Extraction Oil and Gas Looking to Acquire Mineral Leases in Gunbarrel

November 21, 2018 GMT

Denver-based Extraction Oil and Gas is looking to acquire mineral leases from property owners in Gunbarrel, alerting residents, Boulder County and city officials that more drilling of publicly owned open space might be imminent.

Residents of the Heatherwood neighborhood, east of North 75th Street and just north of Jay Road and Boulder Creek, last week received letters from Denver-based Rocky Mountain Hydrocarbon on behalf of Extraction offering to lease minerals.

Copies of letters shared by residents with the Daily Camera and Times-Call indicate the leases would be for four-year terms, with two-year extension options, and would provide property owners a 15-percent royalty on any minerals developed.


But most residents who have received such offers are uninterested in accepting, opting instead to push back against any efforts to drill near their homes or underneath the city and county open space parcels that surround the neighborhood to the north, south and east, according to resident Leesah Patt.

She has organized an effort to hold neighborhood meetings and to work with Boulder County to find the best route to prevent any drilling below the neighborhood’s homes or on the adjacent open space properties.

“The main concerns are we don’t want any oil production in our area. Not only does it drop our property values, which is the least concerning for me, but we don’t want our water to become undrinkable. We don’t want our kids to live in an area where they can’t breathe and they get cancer,” Patt said, echoing a concern common among area opponents of oil and gas development.

No applications to drill in the area have been submitted by Extraction or its subsidiary 8 North to the state, Colorado Oil and Gas Conservation Commission records showed Tuesday.

However, 8 North owns minerals under three city open space parcels east of the neighborhood totaling nearly 500 acres, county property records show.

“Residents have informed us of these lease offers. The county doesn’t get involved in private contract issues, but can provide information to residents. If and when Extraction applied for permits to drill at the COGCC, the county would likely be involved and Extraction would also have to come through the county’s permitting process,” Senior Assistant Boulder County Attorney Kate Burke said.

Extraction declined to disclose any details on its plans in the area.

“We wouldn’t be able to comment on mineral or lease purchases, whether or not they are ours, as those are always considered confidential and competitive,” Extraction spokesman Brian Cain said.


Rocky Mountain Hydrocarbon landman Julie Pantelopoulos, who Heatherwood residents were instructed to contact if interested in leasing, declined to answer a reporter’s questions, instead referring inquiries to a firm leader who did not reply to a request for comment Tuesday.

But John Stem, another resident of Heatherwood, said he talked with Pantelopoulos and learned from her that drilling in the area is likely two to six years out, that horizontal fracking would be used to tap the below-ground hydrocarbons and that a well site could be located a half-mile to 2 ½ miles northeast of the neighborhood.

“I’ve got mixed emotions about the whole fracking thing. I definitely don’t want one next door, but I don’t see how we can get along without petroleum for the foreseeable future,” Stem said. “On the other hand, I believe it’s absolutely stupid for us to not do every method of conservation or renewable energy or whatever we can do. ... They would have to offer me an awful lot of money before I signed on as a royalty taker.”

Boulder County in recent months filed two separate lawsuits against 8 North with the goal of stopping its drilling projects to drain 4,000 acres in east Boulder County.

In the first, filed Aug. 31 , the county alleged 8 North failed to produce adequate proof it owned enough mineral rights within the areas it plans to drain, and that the county’s minerals would be wrongly disturbed by drilling. It also named the Colorado Oil and Gas Conservation Commission as a defendant, claiming the agency didn’t hold 8 North to a high enough standard of proof that it owned the minerals the company claimed.

The county on Sept. 25 filed another civil suit against 8 North, as well as one against Crestone Peak Resources, with both based on the claim that the companies’ respective mineral leases for the east county areas they plan to drill are either expired or would be violated if used for horizontal fracking.

Whether additional legal action would result from the county over any Extraction attempts to drain open space in Gunbarrel hinges partly on the contents of the leases the company would use to establish its right to drill.

“Any litigation would depend on the existence of legal disputes involving agency actions or lease terms or other specific circumstances. So we can’t say ahead of time whether litigation would be necessary,” Burke said.

Boulder County owns all the mineral rights on just two small parcels north of the neighborhood, likely limiting officials from claiming county property would be unjustly tapped by drilling in the rest of the area. The city owns at least some mineral rights associated with its large swaths of open space in the area, Boulder Open Space and Mountain Parks spokesman Phillip Yates said, but it is unknown exactly how much surface land has corresponding minerals owned by the city.

The city has not been contacted about leasing its mineral rights in the area.

“For decades and continuing through today, the city of Boulder has worked to acquire subsurface property interests — including oil, gas and mineral rights — as part of any new open space acquisition or where the opportunity has existed to acquire them separately. These acquisitions have helped to better control oil, gas and mineral development in the Boulder area that could cause detrimental impacts to city open space and adjacent properties,” Yates said.

Boulder County also has viewed its mineral ownership as a safeguard against new drilling of open space.

“I feel like we’re under attack,” Heatherwood resident Lon Goldstein said. “We can’t look to the state government for protection. The oil and gas industry seems to have the state under control, so we’re looking to Boulder County and some other groups that have fought this in their neighborhoods.”

Heatherwood neighborhood residents’ feelings were in slight contrast to those of property owners between Vermillion and Yellowstone roads north of Longmont who received mineral offers earlier this year from Rocky Mountain Hydrocarbon, which was working on behalf of an unknown party in that area. Some of those residents expressed interest in leasing minerals.

Sam Lounsberry: 303-473-1322, slounsberry@prairiemountainmedia.com and twitter.com/samlounz .