Erie’s Acting Town Administrator: Presentation to the Board of Trustees [Transcript]

Acme Site Map by De La Vaca for Yellow Scene

We feel it serves the town to provide transcripts of our elected and appointed/acting official’s comments in regard to highly divisive issues. It should be noted that much of the conversation and concern was about the possibility of propositions 112 and 74 passing, which neither did. Are we in a better place with the operator agreement in place? Arguably we are. But the loopholes in the agreement – of which there are many – make it likely that Crestone will find ways to undermine the intent of the agreement and continue to operate in the best interests of their shareholders and their industry. We hope we’re wrong. Presented here is the transcript of the presentation made by acting town administrator Farrell Buller with some notes from our editor.

MAYOR CARROLL: …We’ve been informed by Crestone that they had submitted their application for the Erie Vessel site, last week, and that they were gonna be submitting the Acme site tomorrow. Whether or not we approve the operator agreement for either the 15 or 30 wells. So they are moving forward as they told us last week.

The second item is how we got here. A lot of people have questions. So after the vote on Tuesday, Crestone’s attorney reached out to our attorney to see if, or to tell us that between then and Tuesday they still were open to negotiating if we wanted to. Our attorney reached out to the board, as that legal obligation exists, and one or more of our trustees said they were willing to talk further with Crestone to see what additional items we could get. So we did some more negotiating on Thursday, we made six changes, and now that’s how we are here today.

So with that, we’re gonna do presentation on the operator agreement.

FARRELL BULLER: Good afternoon Mayor and Board of Trustees. Farrell Buller, Acting Town Administrator for the town of Erie. We are gonna go through a presentation of about ten slides, talking through not only the changes that have happened since October 30th to date, but just to kind of give some overall context and concept of how we got here since about June. After my presentation we will be doing some Q and A with the citizens and for the board’s direction I just want to take a minute to explain how that will happen because we don’t have a sign in sheet today. How that will happen is, Amy Teetzel who is our operations manager will have a microphone and she will be at that end of the aisles if you have a question that you would like to ask, whether that’s addressing the board or Crestone or staff, you can go to the end, ask your question and it will be addressed verses coming and standing for three minutes and talking and not getting any interaction. The board’s desire was to have a little more of that feedback so we’ll go each row and give people the opportunity to ask a question.

[Editor’s note: one could not be faulted for thinking that this move appears to be less about interaction with the citizens, less about “a little more of that feedback”, than about preventing the coordination of another presentation by citizens, who had signed up in order, en mass at the last board of trustees meeting to incredible effect. You can read about that and see those slides here.]

Why are we here? Why are we in this setting, in this conversation? So, the desire of this Board of Trustees is to have less wells in Erie, less well pads in Erie, to work towards elimination of the Vessel mineral site, to enact safeguards for residents over and above what’s required by the state, and then to settle the current pending litigation against Crestone. A little bit about how we got here, in the beginning of May, right after the current board elections were held, this board began working with staff immediately on how can we do oil and gas better? So, instantly we changed things from, we didn’t have notice of where these agreed on well pads were in the town, whether it was by Crestone, Extraction, Anadarko, other providers, so immediately we were instructed to create a map and put that on the website.

Erie Oil & Gas ACtiviy Map, from erieco.gov

That happened in early June and at that time was the first time we publicly shared both Vessel site and the Acme site and Crestone’s plans, as well as other operators but I’m just gonna stick to those today. In June we also began working on a new approach that the Board of Trustees wanted to have with Crestone, and additional operators. On July 10, the Board of Trustees adopted a six month moratorium for all new oil and gas permits. That moratorium was adopted with the caveat that we would begin working with operators to create updated operator agreements.

[Editor’s note: The caveat “that we would begin working with operators” doesn’t imply that an operator’s agreement needs to be made or agreed to, just that efforts towards that end are occuring.]

So something has to happen within those six months to show progress working with those entities. That’s what happened at that time. Between August and October, we all went to work; Staff, Board of Trustees, our legal attorney, Crestone, their legal attorneys, and basically worked through from where we were in 2015 to where were are in 2018, about October 18th when the first operator agreement was released to everybody, and to the public, on our website.

During that time other things that had happened in conversations that had been had is town staff began to identify additional experts we could utilize, looking into air quality projects, new oil and gas experts that had different studies, that we could utilize them, not only on this operator agreement but for any type of development, any type of testing like that. We secured additional resources. The Board of Trustees began working on citizen engagement. That was through a multitude of facets. They did do a survey [linked here] that went out to and came back from 525 people, they offered to do three sessions of one-on-one face-to-face meetings, the Mayor and additional board members have attended monthly meetings with residents that have been put in various areas of the community to try to draw out different conversations and different feedback. This will be our third public meeting, regarding this conversation. As well as this board was elected with a different level of knowledge of oil and gas than some of our previous boards, so all of that expertise that they had obtained prior to this August 1st date also rolls forward and anytime a citizen comes and speaks at a Board of Trustees meeting, all of that information is captured. The board also regularly receives emails ongoing of this topic and other topics that they take into consideration.

