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Crestone Peak Resources proposes to drill 28 wells from a pad on property just east of Panama Reservoir No. 1 that is covered by Boulder County conservation easements. A state regulator has postponed hearings on the project until a lawsuit filed by Boulder County is resolved. (Dana Coffield, The Colorado Sun)

It doesn’t look like much of a battlefield — cottonwood groves, a small reservoir and farm fields with traffic zipping through on Colorado 52 — but this 10-square-mile patch of ground is being fiercely fought over by Boulder County and oil and gas drillers.

Both the county and Denver-based Crestone Peak Resources lay claim to the roughly 6,400 acres, although they have different claims, and therein lies the rub.

Where Crestone Peak Resources wants to drill. (Photo courtesy of Boulder County)

Boulder County owns the surface rights or has conservation easements on nearly two-thirds of the land, purchased for $74 million as part of its 26-year effort to preserve open space. Crestone says it has leases for about 70 percent of the mineral rights beneath the surface.

Crestone’s final comprehensive development plan (CDP), which has been submitted to the Colorado Oil and Gas Conservation Commission (COGCC), calls for drilling 140 wells on the land. The plan, the county says in its protest to the commission, would create the “largest complex of dense well pads in the state.”

If the commission approves the plan, Crestone will have the right to move its drill rigs and fracking pumps on to open space, where “public funds have been spent to purchase, manage and protect valuable agricultural lands and ecological resources,” the county protest said.

Not that Boulder County is giving up.

Lawyers are pursuing a variety of strategies from frontal assault to the more subtle and arcane, worthy of the complexity and deep legal roots of the conflict.

On Sept. 25, the county filed two lawsuits in Boulder District Court, one against Crestone and a second against 8 North, a subsidiary of Denver-based Extraction Oil & Gas Inc., which is planning to access 2,720 acres of Boulder County minerals from a site just across the Weld County line.

Boulder County contends that on a handful of parcels the old mineral leases have expired, so it is the county, not Crestone or 8 North, that holds the mineral rights, and that some of the old leases limit how much drilling can be done.

The lawsuit against 8 North also said that even though the company’s plan is to build its 32-well pad across the Boulder County line, the conservation easement Boulder County holds on the land in Weld County should block development.

A resident of a farm at the edge of Panama Reservoir No. 1, near where Crestone Peak Resources proposes to drill 28 wells from property covered by Boulder County conservation easements, uses a campaign sign to urge people driving past on Colorado 52 to vote against Proposition 112. The ballot measure would set a 2,500-foot setback between oil and gas wells and occupied buildings and “vulnerable” areas such as lakes and waterways. (Dana Coffield, The Colorado Sun)

In its complaint, the county contends placing the well pad on the easement would violate a Colorado statute that prohibits “injuring or destroying” conservation values protected by conservation easements. Crestone’s proposed well pads also would sit atop land controlled by conservation easements.

“We have an obligation to protect those areas,” said Kate Burke, senior assistant Boulder County attorney.

A spokesman for Extraction declined to comment Wednesday, saying the company has not yet been served with the complaint.

The Colorado Oil and Gas Association, the state’s largest trade group, condemned the legal attack. “Ultimately, a political agenda can’t override legitimate private property rights, and we would hope the county would work toward mutually beneficial solutions, rather than take it to the courts,” COGA spokesman Scott Prestidge said.

Jason Oates, Crestone’s director of external affairs, said the oil and gas leases predate Boulder County’s open space program and the conservation easements. The company has also rebutted many of the challenges to its leases, he said.

“They’ve been challenging us on all of the leases and lease clauses, and we’ve been proving we’ve had brokers and title companies running everything,” Oates said.

Underlying all these machinations is the question of how a private company can march onto public land purchased expressly for open space, have a free hand to drill for oil and, if need be, install tanks and pipelines — even on parcels where the county owns both the surface and mineral rights?

Settle in. This is going to take some explaining.

The answer starts in the time of knights, feudal lords, castles and the beginning of English common law. In those days wealth and the entire economy was largely dependent on agriculture, so who owned the land was key.

The complex chain of land rights — from king to aristocracy to tenant — became one of the first developed fields of law leading to “Littleton’s Tenures,” the first English law textbook, published in 1481.

By 1756, the standing of a land owner was well established in Sir William Blackstone’s “An Analysis of the Laws of England,” which said “The right of Private Property confifts in every Mans free Ufe and Difpofal of his own lawful Aquifitions, without Injury or illegal Diminution.”

In other words, one landowner could not block another from the “ufe and difpofal” of his property. That English common law was an import to America.

Now, in contemporary English

“In common law, the mineral estate is dominant,” said Mark Squillace, director of the Natural Resources Law Center at the University of Colorado law school. “Mineral owners get to call the shots … It has pretty much been that way since the country’s beginning.”

