CEO: "Political Risks" Confront Oil & Gas Companies in Colorado

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Oil & Gas companies operating in Colorado face "political risks" they don't face in other areas, an oilfield service company executive told attendees at the 5th Frac Sand Conference, held in Denver, Colorado, on September 13. "Colorado is the tip of the spear, the place where industry meets residential communities," Chris Wright, chief executive at Liberty Oilfield Services (Denver, Colorado), told about 130 attendees at a conference organized by Industrial Minerals Events.

Wright urged attendees not to forget that oil and gas companies need a "social license to operate," and that the old ways of doing business must change with the times. "We can't continue to play the game the same way. In Colorado, we must play on a higher level."

He estimated his company used about four billion pounds of frac sand in the Denver-Julesburg (D-J) Basin last year, and may use as much as six billion pounds in that basin this year.

Wright's comments came as communities along Colorado's Front Range, which sit atop portions of the D-J Basin, enact or consider enacting measures to limit oil and gas development. The night before Wright spoke, the city of Erie adopted a measure to require operators in that community to map their pipelines and flowlines. Earlier, in a separate move, Erie adopted an ordinance that enables residents who are offended by the smells coming from a drilling operation to lodge complaints against the operators. That ordinance went into effect at the end of August.

The neighboring cities of Broomfield, Lafayette and Thornton all are considering their own measures to limit development and make operators more accountable and transparent. These moves follow several years of failed efforts to put measures before Colorado voters that would restrict oil and gas development. Passions were reignited earlier this year after two oil and gas accidents five weeks apart killed three people and injured four. For more on that, see August 29, 2017, article - Fracking Fight Coming Back to Colorado?

"As an industry, we have gotten better in the last five years," Wright said. "We need to continue to get better."

Although Colorado is not the only state where operators are using hydraulic fracturing to extract oil and gas, it is one of the few places where drilling is taking place close to residential subdivisions. Although drilling has been going on in Colorado for decades, until about 10 years ago, drilling in east-central Colorado, along the so-called Front Range, took place mostly in rural, less-populated areas. But those areas have experienced strong population growth over the last decade at the same time that hydraulic fracturing became more widespread. For that reason, some areas have experienced sharp conflicts between environmental groups and homeowners, on the one hand, and the Oil & Gas Industry, on the other. In many cases, elected officials are caught in the middle.

Wright said residential communities most often clash with operators on three interrelated issues: truck traffic, noise and dust. He predicted better communications with affected communities and reducing truck traffic would go a long way to making peace with communities that abut oil and gas drilling. Making progress on those issues would also help reverse "the perception among some that we are ruining the Earth."

"We need to engage in conversations with younger people about energy issues," Wright continued. "Young people are not hearing the good news about energy." He said hydrocarbons are one reason the life expectancies of people around the world increased dramatically throughout the 20th century.

He acknowledged that solving the truck traffic issue will be tricky. "You can pipe in water, you can pipe out water and oil and gas, but you can't pipe in frac sand." That means trucks--a large number of them--are needed to bring proppant to the wellsite. Speakers at the conference agreed it takes between 10 million and 12 million pounds of sand to frac a well, on a national average. Each frac sand truck can carry between 43,000 and 47,000 pounds of sand. That means hydraulic fracturing an average well requires an average of about 250 truckloads of sand. Typically, that sand would be delivered in a very concentrated period of about two weeks.

Those trucks typically have their sand removed by pneumatic blowers, which are noisy and put a lot of dust in the air. It takes about 40 minutes for a pneumatic blower to empty a sand truck. Also, while waiting for their sand loads to be removed, trucks are idling, which wastes fuel (thus driving up costs), creates noise and puts emissions into the air.

Wright's company was one of several at the frac sand event that were demonstrating systems that would get sand trucks off the road, which would reduce wear and tear on surface roads while cutting down on noise and dust.

The Liberty executive said the industry has made important strides by shrinking its footprint through the use of multi-pad drilling. Operators have shaved days off the time it takes to drill and frac a well. But as laterals get longer and drilling is more concentrated, there is an ever-greater need for frac sand. Unless the industry can remedy the interrelated issue of truck trips, noise and dust, he suggested continued clashes with communities will be the rule, not the exception, in Colorado.

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