Rural residents pay steep price in loss of privacy, time, and property values
By Heather McGregor
Until a year ago, Dry Hollow was the perfect scenic hideaway for Orlyn and
Carol Bell. The basin's rolling hills are cut by rock outcrops and smoothed
by horse pastures, and the Grand Hogback and Roan Cliffs stand to the north
as a majestic backdrop.
The Bells bought extra acreage to buffer creeping residential development
and started to build a big barn that would hold a woodshop for him and a writing
studio for her.
But the Bells weren't the only ones with plans for Dry Hollow.
In August 2004, EnCana USA bulldozed three acres on the Bells' lower pasture
and drilled four gas wells from the leveled site. After five months, EnCana's
drilling contractor, Nabors Industries Ltd., moved the rig to a neighbor's
land. In February another subcontractor, Schlumberger, moved in to do the
deep underground fracturing that will complete the four wells and ready them
for production.
Carol Bell, 57, a retired pharmaceutical chemist, worries that the fracturing
will be the most risky part of the process. It involves forcing water, mud,
and chemicals down the well bore, right through the precious water table residents
depend on.
Already, EnCana subcontractors have accidentally spilled diesel fuel and
other liquid chemicals at the well site on Bell's property. The presence of
drilling has required constant vigilance, on top of research, meetings and
negotiations.
"The time we spend on this is incredible," said Carol. "We don't have time
to live anymore."
"We probably spend four hours a day dealing with this," said Orlyn Bell,
59, a retired state division water engineer. "It affects us daily, and daily
we have to assess if we can stand it, or should we hang up a sign and sell
out."
The drilling started after months of negotiations between EnCana and the
Bells over how the drilling, roads, and pipelines would be done, and how much
the energy company would pay for the surface damages to their land.
EnCana promotes a "good neighbor" policy in seeking reasonable surface use
agreements with landowners, said spokeswoman Florence Murphy. And drilling
techniques have improved dramatically in the past decade.
"We're making good headway on the livability during the process," Bell said
after the drill rig finished its work.
Gas drilling growing every year
Orlyn and Carol Bell are among the latest landowners in Colorado to face
gas drilling up close. Colorado is poised for another record year of gas drilling,
and Garfield County, where the Bells live, leads the state in drilling.
As prices and demand for natural gas rise, Colorado gas producers are stepping
up drilling and production.
Brian Macke, director of the Colorado Oil and Gas Conservation Commission
(COGCC), reported that from January 1 to February 3, drillers won approval
for 284 wells statewide. He estimates that companies will drill 3,050 wells
in the state in 2005, topping the record high of 2,917 wells drilled in 2004.
The industry pays a hefty share of local property taxes and royalties to
state and local government. Statewide for 2002 production, oil and gas companies
paid $130 million in property taxes and $50 million in severance taxes and
royalties, according to COGCC.
Colorado wells produced 191 billion cubic feet of natural gas in 2004. That's
more than a three-fold increase over the 1999 statewide tally of 56 billion
cubic feet.
In context, Colorado's current annual production is enough to heat 2.1 million
homes for the winter. The average home uses from 81,000 to 96,000 cubic feet
of gas for heating from October through March, according to the U.S. Energy
Information Administration (EIA).
Natural gas also is fast becoming a fuel of choice for electrical generation.
In 2004, gas-fired power plants provided eighteen percent of the country's
electricity, on par with nuclear energy, and marked a seven percent growth
in output over 2003, the EIA reports.
Gas drilling is a fast-paced industry that can respond quickly to price changes,
discoveries, and better access to regional markets through new pipelines.
Until recently, gas drilling in western Colorado was heavily focused on coal
bed methane wells in La Plata County.
Now Garfield County is leading the state with seventy drilling permits approved
through February 3 and thirty-one rigs at work by contractors working for
major players: EnCana USA, Williams Production RMT Co., Bill Barrett Corp.,
Petroleum Development Corp., Oxy, and Noble Energy.
Yuma and Weld counties are close behind in drilling intensity. Together the
three counties account for seventy percent of the state's gas drilling activity.
Experimental drilling aimed at unlocking the gas
Drilling started in Dry Hollow in 2001, but drilling has been going on for
forty years around Rulison, about ten miles west.
In the mid 1960s, Darleen Mackley's mother, Marie Bernklau, leased the mineral
rights on her small Rulison ranch for some added income. She came home from
work one day to find her fence ripped down and a bulldozer leveling a well
pad in a pasture 250 feet from her home.
"We didn't have any of the education we have today about how to deal with
it," recalled Darleen's husband, Arnold Mackley, 72.
After drilling the well, the company went bankrupt and abandoned the site.
"The rig and the pits sat here for years. Nothing was cleaned up," Arnold
said. Mrs. Bernklau wrote to the COGCC asking for help, but never even got
a reply.
Once Arnold and Darleen moved back to Rulison and took over the ranch in
1973, they did the cleanup themselves. And with some trial and error, they
harnessed the gas well to power an irrigation pump and to heat the new house
they built on her mother's place.
In the early 1980s, the U.S. Department of Energy launched a twelve-year
project on the Mackley ranch called the Multi-Well Experiment, or MWX. The
effort was aimed at improving drilling techniques and taking a second try
at unlocking what were thought to be huge gas reserves in the tight sands
of the Mesa Verde Formation, 7,000 to 8,000 feet underground. (The government's
first try at the gas had been in 1969, when it set off a nuclear bomb at the
bottom of a well bore in an attempt to pulverize the rock and free up the
gas. Project Rulison worked in freeing the gas, but the bomb contaminated
the gas with radioactivity, rendering it a commercial failure.)
