compliance with the safety requirements of the
Company. Existing vegetation shall be minimally impacted. In the UDA,
motorized equipment shall be restricted to the Well Pad and access roads to the
Well Pads. A Visual Mitigation Plan, along with fencing and landscaping shall be
developed for new construction.
29. Lighting. Except during drilling, completion or other operational activities requiring
additional lighting, down-lighting is required, meaning that all bulbs must be fully
shielded to prevent light emissions above a horizontal plane drawn from the bottom of
the fixture. A lighting plan shall be developed to establish compliance with this
provision. The lighting plan shall indicate the location of all outdoor lighting on the site
and any structures, and include cut sheets (manufacturer's specifications with picture or
diagram) of all proposed fixtures.
30. Maintenance of machinery. Routine field maintenance of vehicles or mobile
machinery shall not be performed within three hundred (300) feet of any water body.
31. Mud Tracking. The Company shall take all practicable measures to ensure that vehicles
do not track mud or debris onto City streets. If mud or debris is nonetheless deposited
on City streets, the streets shall be cleaned immediately by the Company using
pressured water from a water truck. This shall be done as part of maintenance. If for
some reason it cannot be done, or needs to be postponed, the LGD shall be notified of
the Company’s plan for mud removal.
32. Natural Resources – An Ecological Characterization Study shall be provided if any New
Well is within 500 feet of a Natural Habitat or Feature, and if impacting these resources,
mitigation plans to ensure no net resource loss per Fort Collins Land Use Code 3.4.1.
33. Noise mitigation. Noise mitigation measures shall be constructed along any edge of any
oil and gas operation site if such edge is between the oil and gas operation and existing
residential development or land which is zoned for future residential development. The
noise mitigation measures shall, to the maximum extent feasible, decrease noise from the
OPTION 2
19
oil and gas operations to comply with the sound limitation regulations set forth in
Commission Rule 802. A noise mitigation study shall be submitted with the application
to demonstrate that noise will be decreased to the maximum extent feasible.
34. Pipelines. Any newly constructed or substantially modified pipelines on site shall meet the
following requirements:
(a) To the maximum extent feasible, all flow lines, gathering lines, and transmission lines
shall be sited a minimum of fifty (50) feet away from general residential, commercial,
and industrial buildings, as well as the high-water mark of any surface water body.
This distance shall be measured from the nearest edge of the pipeline. Pipelines and
gathering lines that pass within 150 feet of general residential, commercial, and
industrial buildings or the high water mark of any surface water body shall incorporate
leak detection, secondary containment, or other mitigation, as appropriate.
(b) To the maximum extent feasible, pipelines shall be aligned with established roads in
order to minimize surface impacts and reduce habitat fragmentation and disturbance.
(c) To the maximum extent feasible, operators shall share existing pipeline rights-of-way
and consolidate new corridors for pipeline rights-of-way to minimize surface impacts.
(d) To the maximum extent feasible, operators shall use boring technology when crossing
streams, rivers, or irrigation ditches with a pipeline to minimize negative impacts to
the channel, bank, and riparian areas.
35. Recordation of flowlines. All new flowlines, including transmission and gathering
systems, shall have the legal description of the location recorded with the City Clerk and
the Larimer County Clerk and Recorder within thirty (30) days of completion of
construction. Abandonment of any recorded flowlines shall be recorded with the
Larimer County Clerk and Recorder’s office within thirty (30) days after
abandonment.
36. Recreational Activity Standards. The installation and operation of any oil and gas
operation shall not cause significant degradation to the quality and quantity of
recreational activities in the City. Methods to achieve compliance with this standard
include, but are not limited to locating operations away from trails and from property
used for recreational purposes, or by using existing Well Pads.
37. Removal of debris. When an oil and gas operation becomes operational, all
construction-related debris shall be removed from the site for proper disposal. The site
shall be maintained free of debris and excess materials at all times during operation.
Materials shall not be buried or burned on-site.
OPTION 2
20
38. Removal of equipment. All equipment used for drilling, re-completion and maintenance
of the facility shall be removed from the site within thirty (30) days of completion of
the work, unless otherwise agreed to by the surface owner. Permanent storage of
equipment on Well Pad sites shall not be allowed.
39. Soil Gas Monitoring – The City, at its discretion, may conduct soil gas monitoring to
assess well casing integrity. This shall be typically completed within ninety (90) days of
New Well completion. The City shall notify the Company prior to entering the site for soil
gas monitoring.
