HomeMy WebLinkAboutAgenda - Read Before Packet - 5/21/2013 - Agenda Item #27 - Revised - May 21, 2013 City Council MeetingREVISED
DATE: May 21, 2013
STAFF: Laurie Kadrich, Lindsay Ex,
Dan Weinheimer
AGENDA ITEM SUMMARY
FORT COLLINS CITY COUNCIL 27
SUBJECT
(Highlighted text indicates changes made to this Agenda Item Summary since 12 p.m.,
Monday, May 20) Red Text indicates changes made by 5 pm Tuesday, May 21.
Items Relating to the Oil and Gas Operator Agreement Between the City and Prospect Energy, LLC. (Continued from
April 23, 2013).
A. Resolution 2013-036 Approving an Amendment to the Oil and Gas Operator Agreement Between the City and
Prospect Energy, LLC (Options 1, 2 and 3).
B. 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, 2 and 3).
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 approved by Council and in effect on or before executed by both parties on or before June 1,
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.
While the Whereas clauses for Options #1 and #2 have changed substantially, the substance of the Operator
Agreement in Options #1 and #2 is the same, with the exception that the Agreement needs to be executed by June
1 instead of June 15.
• Option #3 – Amended Operator Agreement Resolution 2013-036
Resolution 2013-036 will further amend the Operator’s Agreement with Prospect Energy to include some options
suggested in Option #1 plus the following (1) certain portions of the Agreement apply to existing wells within the City
limits of the Fort Collins Field , and that (2) will insure any wells drilled in the UDA from the initial drilling phase through
completion will be required to have a $10,000,000 per occurrence policy that covers Pollution and Cleanup, and
General Liability, and that (3) increased setbacks will be required in certain areas of the UDA, and that (4) the
Amended Agreement must be approved by Council and take effect on or before June 1, 2013.
May 21, 2013 -2- ITEM 27
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)
(note: APD is the Colorado Oil and Gas Conservation Commission (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
• 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).
Option #3 Amendment Conditions
Staff was asked to further negotiate with Prospect Energy on the following conditions:
1. Would Prospect Energy agree to adhere to the Best Management Practices (BMP) contained in the Operator
Agreement for existing wells in the Fort Collins Field?
Prospect Energy is willing to apply certain BMP’s to the Fort Collins Field for wells contained in the
City Limits provided that any existing wells in the Growth Management Area (GMA) are exempt.
Prospect Energy has agreed in whole or in part to 22 of 48 sections of the BMPs; see Attachment 8
for details. 18 of the 48 sections of the BMPs do not apply so Prospect Energy has agreed to 22 of
the 30 sections that apply to the existing field.
2. Would Prospect Energy increase insurance provisions?
Prospect Energy agrees to provide liability insurance that covers pollution, cleanup and general
liability in the amount of $10,000,000 per occurrence during the initial drilling of a New Well through
completion. Following completion, Prospect Energy will provide ongoing pollution, cleanup and
general liability coverage in the amount of $1,000,000 per occurrence and $2,000,000 aggregate, and
general liability umbrella coverage in the amount of $5,000,000.
3. Would Prospect Energy agree to increase the set-backs to 2000 feet rather than 1000 feet along the southern
and western boundaries of the UDA?
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Prospect Energy agrees to increase set-backs for certain portions of the UDA as described in Exhibit
C; 1500 feet from the proposed school lease line and 1000 feet from the lease lines where residential
or building units exist (see Attachment 6).
4. Would Prospect Energy agree to increased inspections by the City?
The Agreement, Appendix A, Number 8 already provides the City with the right to inspect the
Company’s operations and sites during business hours, upon the giving of 24 hours advance written
notice to the Company. Staff believes this is sufficient to allow for any inspection in addition to what
COGCC may provide.
5. Would Prospect Energy allow additional monitoring or alert systems to be placed within the Fort Collins Field
or in the UDA?
Prospect Energy is unable to commit to any property uses within the Fort Collins Field or the UDA as
they are not the property owners. Staff believes that there would be other public or private property
options available if Council wishes to consider this monitoring at a future date.
Prospect Energy has indicated that if Option #3 is not approved on May 21, 2013 they will withdraw the option.
