A new oil and gas operation just over Loveland’s eastern border has added revenue to the city’s coffers and saved it the trouble of repairing a gravel road.
In June and July, a subsidiary of Anadarko Petroleum Corp. drilled eight new horizontal wells at two sites north of U.S. 34 and east of Larimer County Road 3, which is the line between Loveland and Johnstown in that area.
Because Kerr-McGee Oil & Gas Onshore was planning to use County Road 3 as its primary access to the site, and because County Road 3 is within Loveland city limits, the oil company agreed to repair the road and to pay capital expansion fees, said Greg George, the city’s director of Development Services.
Anadarko agreed to pay the street fees the city imposed last year on oil and gas development, even though the development itself is inside Johnstown city limits, not Loveland, he said.
Anadarko is paying the fees for streets and for fire protection because the well sites are within Loveland Fire Rescue Authority boundaries, George said. The one-time total is a little over $16,000, he said.
Road repairs
In addition, “we became concerned about maintenance and the heavy truck traffic,” George said. “County Road 3 was in such bad shape.”
The city is working with Anadarko on an agreement to maintain the gravel road, he said, and “they’ve already done quite a bit of work” between U.S. 34 and Crossroads Boulevard.
George said the city was about to enter into an agreement with Larimer County to share the cost of about $300,000 worth of work on the road, and now that discussion has been postponed.
“That was a benefit for us. It’s work that we don’t have to do,” he said.
From June 25 to July 5, Kerr-McGee completed the eight new wells, according to the Colorado Oil & Gas Conservation Commission website.
Five wells just east of County Road 3 and about a mile north of U.S. 34 are named Encore, and the other three, named Miracle, are about half a mile southeast of that location in an area with several producing wells also named Miracle.
Fracking in October
Anadarko spokeswoman Robin Olsen said the company will frack the wells — sending water, chemicals and sand into the bore holes at high pressure to break open the shale formations underground and release the oil and gas.
That operation, which takes three to five days per well, will occur roughly between Oct. 20 and Nov. 13, she said.
After that, the company will set up the wells to collect the oil and gas and pipe it into Anadarko’s system.
The five-well Encore site, clearly visible from County Road 3, has a two-sided wall of hay bales about 12 feet high on the north and west sides of the wells.
“Any time we begin activity, we carefully evaluate ways to reduce the impacts and inconveniences (that) operations may create for residents,” Olsen said in an email interview.
“We have a number of measures to mitigate noise, dust and light, including sound panels and hay bales,” she said.
Still drilling
Even though oil prices have fallen below $50 a barrel, and oil companies are cutting back on operations and laying off workers in Colorado, Olsen said Anadarko hasn’t laid off any of its 1,500 employees in Colorado during the downturn.
“The Wattenberg field continues to be one of the most attractive areas for investment in the U.S.,” she said, “because of the efficiencies we’ve achieved, infrastructure we’ve built and outstanding quality of the producing rock formations.”
Olsen said the company is committing resources to the eastern Colorado oil fields that might have gone to other areas in the U.S. if prices were higher.
Craig Young: 970-635-3634, cyoung@reporter-herald.com, www.twitter.com/CraigYoungRH.