40. Spills. Chemical spills and releases shall be reported in accordance with applicable
state and federal laws, including the Emergency Planning and Community Right To
Know Act, the Comprehensive Environmental Response, Compensation and Liability
Act, the Oil and Pollution Act, the Clean Water Act, the Resource Conservation and
Recovery Act and the Spill Control Prevention and Countermeasure plan, as
applicable. If a spill or release impacts or threatens to impact surface water or a
water well, the Company shall notify the affected or potentially affected owner
immediately following discovery of the release, and the spill or release shall be reported
to the City and to the surface water or water well owner within twenty-four (24) hours of
becoming aware of the spill or release.
41. Stormwater control plan. All oil and gas operations shall comply and conform with the
Fort Collins Storm Criteria Manual (FCSCM), including submission of an Erosion
Control Report and Plan.
42. Temporary access roads. Temporary access roads associated with oil and gas operations
shall be reclaimed and re-vegetated to the original state.
43. Trailers. A construction trailer or office is permitted as an accessory use during active
drilling and well completion only.
44. Transportation and circulation. All applicants for drilling and completion operations
(New Wells) shall include in their applications detailed descriptions of all proposed
access routes for equipment, water, sand, waste fluids, waste solids, mixed waste, and
all other material to be hauled on the public streets and roads of the City. The
submittal shall also include the estimated weights of vehicles when loaded, a description
of the vehicles, including the number of wheels and axles of such vehicles, trips per
day and any other information required by the Traffic Engineer. Preliminary information
is required for this item for the Conceptual Review meeting, in accordance with Appendix
B. The Company shall comply with all Transportation and Circulation requirements as
contained in the Land Use Code as may be reasonably required by the City’s Traffic
Engineer.
OPTION 2
21
45. Wastewater and Waste Management. In the Fort Collins Field, aAll fluids shall be
contained and there shall be no discharge of fluids, as described in the Closed Loop
System and Green Completions section of this Appendix. Waste shall be stored in tanks,
transported by tanker trucks, and disposed of at licensed disposal fields. In the UDA, new
secondary containment shall be constructed of steel, with sufficient perimeter and height
to hold one and one-half (1.5) times the volume of the largest tank and sufficient freeboard
to prevent overflow. No potential ignition sources shall be installed inside the secondary
containment area unless the containment enclosed a fired vessel. The requirements for
secondary containment will meet the Fort Collins Stormwater Criteria Manual. No land
treatment of oil impacted or contaminated drill cuttings are permitted. The use of a closed
loop drilling system precludes discharge of produced water or flowback to the ground or
the use of pits. Produced water or flowback will not be used for dust suppression. A copy
of the field’s Spill Prevention, Control, and Countermeasure Plan (SPCC) will be given to
the City, which describes spill prevention and mitigation practices. The Company will
provide the City documentation of waste disposal and its final disposition.
46. Water supply. The Company shall identify in the site plan its source for water used
in both the drilling and production phases of operations. The sources and amount of
water used in the City shall be documented and this record shall be provided to the
City annually or sooner, if requested by the City Manager. The disposal of water used
on site shall also be detailed including anticipated haul routes, approximate number of
vehicles needed to supply and dispose of water and the final destination for water used in
operation.
47. Weed control. The Company shall be responsible for ongoing weed control at oil and
gas operations, pipelines, and along access roads during construction and operation, until
abandonment and final reclamation is completed per City, Larimer County or other
applicable agency regulations. The appropriate weed control methods and species to be
controlled shall be determined through review and recommendation by the County Weed
Coordinator by reference to the Larimer County Noxious Weed Management Plan and in
coordination with the requirements of the surface owner.
OPTION 2
22
APPENDIX B
SUBMITTAL REQUIREMENTS FOR THE COMPANY FOR NEW WELL
LOCATIONS WITHIN THE CITY LIMITS OF FORT COLLINS
1. Conceptual Review Submittal Requirements. The following documents shall be submitted
prior to the Conceptual Review meeting outlined in Appendix A:
a) A preliminary summary of planned operations, including identified access points and
operational timeline for posting to a local community information web-page;
b) A preliminary site plan for site preparation, mobilization and demobilization;
c) A preliminary plan for interim reclamation and revegetation of the well pad and final
reclamation of the well pad;
d) A preliminary plan for noise, light and dust mitigation;
e) A preliminary traffic management plan;
f) A preliminary Visual Mitigation Plan, including but not limited to, a list of the
proposed colors for the operations’ equipment, proposed fencing and screening in
accordance with Appendix A.
g) A preliminary list of permits that shall be submitted in conjunction with the APD and
any exceptions proposed to be requested.
h) A draft air quality mitigation plan in accordance with Appendix A.
i) A draft emergency response preparedness plan in accordance with Appendix A.
j) Preliminary list of chemicals proposed to be disclosed through the “Frac Focus”
uploading mechanism and regulated through the COGCC Rule 205.
k) Proposed sampling locations in accordance with the water quality monitoring plan
outlined in Appendix A.
