As many residents of the north metro area know, energy companies have expressed interest in drilling for oil and gas from various locations within Adams County. The State of Colorado, through the Colorado Oil and Gas Conservation Commission (COGCC), currently holds all legal authority regarding where and how oil/gas can be extracted in our state.
None of the proposed drilling will occur on district property but some of the minerals are underneath district schools and some drilling locations are near district property and schools. This has raised concern for many residents within our community. This page is intended to provide information on what has happened to date regarding oil and gas activity as it relates to district and school operations.
Background on Summer 2017 Request from Great Western Oil and Gas Company 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.
Background on Mineral Leases Approved in 2015
(Current information as of Dec. 9, 2015) The following article and the attached background/fact sheet is intended to provide information concerning mineral leases the district signed in 2015.
On April 15, 2015, the district's Board of Education approved mineral leases under Century Middle School and Horizon High School. The Century lease was executed with Synergy Resources Corporation, and the Horizon lease is with Land Energy Inc. As of December 2015, neither company had applied for a permit to begin drilling. Drilling can't begin until companies are granted a permit from the COGCC.
The decision by the Board of Education to enter these lease agreements was in response to a request for mineral rights. The decision does not reflect support for the practice of hydraulic fracturing (fracking) or of drilling in general. A few of the factors that were of primary importance in Board members’ decisions were:
- The Board of Education does not have legal authority to permit or deny the placement of oil wells. In 2015, the proposed surface drilling site for minerals under Century was located near 138th Avenue and Franklin Street, and the site for minerals under Horizon was 152nd Avenue and Monaco Street.
- The energy companies have legal authority to force the district into an arrangement called "forced pooling" should the district refuse to lease its minerals to them. Forced pooling poses negative financial impacts and liability risks to the district.
- The district's mineral rights share underneath Century Middle School and Horizon High School is small, and the energy companies indicated they would move forward with extraction with or without a lease agreement with the district.
Our district has and continues to study the above and below ground impacts of fracking so that we can understand its possible effects and can advocate for stringent safety measures and for conditions that will minimize impacts on our schools, staff and community, should the companies seek permits for drilling. We will provide input to the Adams County government should they enter into a Memorandum of Understanding with the energy companies to lay out procedures around noise, lighting, traffic, water testing and other issues. The health, safety and learning environment of our students is our greatest concern.
We encourage residents with interest/concerns about proposed oil/gas activity to reach out to the Colorado Oil and Gas Conservation Commission, 1120 Lincoln St #801, Denver, CO 80203, Phone: (303) 894-2100. If you have questions related to this article or the background/fact sheet, please call 720-972-4206.