On October 18 and October 19th, we presented the Board of Trustees with this updated operator agreement as well as to the public. From October 19th to the present, we’ve continued to refine the operator agreement. So we wanted to demonstrate some of the changes from a really vast level. We realize that a lot residents may or may not have been part of this same conversation in 2012 when this first got worked on, as well as in 2015, this brings us to 2018. You can see up there from BMPs, which are best management practices, in 2012 we had six. We had this same provider which I believe is called Encana. In 2015, we had 19 best practice management identified. In 2018, at the 10/30 meeting we had 31 best practices identified and today we still have 31.

With regards to odor, you can see that in 2012 and 2015 we didn’t have any type of odor control plan. It wasn’t in people’s radar of being a really high important topic and really something we needed extreme, extreme attention to really pay attention to. The odor control plan was identified in 2018 with this operator agreement and it’s still in the operator agreement. With regards to sound mitigation, in 2015 we had just the A limit on drilling, and we know that at times it seemed like a lot of complaints would come from the C level noise of drilling so there is a cap in our current agreement and that has been addressed at a much more attainable level for all parties in the 2018 operator agreement, both versions.

Specific to air, you’ll that the safeguards in 2012 and 2015 are different than the safeguards in 2018 in both of those operator agreements. Specific from October 30 to today, one of the requests that was made in that time was changing the fluid used to help address air quality, which also affects likely odor.

Additional safeguards, over and above the state law, is something that this board has been highly focused on. The four items that are listed in the 2018 operator agreement: [1] monthly inspections for all Crestone wells in Erie, [2] additional stakeholders review i.e. that could be Broomfield or other interested parties that we identify, most recent operator agreement among local entities, so I think that’s important because other local entities have adopted something likely hasn’t been put into practice, so we have some experience with what we’ve put into practice, we know how it’s supplied, we know the outcome, so it’s that assess, plan, implement, evaluate. [3?] We’ve been able to evaluate and we’re back to the next stage. A lot of the entities that recently adopted operator agreements likely use the 2015 Erie’s agreement as a base or starting point. [4] Finally, we have a new and improved risk analysis that was requested, so as there is a potential risk identified, that will come into the town staff and the town board. An important thing to identify for the 2018 today’s operator agreement that we’re reviewing, everything on the list from 10/30’s operator agreement is a carry-over, so I just didn’t rewrite all those. Those are all in.

The other five things that were recently negotiated, led by board of trustee Christiaan van Woudenberg, were to prohibit Gibson D822 drilling fluid, the addition of Pratt and Waste Connections well pad sites to this agreement, so if there’s something going on these best management practices still apply, a guarantee of a connection to the electric grid, additional distance from the residents, that is definitely one thing this Board of Trustees has heard and it was indicated that should there be any give in trying to move that well pad site further from the residents that we expected that and Crestone has been able to do that. Additionally, this agreement, the terms have been reduced from 10 years to 5 years. Some of the additional administrative safeguards, this will satisfy the odor litigation, which we have our next deadline I believe November 12th coming up, monthly inspections will be ongoing for all sites in perpetuity, that was not the case in 2015, detailed reports, studies, and plans are required describing how Crestone will mitigate the impacts and satisfy all the BMPs.

That’s important because prior to this, we were the ones directing Crestone to do these things that was very prescriptive and what we learned is we’re not the expert, and as their technology improves, we actually wanna guarantee that we receive that technology so now [1] it will be a plan that is submitted and reviewed by all entities. [2] Other stakeholders, such as the city and county of Broomfield, can be listed as an interested party with the rights to review plans for each pad site. [3] Administrative approvals, not just consultations, [are] required for each identified pad site. [4] Crestone will pay a fee of $35,000 per well pad site to cover town costs. [5] The town has the right to conduct inspections of the well pads and related facilities without notice. [6] The town may propose that Crestone adopt new technologies in the future, such technology will provide a material benefit for public health, safety, welfare, to the environment of the town of Erie. [7] Additional landscape requirements have been included and then [8] a master pipeline license agreement so that all the operators and the town and the residents and any of those stakeholders groups are participatory and understand what the full plans were.

[Editor’s note: a point brought up by a citizen speaker, which bears out here, is that the town’s ability to propose new technology for Crestone to use does not guarantee Crestone will have to use it. That rings of the prescriptive position that town claims it’s trying to avoid.]

One of the things the Board of Trustees directed staff do is help identify what is the overall plan, not just trying to look at everything so segmented as an ongoing basis. A couple of the risks and rewards, one risk and considered and identified is not knowing the size and duration of Acme at this time.

[Editor’s note: in the course of answering a constituent question, Jason Oates of Crestone Peak Resources said the wells at Acme would be in production for 25 years following an 18 month drilling phase. Why acting town administrator Buller is pushing for this agreement but claimed not to know that is unclear.]