Common law is the rules created by court decisions old and new. In Colorado, that has been buttressed by statutes passed by the legislature.

There is the “reasonable accommodation” statute that says an oil and gas operator should “minimize intrusion upon and damage to surface land,” but at the same time says a driller can use “that amount of the surface as is reasonable and necessary to explore for, develop, and produce oil and gas.”

“It all turns on words like ‘reasonable’ and ‘customary.’ It all depends upon interpretation,” Burke said in a lawyerly way.

The state also has a so-called forced-pooling statute that enables an oil and gas operator that has at least some mineral leases in a designated drilling unit, to get an order from the COGCC to access the remaining mineral rights — with compensation — from even unwilling owners. This is done in the name of efficiency and to ensure everyone is paid for their minerals.

In the face of the long history of common law and Colorado’s statutes favorable to the oil and gas industry, what can Boulder County do?

In a frontal assault, on Aug. 24, the county filed a sweeping protest with the COGCC contending that the entire process has been “flawed, leading to an inadequate ‘final’ proposal.”

It said the “impacts on health, safety, and the environment of development at this scale are unprecedented and unknown” and that the commission has not set any criteria or standards on which to measure the plan.

The protest allows the county to participate in the commission’s final deliberations on the Crestone plan set for Oct. 29 and 30.

“How can the COGCC evaluate the plan when they don’t have any criteria?” said Kim Sanchez, Boulder County’s chief planner.

And then came Monday’s lawsuit, where the county’s lawyers delved into country records going back to the late 1970s — not quite medieval — to develop its legal complaint, tracing the fate and, according to the county, the expiration of some leases.

The conditions of these old leases, which often envisioned only two wells being drilled, were made before the advent of large-scale horizontal drilling and hydrofracturing or fracking. “Those are the terms and it is a private agreement,” said Burke, the county attorney.

It is all “a defense of a public policy,” Sanchez said.

Crestone Peak Resources and Boulder County are engaged in a fierce battle over plans to drill for oil and gas on county-owned agricultural open space. The energy company, in its final comprehensive development plan, calls for two well pads with 28 wells each to be drilled in this county-owned property bounded by U.S. 287 and Colorado 52 near Erie. The company already has wells on the property. (Dana Coffield, The Colorado Sun)

Taxpayers raised $521 million for open space

Boulder County’s open space program is funded by a quarter-of-one percent sales tax first passed by voters in 1993 and renewed seven times, so far raising $521 million. Its impact is easy to see driving west on Colorado 52 from Interstate 25.

Crossing Weld County “land available” sale signs dot the road, a large subdivision, Wyndham Hill, is under construction, and 32-foot-high, fabric sound walls cloak oil drilling sites, a derrick poking out of the top of one.

When the road hits the Boulder County line, that stops.

Crestone’s development plan has gone through multiple drafts, each one trying to address issues and concerns raised by the county, residents and the COGCC staff, Oates said.

The property rights issue, as far as Crestone is concerned, is settled. The mineral rights for most of the land had been severed from the surface rights long before the county began its open space program.

“Boulder County acknowledged at the time of purchase that there were oil and gas leases,” Oates said. “Boulder County entered into open space purchases knowing the position of the minerals.”

This has led to a legal trench warfare over who really owns what. It isn’t a simple exercise.

“There are a lot of different ways that somebody can acquire those rights,” Burke said.

Someone could get minerals through deeds, leases or assignments. The first lease will show up in the records of the county clerk, but once it that right starts changing hands, it becomes hard to track, she said. Some of the leases go back to the 1950s.

“Overall, it is a very complicated project to figure out who has the rights to the minerals,” Burke said. “Clearly to do this project, Crestone has to own some portion of the minerals.”

The oil and gas company’s plan still must undergo a review under the county’s new oil and gas ordinance, which the county calls “the most stringent in the state.”

“We have this dual role as the landowner and the regulators,” Sanchez said. “We scrutinize leases, scrutinize the conduct of the operator.”

While Crestone, with adequate mineral leases, does have the right to come onto the county’s land, it is limited to where it may operate to “drilling windows” set by state rules, Oates said.

One of proposed drill sites is near a small private reservoir known to draw local anglers, and a bald eagle’s nest.

Striking a surface use agreement with Boulder County could enable more optimal placement and more limited impacts, Oates said. But in a letter to Crestone, the county dismissed the idea as “premature” until after a county land-use code review of the proposed sites.

“The principal argument remains that open space that was purchased with taxpayer dollars shouldn’t be used for oil and gas development,” Sanchez said.

Rising Sun


Mark Jaffe

Special to The Colorado Sun Twitter: @bymarkjaffe