2. Submittal Requirements Prior to Commencement. The following documents shall be
submitted by the Company prior to the commencement of drilling and completion:
a) A response letter that outlines how staff comments from the Conceptual Review were
addressed during the APD permitting process.
OPTION 2
23
b) A summary of planned operations, including identified access points and operational
timeline for posting to a local community information web-page;
c) A site plan for site preparation, mobilization and demobilization;
d) A plan for interim reclamation and revegetation of the well pad and final reclamation
of the well pad;
e) A plan for noise, light and dust mitigation, to the extent reasonably feasible;
f) A traffic management plan, if applicable, and a reasonable bond to cover any damage
to public infrastructure during active drilling and completion;
g) A Visual Mitigation Plan, including but not limited to, a list of the proposed colors
for the operations’ equipment, proposed fencing and screening in accordance with
Appendix A.
h) Copies of all permits requested, including any exceptions.
i) A final air quality mitigation plan in accordance with Appendix A.
j) A final emergency response preparedness plan in accordance with Appendix A.
k) Updated preliminary Chemical disclosure using the “Frac Focus” uploading
mechanism, and Chemical Inventory per COGCC Rule 205.
l) Baseline water quality data collected in accordance with the Water Quality
Monitoring Plan.
3. Submittal Requirements Post Well-Completion. The following documents shall be
submitted by the Company after well-completion:
a) Chemical disclosure using the “Frac Focus” uploading mechanism, and Chemical
Inventory per COGCC Rule 205.
b) Water quality data collected at 1, 3, and 6 year post-completion intervals, as described
in Appendix A.
c) Air quality and other data collected throughout the post-completion phase, as
identified in Appendix A.
-Compliance with all buffer
standards
Existing Vegetation Minimize
disturbance
Preservation of
existing vegetation,
mitigation requirements
Preservation of
existing vegetation,
mitigation requirements
General Conditions that apply to all oil and gas operations, regardless of the review track selected
Emergency Response Must have a plan in compliance with the International Fire Code
- Include emergency contact information for the operator
- Trigger/threshold levels identified to determine when a state of emergency
should be declared
- Spills shall be immediately reported
- Establish a process for the operator to notify neighbors regarding risks and
establish a communication process
Transportation - Access roads and access points shall be provided, reviewed, and approved by the City
- A traffic impact analysis shall be submitted; all street frontage shall be improved in
accordance with the Larimer County Urban Area Street Standards, including street
trees, sidewalk, curb and gutter
- Transportation fees and securities, i.e., bond or letter of credit, provided to ensure no
damage to City streets, including any access routes
Lighting Except during drilling, completion or other activities where worker safety is a concern, all
lighting shall be fully shielded and not spill off the site
Spills Chemical spills and releases shall be reported in accordance with local, state, and
federal laws
Chemical Disclosure All Material Safety Data Sheets (MSDS) shall be provided to the City and Emergency
Personnel
compressors
Required for pumping units and
compressors
Required for pumping units and
compressors
Green Completions
Must ensure no
significant
degradation
Capture gas during completion or
use completion combustion
devices rather than flare or vent
Capture gas during completion or
use completion combustion
devices rather than flare or vent
Air Quality Monitoring Must ensure no
significant
degradation of air
quality
Baseline and well completion
monitoring required, and additional
post-completion testing may be
required if changes in air quality
are identified
Baseline and well completion
monitoring required, and
additional post-completion testing
may be required if changes in air
quality are identified
prior to the hearing
Public Comments Written comments can be provided prior to or at the public hearing
Residents and affected parties can testify at the public hearing
Decision-making
authority
Planning and Zoning Board approval
Setbacks If not located on an existing well pad, all operations must be 500’ from an occupied
structure, water well, Natural Area or City Park and 150’ from any property line
iii. Well effluent containing more than ten (10) barrels per day of condensate
or within two (2) hours after first encountering hydrocarbon gas of salable
are not required, operators shall employ Best Management Practices to reduce
emissions. Such BMPs may include measures or actions, considering safety, to
minimize the time period during which gases are emitted directly to the
atmosphere, or monitoring and recording the volume and time period of such
emissions. Such examples could include the flaring or venting of gas.