Staff was also asked to respond to citizen questions by preparing a list of questions and answers, and then post them
on the Oil and Gas Web-site (http://www.fcgov.com/oilandgas/) for easy access by the public. This was completed
on May 7, 2013 and subsequently updated to include questions answered during the Oil and Gas Presentation held
May 8, 2013.
Council asked staff to hold a community meeting specifically providing an opportunity for those residents who may be
most affected by an Operator Agreement with Prospect Energy to an informational meeting. An invitation was
extended to approximately 3,000 residents to attend such a meeting on May 8, 2013 at the Lincoln Center. At least
120 persons attended the event which included informational table displays with opportunities to ask questions of
project team members, a presentation outlining the proposed agreement and possibility to exempt Prospect Energy
from a City Moratorium prohibiting any new oil and gas development and ban from new drilling and operations
conducted by Prospect Energy in the Fort Collins Field (city limits) and the UDA.
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 Revised Amended Option #1 Option #3, Ordinance No. 057, 2013 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;
(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);
(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;
(4) Certain portions of the Agreement apply to existing wells within the City limits of the Fort Collins Field;
(5) The Agreement will insure any wells drilled in the UDA from the initial drilling phase through completion will
be required to have a $10,000,000 per occurrence policy that covers Pollution and Cleanup, and General
Liability;
(6) In addition to (3) added set-backs will be required for certain portions of the UDA as described in Exhibit C;
1500 feet from the proposed school lease line and 1000 feet from the lease lines where residential or building
units exist; and
(7) the Amended Agreement must be executed by both parties on or before June 1 15, 2013.
May 21, 2013 -4- ITEM 27
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. Copy of Work Session Agenda Item Summary - April 23, 2013 (w/o attachments)
5. Oil and Gas Information Meeting summary, May 8, 2013
6. Appendix C – Option #3 Set-back boundary map
7. Powerpoint presentation
8. Comparison Table: Option #3 Application of BMP’s to existing field
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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
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ATTACHMENT 4
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?
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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
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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:
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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
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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,
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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.
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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.
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• 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.
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Will the Operator voluntarily provide sniffers to neighbors of the well sites so they can monitor
air quality?
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.
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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
6. Prospect Energy’s Fort Collins Field Well locations
7. Comparison Table Operator Agreement BMPs vs. COGCC.
ATTACHMENT 5
UDA Outline With Setbacks
Setback
Boundary
1,000’ setback
from lease line
A
B
A
1,500’ setback
from lease line
B
1,000’ setback
from Building Unit
C C
ATTACHMENT 6
(OPTION 3)
1
Second Reading Ordinance No. 57
Laurie Kadrich
Director, Community Development & Neighborhood Services
Dan Weinheimer
Policy and Project Manager
Lindsay Ex
Senior Environmental Planner
May 21, 2013 Council Hearing
ATTACHMENT 7
1
Second Reading Ordinance No. 57
Laurie Kadrich
Director, Community Development & Neighborhood Services
Dan Weinheimer
Policy and Project Manager
Lindsay Ex
Senior Environmental Planner
May 21, 2013 Council Hearing
ATTACHMENT 7
2
Items for City Council
Consideration:
• Should City Council Adopt Second Reading of
Ordinance No. 57 removing Prospect Energy from
a Moratorium against any new drilling and
allowing them to use hydraulic fracturing in
operations?
– If so, should the Operator Agreement with Prospect
Energy be amended?
– If amended, should Option 1, 2, or 3 be adopted?
3
Fort Collins
Field &
Neighborhoods
4
Brief Timeline
• Operator Agreement approved 3-19-13
• Ordinance No. 57 First Reading approved 3-19-13
• Second Reading Ordinance No. 57
– Scheduled 4-16-13
– Continued to 4-23-13
• Council Work Session 4-23-13 and Second
Reading Ordinance No. 57 continued to 5-21-13
• All Q & A available on web-site 5-7-13; including
past Service Area Requests (SARs)
• Community Information Meeting 5-8-13
5
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
6
Options 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?
7
Options for City Council
Consideration:
Option 1:
• Response from Prospect Energy:
– Prospect Energy Agrees to Option #1
–Timeframe:
• Available until August 1, 2013
8
Options 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?
9
Options for City Council
Consideration:
Option 2:
• Response from Prospect Energy:
– 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.
