Natural gas & Longmont: Risk motivation

The following is a statement excerpts of which were read before the Longmont Planning Commission February 15, 2012.

At one time I earned my living acquiring land rights and permits for two oil majors consecutively – CONOCO and Union Oil of California (UnoCal). I know a little about the natural resource industry, and a bit about the risks it faces and generates. More about that in a moment.

All the regulations in the world won’t prevent use of a defective piece of well casing, or what can result from a poor cement job. BP’s Macondo well in the Gulf of Mexico is one illustration of the latter.

A major condition or factor that could materially reduce potential damage from a modern directionally- drilled oil and gas well is less-dense well spacing. Unfortunately, spacing is controlled by the state.

I’ve read two authorities (one is Fitch, the debt rating concern) stating that the natural gas market is essentially selling the stuff today at the marginal cost of production. Now, there’s risk. Many holes are probably being planned under a “drill it or drop it” scenario. Loss of a lease may be more important than revenue.

I  have a list of some of the kinds of chemicals used in hydrofracturing, presented in the fall of 2008 at the annual Ground Water Protection Council forum in Cincinnati, Ohio. Here are just three:

Ethylene Glycol. This is good in your car’s radiator; not so good in your drinking water.

Glutaraldehyde. This is a “cold sterilant” used in the health care industry as well. Read “biocide;” you wouldn’t want your dog to go near this.

Hydrochloric acid. At any strength this is nasty material. You would find just a drop quite objectionable, and especially on your skin. If that isn’t taxis enough for you, in its stead Muriatic Acid is often used. This is fine for cleaning your swimming pool, but definitely not if anyone is in it.

I’ve learned that the typical fracked hole uses the equivalent of two rail tank cars of these chemicals. This is not the drilling fluids, but rather only the fracking additives. The next time you see the Burlington Northern go by, have a look at the tank cars so that you can comprehend the magnitude of this use.

We can only hope that that the first local drilling effort results in a dry hole. This would provide little to no encouragement to the mineral operators. Once these chemical migrate vertically through seams or joints in sediments (don’t believe they cannot), or up old, abandoned, even undocumented wells that did not have to be cased or cemented, then it is too late.

Interesting to me is that some sources in the industry say “fracking” can withdraw hydrocarbon gases and liquids from a radius as great as ten miles. I don’t remember granting a lease for my property, so if this is done from the east side of town then some oil firm is in mineral trespass. Many cities require a covenant of non-development (of minerals) in return for annexation or plat approvals. I recommend everyone thoroughly examine his title insurance policy.

The City as a surface owner has a bully pulpit from which to hold feet to fires. But more important would be a substantial performance and damage bond. While I worked for those mineral operators I secured legislative clearance to place mineral operations within the River of No Return Wilderness in Idaho, and gained regulatory permission to conduct operations within the suburbs of Baltimore, Maryland. The latter went within 150 feet of the Patapsco Reservoir, a city drinking water source. Obtaining these permits is responsible for only some of my grey hair.

To me the key for this city is to make failure very expensive for this undertaking. This explains why neither the Idaho wilderness nor the Baltimore reservoir has been threatened by drilling to date. Without a solid and enduring market, then, perhaps these promoters will go away.

We can only hope.

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