The bottom line is this: Oil and gas drilling is going to happen within Colorado Springs city limits starting next year.
Some people are thankful, saying it means new jobs and new tax money amid a sluggish economic recovery characterized by a stubbornly high unemployment rate.
Others argue it will place drilling rigs within a few hundred feet of homes, parks and businesses, and could spell environmental disaster in a region heavily reliant on tourism and outdoor activities — not to mention a limited water supply.
But state, not local, rules will dictate what is or isn't done to protect air and water quality, because the state asserts it alone has authority over drilling operations. The state, in fact, holds most of the cards in dictating how wells will be drilled and operated, leaving the city with scant control.
Nonetheless, exploration is expected to begin in February after drillers navigate the city's land-use application process, says city interim Planning Director Kyle Campbell.
"I feel comfortable with what the Council has approved," Campbell says. "We've got a well-thought-out ordinance that allows us to move forward."
Opening the door
A year in the making, the city's ordinance won Council approval 6-3 on Nov. 27 after about 30 people spoke, mostly against the measure. Council President Pro Tem Jan Martin and Councilor Val Snider opposed the rules based on environmental concerns, while President Scott Hente dissented because he's frustrated the state considers local home-rule powers meaningless over oil and gas drilling.
If Council approves the ordinance on second reading Dec. 11, the city will open the door for companies with mineral rights to drill in the city, most notably Ultra Resources of Houston, which owns 18,000 acres of the Banning Lewis Ranch.
In a nutshell, rigs can be set up in every zone of the city, including residential areas. Drilling applications will be handled by city staff unless a rig is planned closer than 1,000 feet from any building. In those cases, applicants must go before the Planning Commission and Council, though neither could stop drilling if the applicant meets the state's 350-foot setback requirement and other state rules. And drilling could happen even within 350 feet if permission's given by building owners within that area.
Campbell says the city will require a traffic impact study for each well application to "identify impacts to city streets and bridges" for which the city can assess fees and elicit "financial assurances," such as bonds. During the development review process, the city can ask a company to provide fencing and berms around drilling pads, he says, but can't require anything more restrictive than state rules.
The ordinance is silent on air and water quality, which are within the state's purview. That's bad, say drilling opponents, including Springs residents Laurel Biedermann and Mary Talbott.
The state is considering a new rule requiring that water wells within a half-mile of a drill site be tested before drilling, one year after that, and six years after that. If there's no well within a half-mile, drillers would have to look for one within a mile to test.
But Biedermann and Talbott point out that once underground water supplies are polluted, little can be done to restore them.
And now is not the time, they say, to be using precious water supplies that will be rendered useless through hydraulic fracturing, or fracking, when water is mixed with sand and chemicals, including deadly carcinogens like benzene, to shake loose oil and gas deposits otherwise not accessible.
Biedermann notes that pollution and other problems could develop without state regulators knowing about it, because the state is understaffed to monitor 48,000 active wells.
Todd Hartman, spokesman for the Colorado Oil and Gas Conservation Commission that oversees drilling, says via e-mail the state employs 17 full-time inspectors and has another 20 "technical staffers" who often work in the field. "We also rely heavily on landowners, neighbors, community members who as you might expect are generally not shy about bringing attention to potential issues at well sites," he says. Hartman adds the agency plans to seek funding next year for five more inspectors.
Pollution aside, Talbott and Biedermann worry about where drillers will get water for fracking operations.
"Each of these 48,000 wells and those coming to our city, destroys 5 million gallons of water," Biedermann says. "It can't be used for any other purpose [after use in fracking]. How can we justify destroying 5 million gallons of water per frack?" Fracking is normally a one-time use of 1 million to 5 million gallons, though wells can be fracked multiple times. For perspective, the city's average use is 73 million gallons per day.
Colorado Springs Utilities hasn't received a request from Ultra or other drillers to get city water, Utilities spokesman Steve Berry says. Ultra declined comment for this story.
As of Nov. 30, city water storage on Pikes Peak stood at 47 percent of capacity, compared to the 30-year average of 65 percent. Systemwide, which includes high-mountain reservoirs, Utilities' storage was at 49 percent capacity, compared to the 30-year average of 66 percent. The historic systemwide low was 44 percent in March 2003.
"If we go into any kind of significant water restrictions next year," Berry says, "that would certainly make it extremely difficult, if not impossible, to be selling water for [drilling]."
Even after the Southern Delivery System pipeline from Pueblo Reservoir increases the city's water supply by a third starting in 2016, Berry warns against thinking of SDS as the solution. "There's all kind of conjecture on the impact of climate change, and if there is even going to be enough water for Colorado down the line," he says. "We don't want people thinking [SDS] will solve every conceivable water issue."
Equally unclear is what operators will pay for their water. City Attorney Chris Melcher says in an e-mail the city is preparing a special tariff and rules and regulations for providing water to oil and gas operators that Council likely will consider in January.
"Once the tariff and rules and regulations are in place, water for fracking operations within the city will have to be purchased from Utilities," he writes. "All of these questions and decisions would also depend on the status of the City's water supply, and the capacity of CSU available for non-fracking uses first."
The 1988 Banning Lewis Ranch annexation agreement, a document in dispute since Ultra bought the ranch property last year, gives the city rights to groundwater there. But it also says this: "The city shall allow ANNEXOR to use groundwater under its property for irrigation, cooling tower purposes and such similar non-potable uses subject to specific agreements entered into by and between ANNEXOR and CITY." The agreement also requires the city to help pay the cost of extending lines to provide water service.
If operators want to truck water into the city, a far-fetched strategy given that one frack could require thousands of truckloads, they'll need a pass, Berry says.
"If you're not already on a well, we are the exclusive water provider [in the city] as it's set up now," he says. "So if you wanted to bring in water from somewhere else, you would have to get permission from [the Utilities Board, made up of City Council members]."
Meantime, Talbott agrees with Councilor Lisa Czelatdko that staff should produce monthly, rather than quarterly, reports — an idea rebuffed by Councilor Angela Dougan and left unsettled last week.
Those reports, Talbott says, should include updates on applications received, spill reports, complaints, air pollution readings, amount of sales and use tax paid, and more. "Nothing should be in the shadows," she says.