i. The operator shall employ sand traps, surge vessels, separators, and tanks
as soon as practicable during flowback and cleanout operations to safely
maximize resource recovery and minimize releases to the environment.
ii. Well effluent during flowback and cleanout operations prior to
encountering hydrocarbon gas of salable quality or significant volumes of
condensate may be directed to tanks or pits (where permitted) such that oil
or condensate volumes shall not be allowed to accumulate in excess of
twenty (20) barrels and must be removed within twenty‐four (24) hours.
The gaseous phase of non‐flammable effluent may be directed to a flare pit
or vented from tanks for safety purposes until flammable gas is
encountered.
within 1/4 mile of a building unit, educational facility, assembly building,
hospital, nursing home, board and care facility, jail, or designated outside
activity area shall utilize a control device capable of achieving 90% control
efficiency of VOC and shall hold a valid permit from the Colorado Department of
Public Health and Environment, Air Pollution Control Division, for the glycol
dehydrator and control device. Glycol dehydrators meeting the above criteria
and existing on May 1, 2009 on federal lands and on April 1, 2009 on all other
lands shall be in compliance with this subsection by October 1, 2009.
(1) Compliance.
A. Oil and gas operations shall be in compliance with the Department of Public
Health and Environment, Air Quality Control Commission, Regulation No. 2 Odor
Emission, 5 C.C.R. 1001‐4.
a. Setbacks. Effective August 1, 2013:
(1) Exception Zone Setback. No Well or Production Facility shall be located five
hundred (500) feet or less from a Building Unit except as provided in Rules
604.a.(1) A and B, and 604.b.
A. Urban Mitigation Areas. The Director shall not approve a Form 2A or
associated Form 2 proposing to locate a Well or a Production Facility within an
Exception Zone Setback in an Urban Mitigation Area unless:
i. the Operator submits a waiver from each Building Unit Owner within five
hundred (500) feet of the proposed Oil and Gas Location with the Form
Added requirement that a noise
mitigation plan must be submitted to
the City to illustrate how compliance
15
14
Same requirements as COGCC
3
1 baseline sampling event prior to site
construction
Increased to 3 post‐completion sampling
events at 1, 3, and 6 years after well
completion
1
Energy from the
moratorium and the
hydraulic fracturing
ban (5-1 vote).
On 4/16/13, the
second reading of the
ordinance to lift the
ban and exempt
Prospect Energy from
the moratorium was
postponed until
4/23/13.
An amended Operator
Agreement was
presented to Council
on 4/16/13; this item
was also postponed
until 4/23/13.
Prospect Energy Timeline
(to the best of our
understanding)
The Fort Collins Field has
been in operation since
1924. Prospect Energy (PE)
obtained ownership in 2009.
53 hydraulic fracturing
processes have occurred
since the 1950s.
When
moratorium
passes on 5/15,
Fort Collins Field
3rd Party sale falls
through.
Regulatory
environment
rating changes
from stable to
uncertain.
Prospect Energy is unable to develop their field
during the moratorium. Prospect Energy cannot
explore proved reserves or any other lease
holdings within the City.
Third party engineers inform Prospect Energy
that proved undeveloped (PUD’s) reserves will
be downgraded as per Securities and Exchange
Commission (SEC) guidelines due to regulatory
uncertainty at Fort Collins Field effective Q1
2013 for both financial books and for PE’s Bank
as per a Borrowing Base determination.
Prospect
Energy assets
devalued on
their financial
books effective
Q1 2013.
Staff receives
draft Operator
Agreement
from Prospect
Energy on
2/7/13.
After passage of the
ban, other mineral
royalty owners
affected (142 in Fort
Collins Field).
PE submits report to
the bank. Bank
write’s down Fort
Collins PUDs.
Informs bank that
negotiations are
ongoing.
Prospect Energy
Operator Agreement
remains on hold until
August 1 or when the
ban and moratorium
are lifted from their
fields.
Prospect Energy’s and
PE’s Bank is waiting on
final outcome of City
Council vote.