Obviously, all of those pieces are the next step. When we hear people talk about traffic, environmental, lights, sight, drop off times, things like that… all of those come in the next step when an application actually comes to the town, so the town doesn’t have that application at this time. Not having control of the 12 new reports and studies; again those are above and beyond what the state approves and recommends as a regular basis, not having inclusion of the recompletions of existing wells. Recompletion of existing wells. Thirteen of the new BMPs make those inclusive so we can hold those to the highest standard possible. Any rewards at this time, obviously the “why” slide of having less wells in Erie around people, less well pads, closing Vessels Minerals, improving and increasing local control, and settling the pending litigation. Another rewards is having plans versus prescriptive BMPs, I just identified what those were when they’re prescriptive, it’s ‘do this’ and that’s exactly what we will get and when it’s a plan then we have the ability to make recommendations and as technology improves or as the town or staff or a consultant identifies a better option or better practice, we now have the right to have Crestone look into that.

[Editor’s note: to say that prescriptive – literally “relating to the imposition or enforcement of a rule or method” – means to “ ‘do this’ and that’s exactly what we will get” is a lower standard than plan, which is described here as “the ability to make recommendations and as technology improves or as the town or staff or a consultant identifies a better option or better practice, we now have the right to have Crestone look into that” makes no sense to us. It makes less sense in light of the prior assertion that the town’s ability to “propose” new technology does not guarantee its use. It appears, based on the language here, that the town added BMP’s in the new negotiation in exchange for lowering the already minimal enforcement standards.]

The other identified reward is to improve the overall welfare of Erie Air Park through the funds accrued in the Air Park URA [info here]. Just so everyone is aware of what we’re talking about when we say these two pad sites, the back layer map is the map that’s on our website that I mentioned has been up since about early May, and that shows where the anticipated sites are right now with our three main operators. We did also add the Coyote site, which technically isn’t in Erie but was moved to Erie. We have that so our residents are aware of what’s happening.

This appears to be the same map, but was taken from Trustee van Woudenberg’s website post

The Vessels Mineral pad site would be 20 acres and 30 wells and the Acme pad sight would be 20 acres and either 15 or 30 wells. This is a picture specifically of the Acme site, you can see Erie in the most middle and what we have done is put on there how many feet that is from residents houses so that you can see just kinda where we’re at and how many buildings that we’re actually talking about. The other thing I mentioned that I just wanted to make sure people are aware of are the URA, this blue area. The Acme site is there because I realize the map format changes. This is what’s called the Urban Renewal Authority Area, this was created in about 2008 and basically what it does is it captures revenue specifically in this area to put back into improving the area. When this was created in 2008, items that were considered important to this area were remaking those roads to make them much improved and meet current standards, potentially sewer options, potentially water options, so just making improvements to this area. This is the area where those funds received would be spent. They can’t be spent in like all the gray area, for example.

The other thing with this is we do have other stakeholders that participate such as Saint Vrain Valley School District, Mountain View Fire Protection District, Weld County, so all of us are part of the same URA to help improve this area. In decisions on how those dollars, collected and spent, Erie has about a 15.8 mil so that’s how we know the dollars would be significant in this area to make improvements to that land.

This Board of Trustees has heard some conversation about the recent elections and we just wanted to provide some information on a couple of things that we know. The election is happening November 6th. The changing governor and outcomes of Proposition 112 and Amendment 74 are the primary outcomes that may shift oil and gas landscape after the election. The operator, aware of potential impacts of permits submitted or modified after November 6th has submitted or indicated they will submit all permits by November 5th, with or without an updated operator agreement. What we can expect if Proposition 112 passes: section 6 specifies the 2500 foot setback would apply to oil and gas development permitted by the state after the proposition goes into effect. The timing of the approval of the permits by the state will be impacted by Erie’s decision, whether or not we enter into an updated operator agreement.

[Editor’s note: much conversation has been had about the timing of this event. As pointed out at the meeting, the election date isn’t the important date. In fact, it’s the certification of the election – which should happen in December – that is the date that impacts applications. Trustee Haid has even pointed out that, should the board of trustees be willing (and it doesn’t appear that that would be the case), they could work with the COGCC to deny any existing permit applications (such as Acme and Vessels) based on proposition 112.]

As the operator indicated, the permits will be submitted one way regardless. Nothing in Proposition 112 mentions previous agreements with municipalities. Proposition 112 explicitly states that there is no exception to reducing a setback, but municipalities can increase the setback. Next steps for this Board of Trustees, obviously to continue getting citizen feedback through education sessions, public meetings, monthly meetings, however the board deems most appropriate. I think that is just conveyed but this isn’t the end of this conversation and it’s not the end of oil and gas in Erie, or how it affects our residents. To improve the public meeting processes, to continue to work with a variety of experts, to work with neighboring communities, and to continue to negotiate with the remaining oil and gas operators. That’s important because we’ve already continued to meet with some of the other operators. The draft that I received from one of them on an operator agreement was less than our year 2015 agreement so that will obviously come into play if we have an updated one or not at this time. That is the end of my presentation.