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HomeMy WebLinkAboutReport - Read Before Packet - 3/19/2013 - Item 28 � Power Point Presentation � Items Relating To An Operator Agreement Between The City And Prospect Energy, Llc1 Should the City Council Approve an Operator Agreement with Prospect Energy? Laurie Kadrich Director, Community Development & Neighborhood Services Dan Weinheimer Policy and Project Manager Lindsay Ex Senior Environmental Planner March 19, 2013 City Council Meeting ITEM 28 Items Relating to an Operator Agreement Between the City and Prospect Energy LLC 2 Items for City Council Consideration: Resolution 2013- 024: Approval an Operator Agreement with Prospect Energy, LLC. And, if approved consider First Reading Ordinance No. 057: exempting Prospect Energy from the Moratorium imposed by Ordinance No. 045, 2012 with respect to oil and gas operation and production. 3 Who is Prospect Energy? Prospect Energy, LLC • Operator of the Fort Collins Field located in the northeast part of the City – Field in production since 1924 – Oil production – 7 producing oil wells • Leaseholder for mineral interests within the City described as the Undeveloped Area (UDA) • Intention to continue operating and expand production of existing leases 4 Vicinity Map 5 Fort Collins Field & UDA 6 Fort Collins Field & Neighborhoods 7 Potential Areas for Additional Wells 8 Production based on Fort Collins Field (2,552 acres) Field Oil BOPD Gas MCFPD Water BWPD Number of Wells Fort Collins 122 20 6,671 56 Wattenberg 221 6,641 100 194 Piceance 150 75,000 3,500 363 • BOPD = Barrels of oil per day • MCFPD = 1,000 cubic feet per day • BWPD = Barrels of water per day • 1 Barrel = 42 gallons 9 Hydraulic Fracturing Comparison Field Average Gallons of Water Used Average Pounds of Sand Used Formation Drilling Type Fort Collins Field (6 wells) 114,129 240,232 Muddy or Niobrara Directional Wattenberg Vertical (5 wells) 361,926 398,249 Niobrara or Codell Directional Wattenberg Horizontal (5 wells) 2,828,299 3,558,237 Niobrara or Codell Horizontal 10 Permitted Volatile Organic Compounds (VOC) Emissions* *Permitted Emissions Data from Colorado Department of Health and the Environment 11 Criteria for Exemption from Ordinance No. 032 Hydraulic Fracturing Ban • Council approved Operator Agreement • Strict controls on methane release • Adequately protects public health, safety and welfare 12 What are the concerns we’ve heard? • Air Quality – Pollutants, carcinogens, dust, aerosols, odors – Haze and acid rain • Water Quality – Methane gas, spills and shallow water contamination, illicit dumping • Waste and Wastewater – Capture, storage and disposal challenges • Earthquake Potential – Deep disposal wells • Habitat Fragmentation (Regional concern) – Migration patterns and winter use 13 Air Quality Controls for Methane Gas Prospect Energy captures all gases from production and tanks and routes them to a thermal oxidizer for destruction: • 99% of all emissions destroyed • Colorado Oil and Gas Conservation Commission (COGCC) requires 95% • The percent of emissions is very low to start with • UDA will require equal to or better technology 14 Controls for Methane Gas, Cont. • No uncontrolled venting • Minimal flaring during drilling and completions (24 hour supervisor) • EPA Method 21, Leak Detection & Repair (LDAR) – Use a Forward-Looking Infrared Camera (FLIR) – Notify the City for observation of testing • Green Completions • Containment of all produced water or flowback • No permanent storage or deep injection wells 15 Water & Wastewater Protections: • Water Quality – COGCC Rule 609 – Testing Pre & Post Drilling – Added tests for Dissolved metals – Added testing intervals – Analytical tests shared with City • Wastewater and Waste Management – Closed Loop and Green Completions – No discharge of fluids – No Permanent Storage 16 Natural Areas & Features 17 Added Public Health, Safety, & Welfare Protections: • Setbacks • Conceptual Review • Community Notice • Closed Loop Pitless Systems • Chemical disclosure and storage • Electric Equipment • Emergency Preparedness Plan 18 Comparison with Land Use Code Option B • Previously proposed Land Use Code Ordinance No. 144 • Currently under the Moratorium – Expires July 31, 2013 • Voluntary, more stringent requirements • Agreement - Meets or exceeds Option B 19 Other conditions in Agreement • All Best Management Practices (BMPs) apply to New Wells, in City limits • No further development review process • If area in Growth Management Area annexed, agreement applies • Most stringent requirements apply • 5 year term with renewals • Non-performance clause • Applies to successive owners of the lease areas 20 Items for City Council Consideration: Resolution 2013- 024: Approval an Operator Agreement with Prospect Energy, LLC. And, if approved consider: First Reading Ordinance No. 057: exempting Prospect Energy from the Moratorium imposed by Ordinance No. 045, 2012 with respect to oil and gas operation and production.