2017 Request to Lease Mineral Rights
Great Western Oil and Gas Company contacted Adams 12 Five Star Schools with a request to lease 39 acres of mineral rights located approximately two miles beneath Horizon High School’s property. These 39 acres were not included in a previous oil and gas lease approved by the Board of Education with Land Energy in 2015 (see information on the 2015 lease below).
Surface drilling would not take place within the Five Star District’s boundaries. Instead, Great Western proposes to drill from a pad located near the southeast corner of E. 144th Ave. and Quebec St., which is more than a mile from Horizon High School’s property line. The company intends to extract subsurface minerals between Colorado Blvd. to the West, Quebec St. to the East, 144th Ave. to the North and 136th Ave. to the South.
In order to address this request to lease mineral rights and determine the best path forward, the Five Star District retained outside legal counsel to gather more information regarding oil and gas leases.
Information was presented to the Board of Education at its Aug. 16, 2017 and Sept. 6, 2017 regular meetings. Outside legal counsel highlighted additional steps the Five Star District can take to support the best interest of the district and its families, and provided more information regarding the pros and cons of forced pooling versus leasing. The board took no action on this matter at either of those meetings.
After weighing the pros and cons of forced pooling versus leasing over the past month, the board of education voted at its Sept. 20 regular meeting to lease the mineral rights to Great Western rather than be force-pooled.
In a memo to the board of education, outside legal counsel Matt Sura outlined the reasons he advised against being force-pooled. “Ultimately, forced pooling would harm Adams 12 interests – both financially and legally,” Sura said. “If Adams 12 does not sign a lease by September 21st, Great Western will ‘force pool’ the acreage. ‘Forced pooling’ occurs when an oil and gas company forces a reluctant mineral owner (or a mineral owner it cannot locate) to participate in the drilling of the well.”
Sura went on to outline how the state has authority when it comes to leasing of mineral rights (see C.R.S. 34-60-116). “State law makes it clear that forced-pooled parties are to be treated as if they have a working-interest ownership in the wells,” he said. “The bottom line is that if Adams 12 is forced pooled, it will mean less revenues for the school and liability if an accident were to occur.”
The agenda for the Sept. 20 meeting includes all the documents that the board considered in making its decision.
The district spent a month negotiating with Great Western on numerous aspects of a proposed lease, including efforts to address safety concerns. Additionally, letters on behalf of the district were sent to the City of Thornton, and to Adams County, regarding proposed changes to regulations concerning oil/gas development which would better protect the health and safety of students and staff members than prior regulations, and would better support the safe and efficient operation of our schools/programs.