Luckily, the same tight geologic formations that make it hard for drillers
to draw the gas from the Mesa Verde Formation also contained the radioactivity,
according to extensive tests conducted by the state Oil and Gas Commission.
Now, any drilling proposed within a half-mile of the Rulison well must first
go through the state's public hearing process and pass a rigorous list of
safety requirements.
Drilling impacts add up
The MWX project tested a variety of fracturing methods and was among the
first to try drilling a slanted hole, called directional drilling. While the
MWX "certainly gave us a heads-up on the impacts of drilling," Mackley said,
it also opened the door for commercial gas activity in Garfield County.
It wasn't long before Bill Barrett started buying up gas leases around Rulison,
Battlement Mesa, and Parachute and drilling wells.
By then, Mackley was serving as a Garfield County commissioner. In 1989,
he got a frantic call at midnight from a homeowner on Morrisania Mesa, a quiet
farming area just east of the growing retirement community of Battlement Mesa.
"These people begged me, ÔYou've got to come help us.' I got over there and
the driller was using an air rig. The dust was so thick you couldn't see the
house," Mackley said.
As a county commissioner, Mackley worked to mediate between residents and
drilling companies.
Heavy trucks were speeding on narrow, gravel county roads, endangering motorists,
school buses, pets, and wildlife and carving deep ruts when the roads got
muddy. Dozer operators used crude cut-and-fill methods to level well pads
that eroded during thunderstorms and exploded with weeds imported by mud-crusted
machinery. Drilling stirred up thick dust, emitted foul odors and put up a
racket, forcing residents to close their windows and live indoors in the heat
of summer.
At the same time, the new industry brought much-needed tax and royalty revenues
to the strapped county government and school districts. By 2003, oil and gas
properties comprised one-quarter of Garfield County's total assessed value
in 2003, according to Garfield County Assessor Shannon Hurst, offsetting property
tax bills for homeowners, businesses, and farms.
In those early days, the complaints were steady and the industry was reluctant
to accommodate requests for change. Pressure mounted on the COGCC to better
regulate the industry, and the agency adopted a series of new rules aimed
at protecting public health and safety.
Peace and quiet gone forever
Meanwhile, drilling started again on Mackley's place. In addition to the
six MWX wells, Barrett Resources and its successor, Williams Production Co.,
drilled another five wells. Some wells are clustered on the same well pad,
drilled on an angle using the now-common directional drilling method. In all,
there are eight well pads on the ranch. The well pads, pipeline corridors
and service roads take up about twenty acres.
"We got a fairly good surface use agreement," Mackley said. Among other provisions,
it bars dozer operators from pushing raw dirt off the side of a road or well
pad.
"Most people would say, ÔWhat are you complaining about? They did a good
job on those pads.' The industry is doing a better job now. But from the early
days, there are some pretty ugly things out there," Mackley said.
Some features of their Rulison ranch are gone forever. For one, it is no
longer a private place, as gas company workers make routine visits to well
sites to check the equipment. One road on the ranch is barred with a gate
closed with four padlocks.
"You've lost control of your property," Mackley said. "You have no clue who
is on your land."
For years, Darleen Mackley, 67, loved to walk up through the pi¯on and juniper
forest on the upper slopes of the ranch at holiday time to gather fragrant
boughs to decorate the house.
"It was such a peaceful, private place," her husband said.
After drilling started, Darleen found human feces along the path, and one
day startled a worker who had stopped at the roadside to urinate.
"This is one of the hardest things to explain," Arnold said. "It's no longer
private. It's yours, but it's no longer private."
Tough bargaining over surface impacts
While the Mackleys adjust to the changes, they also benefit from gas drilling.
Because they own the mineral rights underlying their ranch, they are paid
royalties from the gas produced there, giving them a comfortable retirement
income.
"If you own the minerals, the royalty payments are good," Mackley said. "There
are a lot of new tractors on these places and other things you certainly wouldn't
have seen without drilling.
"But those who don't have mineral rights have all the impacts without any
of the benefits."
That's the case for the Bells of Dry Hollow.
"One of the big problems is that surface rights are subservient to the mineral
rights," said Carol Bell. "I believe the rights should be more balanced. They
have a right to develop their leases. We should have a right to say how it's
done."
As it went, the Bells argued with EnCana from February to July 2004 over
well location, size, hauling wastewater off site, and financial compensation
for the open-ended use of eight acres. In August, with no surface use agreement
signed, the company started work on the well. On Nov. 4, the couple signed
an agreement—one they weren't happy with—in order to have some
input on drilling, road, pipeline, fencing, and irrigation impacts.
"Many surface use agreements are signed under duress," Bell testified during
a recent state legislative committee hearing on a related bill. "It's the
difference between having no say, or a limited amount of say."
EnCana ended up paying the Bells $7,075 to compensate for the damage to 2.8
acres, less than what the Bells sought. The lower payment isn't as important
as the message the payment sends about the value of their ranch: $2,500 an
acre rather than $4,500.
It means their perfect scenic hideaway may be worth a lot less than they
thought.