10
Options for City Council
Consideration:
Option 3:
• 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) - Exhibit C,
– Prohibit any re-entry into the plugged and abandoned
wells in the Fort Collins Field?
– Add certain BMP’s to existing wells in the Fort Collins
Field (City-limits),
– Increase insurance during any UDA drilling
11
Options for City Council
Consideration:
Option 3:
• Response from Prospect Energy:
– Prospect Energy is willing to agree to Option 3 if it is
approved tonight otherwise they have indicated they will
withdraw the option from consideration.
12
Options for City Council
Consideration:
Option 3:
• Includes amendments in Option #1 plus
– Certain BMPs apply to existing field
– Increased Insurance during drilling in the UDA
– Increased Set-backs described in Exhibit C
• Increases to 1500’ along future school area
• Eliminates 1000’ set-backs in Option 1 in
undeveloped areas and reverts back to COGCC
Rules; 500’ residential
13
UDA Outline With Set Backs:
Option #3- Exhibit C
A
B
C
A = 1,000’
setback from
lease line
B= 1,500’
setback from
lease line
C= 1,000
setback from
Building unit
14
Other Items from City Council
Consideration Work Session 4-23-13
• 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?
15
Items for City Council
Consideration:
• Should City Council Adopt Second Reading of
Ordinance No. 57 removing Prospect Energy from
a Moratorium against any new drilling and
allowing them to use hydraulic fracturing in
operations?
– If so, should the Operator Agreement with Prospect
Energy be amended?
– If amended, should Option 1, 2, or 3 be adopted?
16
• Option 1 Summary of Options
– Applies UDA and Fort Collins Field
– Adds no drilling in P & A in Fort Collins Field
– Adds 1000’ set-backs in UDA (South/West) & COGCC
rules apply early
• Option 2
– Removes UDA
– Adds no drilling in P & A in Fort Collins Field
• Option 3
– Applies UDA and Fort Collins Field
– Adds increased insurance and set-backs
– No drilling P & A wells
– Certain BMPs apply to existing wells
– Early COGCC rules
17
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?
ATTACHMENT 8
*Item #11 – Anchoring – Did not agree to identify guy lines with bright colors, 4’ in height, and no more than 1’ east of the guy line anchor.
**Item #15 – Color – Only applies to existing wells when wells are repainted for general maintenance purposes.
***Item #21 – Air Quality – Agreed to subsections (j) Ongoing Air Quality Monitoring, and (k) air quality monitoring in response to complaints or emergencies.
1
Oil and Gas Option 3: Additional Elements agreed to, not agreed to, or would not apply to Existing Wells
How this Matrix is Organized: This matrix compares the proposed Operator Agreeement, Option #3, with the Operator Agreement approved by Council 3‐19‐13.
The first column includes the additional regulations agreed to for existing wells. The second column includes the elements of the Operator Agreement not
agreed to for existing wells, and the thrid column illustrates what elements of the Operator Agreement apply only to New Wells, and conversely, do not apply to
existing wells.
Additional Elements Agreed to in
Option 3
Elements not Agreed to in Option 3 Would not apply to Existing Wells
(Only applies to New Wells)
Item #8 – Inspections Item #9 – Containment Berms Item #1 – Regulations
Item #11 – Anchoring (in part*) Item #14 – Chemical disclosure (disclosure
already required by the COGCC)
Item #2 – Setbacks
Item #12 – Burning Item #22 – Green completions Item #3 – Conceptual Review
Item #13 – Chains Item #24 – Fencing Item #4 – Mailed Notice
Item #15 – Color (in part**) Item #27 – Water Quality Item #5 – Posted Notice
Item #18 – Dust Suppression Item #28 – Landscaping Item #6 – Neighborhood Meeting
Item #19 – Electric Equipment Item #34 – Pipelines Item #7 – Commencement of Operations
Item #20 – Emergency Preparedness Plan Item #40 – Spills Item #10 – Closed loop or pitless systems
Item #21 – Air Quality (in part***) Item #16 – Cultural and Historical Resource Protection
Item #23 – Exhaust Item #17 – Discharge valves
Item #25 – Flammable Material Item #26 – Floodplains
Item #29 – Lighting Item #32 – Natural Resources
Item #30 – Maintenance of machinery Item #33 – Noise
Item #31 – Mud tracking Item #35 – Recordation of flowlines
Item #37 – Removal of debris Item #36 – Recreational Activity Standards
Item #38 – Removal of equipment Item #39 – Soil gas monitoring
Item #41 – Stormwater control plan Item #44 – Transportation and circulation
Item #42 – Temporary access roads Item #48 – Bonds and securities
Item #43 – Trailers
Item #45 – Wastewater and waste management
Item #46 – Water Supply
Item #47 – Weed Control
22/48 elements agreed to in whole or in part 8/48 elements not agreed to 18/48 only apply to new wells
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 in the areas that are
the subject 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 that are governed by the Amended
Agreement as long as Prospect Energy, LLC conducts itssuch 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
OPTION 1
Section 3. That in the event that a conflict exists between the provisions contained in
Section 12-135 of the City Code and the provisions of 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 21st day of May, A.D. 2013.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
Passed and adopted on final reading on the 21st day of May, 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, Prospect Energy, LLC (“Prospect”) is engaged in the business of oil and gas
exploration and extraction in the City and operates existing wells in an area known as the “Fort
Collins Field,” which area is shown on Exhibit “A,” attached hereto and incorporated herein by this
reference; and
WHEREAS, Prospect has leased certain additional lands in the City for the purpose of
expanding its operations, which lands are shown on Exhibit “B”, attached hereto and incorporated
herein by this reference, and referenced as the Undeveloped Area or “UDA”; and
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, which
Agreement has been fully executed by both parties; and
WHEREAS, the Agreement governs any new wells spudded by Prospect during the term of
