Jacy Marmaduke

jmarmaduke@coloradoan.com

A statewide increase in oil and gas exploration permits is spilling into Larimer County and Fort Collins, which will soon see its first new producing well in years.

Extraction Oil and Gas LLC is in the permitting process for 19 horizontal oil wells in Johnstown, according to Colorado Oil and Gas Conservation Commission documents. COGCC also recently approved a Prospect Energy application to re-complete and operate a gas well in north Fort Collins near the Hearthfire subdivision at the intersection of Douglas Road and North County Road 13.

Twenty applications might not seem like a lot compared to more than a thousand pending applications in nearby Weld County, but it's more than three times the number of drilling permits approved in Larimer County in the last year.

Drilling applications are up statewide as crude oil prices hover around $50 per barrel, up from about $44 this time last year, and oil and gas company investments are on the rise.

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Seven of the largest companies operating in central and eastern Colorado plan to spend nearly $4 billion this year, up from $2.3 billion in 2016, the Associated Press reported. Meanwhile, the number of oil and gas drilling rigs in the Denver-Julesburg basin, home to more than 90 percent of Colorado's oil production and most of its natural gas production, has increased to about 30.

That's up from about 10 last year, said Taylor Cavey, a Denver-based energy analyst at Platts Analytics, a forecasting and analytics unit of S&P Global Platts.

It's also cheaper to drill a well in Northern Colorado than other parts of the country: About $3.6 million here compared to $10 million or more in other parts of the country, Cavey said.

"The economics in the Denver-Julesburg basin are some of the best in the U.S.," Cavey said.

Oil and gas wells have lately been a rarity in Larimer County, where the resources are generally less plentiful or less easily extracted than in Weld County. About 180 wells were producing oil and gas in Larimer County as of Thursday morning, according to COGCC data. For reference, Weld County has more than 20,000 producing wells and Boulder County has about 300.

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The increase in applications here is a sign of increased confidence, but Cavey doesn't think it necessarily means that Larimer County will be flooded with new wells anytime soon.

"(Developers) are at a point where they're going to pick up drilling in areas they're familiar with," he said. "I don't think $50 a barrel is quite enough to incentivize any exploration outside their core acreage."

But developers might start applying for permits in areas that would be more profitable if prices continue to rise, he added.

Extraction's Larimer County wells, if all approved, will sit just east of Interstate 25 at Johnson's Corner near the RV Retreat and Candlelight Dinner Playhouse.

Extraction submitted applications for the first 13 wells in late January and the last six in late March. Company representatives didn't immediately respond to a Coloradoan call seeking more information.

Johnstown Mayor Scott James said he wasn't surprised by the drilling applications, which are near the Weld County border.

"As long as they don't disturb surrounding development, then they should be able to exercise their right (to extract resources)," he said.

Prospect Energy expects to re-complete a gas well in north Fort Collins by late April after COGCC approved its application Wednesday.

If completed, the Prospect well would be the first Fort Collins has seen since the Colorado Supreme Court struck down the city's fracking moratorium in May 2016. The measure sought to put a five-year hold on hydraulic fracturing within city limits while city officials gathered more information about the safety of the practice.

Prospect Energy doesn't have additional plans for drilling or completion in the north Fort Collins field, but "additional opportunities" might arise based on the results of the recently approved well, said Meghan Twele, a regulatory analyst with Progressive Consulting, which is working on the project.

Prospect Energy operates an oil processing facility at the same site, which made headlines last fall when a malfunctioning valve spilled about 6,500 gallons of crude oil on the ground. The Oct. 27 incident is Larimer County's biggest oil spill on record.

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Boulder County recently adopted regulations on oil and gas development after Colorado Attorney General Cynthia Coffman sued over the county's series of moratoriums on new development, which she called an "open defiance of state law." The new regulations, which county officials say are the strictest in the state, include requirements for air quality monitoring, hydrocarbon emissions control measures and water well sampling. They go into effect May 1.

Weld County's new oil and gas regulations, which took effect in February, require operators in unincorporated Weld County to obtain a special permit before they drill. They must notify area property owners about their plans, work to mitigate lighting, dust and noise impacts and give the county documentation proving they tried to reach an agreement with landowners.

Larimer County doesn't have any county-specific oil and gas regulations.

Oil and gas wells by the numbers

Larimer County: 48 pending permits (29 are for an on-hold project); 181 producing wells.

Weld County: 1,075 pending permits, 20,078 producing wells.

Boulder County: No pending permits, 301 producing wells.