ECMC to terminate Phoenix Resources right to operate in Colorado

Now defunct as the old company, rebranded into a new company. This is common among Oil and Gas operators.

The Littleton-based oil and gas operator was found in violation of several orders that will likely lead to its wells being turned over to the ECMC on March 26. 

Aaron Harber has lived on his sprawling farm on East County Road since 1989, tending to small grain crops, horses, cows, pigs, chickens, and recently, bees. 

But on the eastern side of his property is the Futhey #2 oil well that, if it were up to him, would have been plugged and remediated a long time ago. Though Harber owns the mineral rights to the well, the 1980 lease pre-exists his ownership of the farm, and he has no right to terminate it. 

The situation changed in 2022 though, when the operator of the well, Littleton-based oil and gas company Phoenix Resources LLC, stopped paying royalties to Harber. This gave Harber grounds to terminate the lease, and accomplish his goals to have the well plugged, remove all surface equipment from the drilling site, and remediate the area so that no environmental or health concerns remain. 

“My goal is to not have this kind of above ground activity where there are two neighborhoods next to us,” Harber told Yellow Scene Magazine. 

Harber is one of the owners in the Futhey #2 well’s split estate — where one party owns the surface rights to an oil well, but another party holds the below-ground mineral rights — but it is not required by law for Phoenix Resources to notify him of changes to the lease agreement or activity at the drilling site. When the royalty payments stopped coming in, he was left with dozens of questions. 

“When the ECMC (Energy & Carbon Management Commission) is holding a hearing or conducting any kind of action on a property, the property owner is not notified,” Harber said. “That makes no sense to me at all.”

Harber was concerned that no one was maintaining the well anymore, and that possible environmental damages were going unaddressed. 

Even when oil and gas wells are inactive, they can continue to release potentially dangerous pollutants into the air, soil and groundwater, like methane and benzene, a documented carcinogen. In some cases, abandoned wells can have explosion risk. 

He contacted the Colorado Energy & Carbon Management Commission (ECMC) for answers and confirmed that activity at Futhey #2 had ceased in the last several years. Harber sent the ECMC an official notice of termination for the lease in August 2024, hoping to move the well into Colorado’s Orphan Wells Mitigation Fee Enterprise Fund. 

The Enterprise was created in 2022 to use fees from the oil and gas industry to pay for plug and abandon operations and reclamation of orphan well sites, so that the costs don’t fall to people like Harber. 

Recently, the Enterprise Board unanimously approved a new annual marginal well mitigation fee that requires oil and gas operators to pay a flat fee of $115 per well to fund the plugging of marginal wells in Colorado. The fund is forecasted to generate $5 million annually, and will become effective in April 2025, according to a press release. 

To successfully induct Futhey #2 into the Orphan Well Enterprise, Harber had to secure a signed Stipulated Order Finding Violation from Phoenix Resources, which confirms or denies the accuracy of violations alleged by ECMC Staff.

The SOFV was put before a hearings officer on Feb. 26, which found that of Phoenix Resources’ 18 wells in Colorado, four failed final reclamation and the rest do not have any reclamation status. 

Violations included failure to report monthly operations within 45 days of the end of each month, unmarked and unused risers on location, undesirable plant species, missing wildlife exclusion devices and the presence of stained soils surrounding a drilling site — all of which Phoenix Resources failed to remove before a recent ECMC inspection. 

If approved, the SOFV will terminate Phoenix’s rights to operate in Colorado, foreclose on Phoenix’s financial assurance, which includes a $60,000 bond held by the ECMC, and allow the ECMC to declare Phoenix Resources’ wells orphaned and begin to expend funds to plug and abandon the wells and remediate and reclaim the oil and gas locations, wrote Community Relations Liaison Megan Adamczyk in an email to Yellow Scene. 

Phoenix Resources was originally given a penalty of more than $1.1 million, but elected to suspend the penalty in exchange for turning over its wells to the Orphan Well Enterprise, said ECMC Enforcement Advisor Siera Schroeder during the Feb. 26 hearing. 

The SOFV was reportedly signed earlier this year and will be sent to the ECMC Commission for approval during a March 26 hearing. Because it comes before the Commission as a recommended order, it will be de facto adopted unless commissioners remove the matter for discussion and deliberation or moves to stay the matter. 

Harber is cautiously optimistic that the matter will be resolved on March 26, 2025, and he can see the well successfully plugged and abandoned and remediated to prevent any future environmental or health damages. But, he is glad to have documentation in case he needs to pursue further action, he said. 

“My goal is that all of that [equipment] be removed and that the ground itself be remediated from any spills or anything that occurred,” Harber said. “I’m very confident that we’re on a path to get that done.”