the Agreement that are located within the Fort Collins Field or the UDA, as well as any production
facilities directly associated with such new wells; and
WHEREAS, the purpose of the Agreement is to authorize Prospect to conduct its operations
on such lands, notwithstanding a moratorium that has been imposed by the City on oil and gas
operations through the enactment of Ordinance No. 145, 2012, and to utilize hydraulic fracturing
during the course of its operations, notwithstanding a ban imposed on such activity through the
enactment of Ordinance No. 032, 2013, as long as such operations are conducted in accordance with
the terms and conditions 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
OPTION 1
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:
Section 1. That the Amended Agreement, a copy of which is attached hereto as Exhibit
“AC,” 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 “AC,”
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 a regular meeting of the Council of the City of Fort Collins this 21st
day of May 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
EXHIBIT C
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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
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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
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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
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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:
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
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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
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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
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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
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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 1
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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 1
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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
OPTION 1
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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
OPTION 1
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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
OPTION 1
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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
OPTION 1
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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.
OPTION 1
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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
OPTION 1
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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
OPTION 1
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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.
OPTION 1
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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.
OPTION 1
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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.
OPTION 1
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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.
OPTION 1
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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
in the areas that are the subject of the Agreementof 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.
Option 2
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
on Exhibit “A” as long as Prospect Energy, LLC conducts itssuch 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
Section 3. That, in the event that a conflict exists between the provisions contained in
Section 12-135 of the City Code and the provisions of 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 21st day of May, A.D. 2013.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
Passed and adopted on final reading on the 21st day of May, 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, Prospect Energy, LLC (“Prospect”) is engaged in the business of oil and gas
exploration and extraction in the City and operates existing wells in an area known as the “Fort
Collins Field,” which area is shown on Exhibit “A,” attached hereto and incorporated herein by this
reference; and
WHEREAS, Prospect has leased certain additional lands in the City for the purpose of
expanding its operations, which lands are shown on Exhibit “B”, attached hereto and incorporated
herein by this reference, and referenced as the Undeveloped Area or “UDA”; and
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, which
Agreement has been fully executed by both parties; and
WHEREAS, the Agreement governs any new wells spudded by Prospect during the term of
the Agreement that are located within the Fort Collins Field or the UDA, as well as any production
facilities directly associated with such new wells; and
WHEREAS, the purpose of the Agreement is to authorize Prospect to conduct its operations
on such lands, notwithstanding a moratorium that has been imposed by the City on oil and gas
operations through the enactment of Ordinance No. 145, 2012, and to utilize hydraulic fracturing
during the course of its operations, notwithstanding a ban imposed on such activity through the
enactment of Ordinance No. 032, 2013, as long as such operations are conducted in accordance with
the terms and conditions 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 Amended 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
OPTION 2
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:
Section 1. That the Amended Agreement, a copy of which is attached hereto as Exhibit
“AC,” 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 “AC,”
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 a regular meeting of the Council of the City of Fort Collins this 21st
day of May 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
EXHIBIT C
OPTION 2
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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.
