It was a clash between suburbanites and an oil and gas company. Why, the homeowners wanted to know, couldn’t the driller’s planned wells be located farther from homes? The answer, offered by Calgary-based Encana Corp. at the Aug. 12 Erie town board meeting, was that the wells were located where the property owner wanted them. As oil and gas drilling on the Front Range has moved closer to development and homes, there has been a clash over competing uses of the land.
Gov. John Hickenlooper is set to name a 20-person commission to recommend to the legislature ways to “minimize land-use conflicts.”
But large landowners who own their mineral rights, as well as small landowners who own their rights and band together, already have some clout in dealing with oil and gas operators.
“The larger the property, the more leverage there can be,” said Lance Astrella, an attorney who represents landowners in oil lease negotiations.
In Erie, Encana plans to drill 13 wells from two sites on property owned by Longmont-based Pratt Management.
One well pad is 770 feet from the nearest home, the other 1,652 feet. The state minimum setback is 500 feet.
Residents from the two nearest developments — Vista Ridge and Vista Point, where homes are listed from $400,000 to more than $1 million — and some of their elected officials weren’t satisfied by the answers they got that night.
Why couldn’t the pads be located farther north in the tract — even farther from homes, Erie Mayor pro tem Mark Gruber asked at the meeting.
“How can we put an industrial activity in a residential area?” he asked.
Drilling gets a special-use exemption, town community development director Martin Ostholthoff explained.
Gruber said he was “frustrated” by the state’s ability to undermine local zoning.
But property owner Susan Pratt had asked Encana earlier to place the new well pads near existing wells, which date to 1982 — long before the new subdivisions were built.
“If they didn’t see that there were wells when they bought their houses, it’s not my problem,” Pratt said in an interview after the meeting.
Clustering the wells will preserve 290 acres for the development of up to 600 housing units, she said.
“We’ve worked with Encana for many years, and they’ve done a really good job,” Pratt said.
Encana is planning an innovation at the site — a series of pipelines that will move oil and wastewater to a central collection facility about a mile away.
This will cut the size of tanks at the site, reduce truck traffic and shrink the footprint of the operation.
Nevertheless, an industry with pumps, compressors and tanks will be left operating on the two sites.
“We have to work with the landowner and we try to work with the community — and sometimes we are caught in the middle,” Encana spokesman Doug Hock said.
Anadarko Petroleum Corp. had a plan to put a drill rig next to the Medical Center of the Rockies in Loveland, about 30 miles north of Erie. But McWhinney, the Loveland real estate developer who owned the land, suggested rethinking the plan.
Anadarko did just that, placing the drilling pad a half-mile away.
“Andarko said it was the optimal site. We told them it wasn’t optimal for us,” McWhinney vice president Jay Hardy said.
McWhinney leased mineral rights on 3,000 acres in its Centerra mixed-use development at Loveland’s eastern edge. The company received a signing bonus from Anadarko and will get a percentage of the sales from oil and gas produced at the wells.
“I wouldn’t say it’s standard lease, because the key to each of these leases is the surface-use agreement,” Hardy said. He declined to disclose the terms of the lease.
“Our core business isn’t oil and gas, it is development,” Hardy said, “but we believe the two can coexist.”
McWhinney started with six prospective oil companies, winnowed it to two and then signed a deal with The Woodlands, Texas-based Anadarko, Hardy said.
“It took us the better part of a year and a half to get comfortable,” Hardy said.
The discussion with Anadarko focused on the impact on roads, landscaping and the locations of five drilling pads.
“We promised McWhinney and the city of Loveland to find locations as far away as possible from the city,” said Anadarko senior counsel Susan Aldridge.
To comply with Loveland’s new drilling ordinance, Anadarko made sure its sites were at least 1,000 feet from any building.
The plan is to drill between 25 and 35 wells from the pads, each of which will take up 5 to 10 acres.
In order to cut down on tanks and truck traffic, no drilling will be done until underground pipelines are connected to the sites.
“You have to start with the end in mind — for us, that is the consumer,” Hardy said. “So each time we came up with a challenge, Anadarko came back with a solution.”
Aldridge said Anadarko is working in a similar way with dozens of developers, ranchers and farmers. “McWhinney is one example,” she said.
In central Weld County, Houston-based Noble Energy Inc. is drilling on Steve Wells’ 32,000-acre ranch.
“The ranch has been in the family since 1888, and my goal is for it to be here for my grandkids,” said Wells, 56. “You hear about land damage, the horror stories, but it hasn’t turned out to be true.”
About 80 percent of the ranch is leased to Noble, with the remainder leased to Denver-based PDC Energy Inc.
To exploit the oil-rich Niobrara shale, Noble had to put in roads and multiple drilling pads. Wells said he wanted those roads to be removed when no longer needed and the damaged land to be reclaimed and reseeded.
The rancher said it is very much a give-and-take business relationship. “Did I get everything I wanted? No. Did Noble get everything it wanted? No. But we worked it out,” Wells said.
Noble is using an integrated development plan on the ranch. It includes drilling multiple wells from a single site, carrying water and oil by pipe, and consolidating facilities, senior vice president Dan Kelly said in a statement.
“It’s up to us to make good on our promise to create new value for landowners like the Wells family while doing our work responsibly and with minimal impact,” Kelly said.
By centralizing collection facilities, Noble has removed hundreds of tanks from the ranch, Wells said.
The money from the leases has also been a big boon, allowing Wells to redo the ranch’s irrigation system and install solar-powered pumps on windmills used to provide water to cattle.
“That’s made a tremendous difference because when there is no wind, you have to haul water to the cattle,” Wells said.
In Berthoud, 35 landowners — with holdings as small as 1.2 acres — are banding together in the hopes of getting better terms from an oil and gas operator. The 35 parcels represent a total of 190 acres.
“All landowners dealing with oil and gas companies are at a disadvantage because of the laws,” said Matt Sura, an attorney representing the Berthoud group. “But if a group of small landowners band together and get 100 acres of mineral rights, it is enough to go to the table with the oil and gas industry.”
Sura has also represented groups of property owners in Adams and Arapahoe counties.
In Berthoud, the main goal of the landowner group is getting an agreement to keep drilling rigs at least 1,500 feet from homes.
“It should be harder if you are going to drill in residential areas than in an agricultural area on the Western Slope, where there is nobody around for miles,” Sura said.
Mark Jaffe: 303-954-1912, mjaffe@denverpost.com or twitter.com/bymarkjaffe
