by Bill Knowles
TRINIDAD — At a meeting at La Quinta Inn on Thursday, Nov. 16, elected officials from Las Animas County and the City of Trinidad learned of the purchase of XTO interests in the county by Timber Creek, an energy company.
Purchased were 61,000 net acres, over 500 wells and all associated operational infrastructure (such as lease and surface equipment, gathering systems, compressors, personal property, fixtures and appurtenances). Additionally, as part of the transaction, joint petitioners state that XTO will permanently release to Timber Creek the transportation on Colorado Interstate Gas associated with the gas production assets.
A filing at the Federal Energy Regulatory Commission on Aug. 31, 2017, seeking that the purchase be expedited “…to facilitate Timber Creek’s acquisition of XTO’s natural gas production interests in the Raton Basin, in Las Animas County…and the related capacity held by XTO on Colorado Interstate Gas Company, LLC.” The cost of the deal hasn’t been stated.
According to the vice president of operations Scott Zimmerman, Timber Creek will be uncapping wells and restimulating them through the use of nitrogen. The number of wells capped total about 464 with 36 wells abandoned.
Timber Creek currently employs four to five workers and hopes to have about 10-15 employees by 2018. According to Zimmerman, “If we can demonstrate growth they (workers) will return.” Many workers who have experience in the fields left as Pioneer began stepping down their operation because of a collapse in the market for natural gas. As wells were capped off
Las Animas County experienced an exodus of field workers leaving the county for greener pastures.
The collapse of the natural gas market dropped the valuations of the property owned by Pioneer and the county began seeing a decline in tax revenues which, until this year when a one percent sales tax was approved by voters, threatened to flatten the county’s financial operation.
Another enterprise noted by Zimmerman was a market for produced water. Produced water is ground water pumped from natural gas or oil wells as the drilling operation encounters it. Some produced water, such as that produced by Petroglyph in Huerfano County, is very alkaline and can salt fields used for producing hay for cattle.
Vance vs. Wolfe
The other issue with produced water is the 2009 Colorado Supreme Court ruling that coal bed methane producers must adhere to the same water rules and regulations as other state water users.
According to a 2009 report by the Environmental News Service, a 2005 court case argued the state engineer acted illegally by failing to require BP America Production Company to get permits and water court approvals to pump tributary groundwater as part of the company’s coal bed methane production. The judge agreed and BP filed an appeal.
In the appeal it was argued the state district court, water division erred in not deferring to the state engineer’s determination that the removal of water from geologic formations solely to facilitate coal bed methane mining operations is not a “beneficial use” within the state engineer’s ground water act permitting authority.
The Colorado Supreme Court found, in 2009, that the extraction of tributary groundwater for coal bed methane production is a “beneficial use” of water and as such is subject to water rights administration and approvals by the water courts.
A state engineer permit and water court approval are usually required before tributary groundwater can be pumped. These approvals are designed to ensure that the water rights of others, including instream flow rights held by the Colorado Water Conservation Board, are not injured.
For years, coal bed methane producers have been allowed to pump large amounts of groundwater connected to nearby streams, called tributary groundwater, as part of their extraction operations without a water right or approvals from the state engineer and the water courts.
Coal bed methane is natural gas that is generated and stored in coal seams. Water keeps the coal bed methane in place in underground formations. When groundwater is pumped, the gas is released from the formation and can be captured by producers.
Coal bed methane producers often re-inject most of the water underground, but in different, deeper formations, so the water is not available to other water users or the nearby streams as it was before the methane production.