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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
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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
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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
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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
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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
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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.
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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.
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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.
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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
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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
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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.
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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
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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
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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.
OPTION 3
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 in the areas that are
the subject 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 that are governed by the Amended
Agreement as long as Prospect Energy, LLC conducts itssuch 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
OPTION 3
Section 3. That in the event that a conflict exists between the provisions contained in
Section 12-135 of the City Code and the provisions of 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 21st day of May, A.D. 2013.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
Passed and adopted on final reading on the 21st day of May, A.D. 2013.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
OPTION 3
**REDLINE/STRIKE-OUT SHOW DIFFERENCES BETWEEN
OPTION 1 AND OPTION 3
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, Prospect Energy, LLC (“Prospect”) is engaged in the business of oil and gas
exploration and extraction in the City and operates existing wells in an area known as the “Fort
Collins Field,” which area is shown on Exhibit “A,” attached hereto and incorporated herein by this
reference; and
WHEREAS, Prospect has leased certain additional lands in the City for the purpose of
expanding its operations, which lands are shown on Exhibit “B”, attached hereto and incorporated
herein by this reference, and referenced as the Undeveloped Area or “UDA”; and
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, which
Agreement has been fully executed by both parties; and
WHEREAS, the Agreement governs any new wells spudded by Prospect during the term of
the Agreement that are located within the Fort Collins Field or the UDA, as well as any production
facilities directly associated with such new wells; and
WHEREAS, the purpose of the Agreement is to authorize Prospect to conduct its operations
on such lands, notwithstanding a moratorium that has been imposed by the City on oil and gas
operations through the enactment of Ordinance No. 145, 2012, and to utilize hydraulic fracturing
during the course of its operations, notwithstanding a ban imposed on such activity through the
enactment of Ordinance No. 032, 2013, as long as such operations are conducted in accordance with
the terms and conditions of the Agreement; and
WHEREAS, the City Council has determined that the Agreement should be amended to: (1)
clarify that Prospect, in the course of its operations, will not re-enter any plugged or abandoned wells
within the area of its operation; (2) require that all exploration and drilling activities conducted by
Prospect under the Agreement, 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; (3) require a setback, as
described on Exhibit “C” attached hereto and incorporated herein by this reference, along the west
and southern boundaries of the UDA from any residential area (existing at the time of execution of
the Agreement) in accordance with COGCC standards of measurement; (4) require insurance
coverage in the amount of $10 million per occurrence to cover pollution, cleanup and general
liability during drilling through completion of any well, and ongoing general liability coverage in
the amount of $5 million; (5) require that certain of the Best Management Practices apply to existing
OPTION 3
**REDLINE/STRIKE-OUT SHOW DIFFERENCES BETWEEN
OPTION 1 AND OPTION 3
wells within the City limits; and (6) state that the Amended Agreement must be executed by both
parties effective on or before June 1, 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:
Section 1. That the Amended Agreement, a copy of which is attached hereto as Exhibit
“D,” 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 “D,”
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 a regular meeting of the Council of the City of Fort Collins this 21st
day of May A.D. 2013.
Mayor
ATTEST:
City Clerk
UDA Outline With Setbacks
Setback
Boundary
1,000’ setback
from lease line
A
B
A
1,500’ setback
from lease line
B
1,000’ setback
from Building Unit
C C
EXHIBIT C
OPTION 3
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
EXHIBIT D
OPTION 3
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 3
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 3
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 3
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:
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
OPTION 3
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.
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 3
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
Appendix C - UDA Outline with Setbacks
OPTION 3
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. Additionally,
certain of the paragraphs below shall also apply to existing wells within the City (but not to
existing wells within the City’s extraterritorial Growth Management Area) but only if express
language is included in such paragraphs extending them to existing wells.
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, and as such rules may be amended
thereafter..; provided, however, that along the south and west boundaries of the UDA, a
1,000 foot setback from residential areas existing at the time of execution of this
Agreement shall be required. Notwithstanding the previous sentence, Company agrees
that the center of the wellhead for a New Well shall not be located closer than 1,000 feet
to the western lease line of the UDA acreage covering the NE 1/4 of Section 32,
Township 8 North, Range 68 West; nor closer than 1,500 feet to the western lease line of
the UDA acreage covering the SE 1/4 of Section 32, Township 8 North, Range 68 West;
nor at any location on the UDA acreage located in the NE 1/4 of Section 4, Township 7
North, Range 68 West that is closer than 1,000 feet to a Building Unit (as such term is
defined by the Colorado Oil and Gas Conservation Commission to be adopted effectively
as of August 1, 2013) which if such Building Unit is located south of the southern UDA
lease line located in the NE 1/4 of said Section 4. (See Appendix C for graphic
description.) Whichever regulation is most stringent shall apply. The City agrees that it
will not impose any fine on the Company for violation of a local regulation if the activity
or condition that created the violation is also subject to regulation by the COGCC, so that
the violation could result in the imposition of a fine by the COGCC.
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
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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 effectas
established effective August 1, 2013, and as such rules may be amended thereafter.
Notwithstanding the previous sentence, Company agrees that the center of the wellhead
for a New Well shall not be located closer than 1,000 feet to the western lease line of the
UDA acreage covering the NE 1/4 of Section 32, Township 8 North, Range 68 West; nor
closer than 1,500 feet to the western lease line of the UDA acreage covering the SE 1/4 of
Section 32, Township 8 North, Range 68 West; nor at any location on the UDA acreage
located in the NE 1/4 of Section 4, Township 7 North, Range 68 West that is closer than
1,000 feet to a Building Unit (as such term is defined by the Colorado Oil and Gas
Conservation Commission to be adopted effectively as of August 1, 2013) only if such
Building Unit is located south of the southern UDA lease line located in the NE 1/4 of
said Section 4. (See Appendix C for graphic description.) 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.
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
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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
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.
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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. This paragraph shall also apply to existing wells. City hereby
acknowledges that nothing herein shall grant the City authority to assess fees for the
inspection of the operations conducted by Company hereunder.
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
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.
The first sentence of this paragraph shall also apply to existing wells.
12. Burning. No open burning shall occur on the site of any oil and gas operation. This
paragraph shall also apply to existing wells.
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13. Chains. Traction chains from heavy equipment shall be removed before entering a City
street. This paragraph shall also apply to existing wells.
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. This paragraph
shall also apply to existing wells when such wells are repainted for general maintenance
purposes.
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. This paragraph shall also apply
to existing wells.
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. This paragraph shall also apply to existing wells.
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
OPTION 3
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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.). This paragraph shall also apply to existing wells. 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.
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.
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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). Subparagraphs (j) and (k) shall also apply to existing wells.
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 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
OPTION 3
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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
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.
OPTION 3
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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
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.
OPTION 3
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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.
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
OPTION 3
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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. This
paragraph shall also apply to existing wells.
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. This paragraph
shall also apply to existing wells.
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
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.
OPTION 3
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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. This paragraph shall also apply to existing wells.
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.
This paragraph shall also apply to existing wells.
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. This paragraph shall also apply to existing wells.
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
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:
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(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. This paragraph shall also apply to
existing wells.
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. This paragraph shall also apply to
existing wells.
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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. This paragraph shall also apply to existing wells.
42. Temporary access roads. Temporary access roads associated with oil and gas operations
shall be reclaimed and re-vegetated to the original state. This paragraph shall also apply
to existing wells.
43. Trailers. A construction trailer or office is permitted as an accessory use during active
drilling and well completion only. This paragraph shall also apply to existing wells.
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.
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
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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. This paragraph
shall also apply to existing wells.
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. This paragraph shall also apply to existing wells.
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. This paragraph shall also apply
to existing wells.
48. The Company shall, with respect to the initial drilling of a New Well through completion,
provide liability insurance that covers pollution, cleanup and general liability in the
amount of $10,000,000 per occurrence. Following completion, the Company shall
provide ongoing pollution, cleanup and general liability coverage in the amount of
$1,000,000 per occurrence and $2,000,000 aggregate, and general liability umbrella
coverage in the amount of $5,000,000.
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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.
UDA Outline With Setbacks
Setback
Boundary
1,000’ setback
from lease line
A
B
A
1,500’ setback
from lease line
B
1,000’ setback
from Building Unit
C C
APPENDIX C
-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