Southwestern Energy plans second well on existing Dill Gulch pad and a new well to the north of U.S. 40 | CraigDailyPress.com

Southwestern Energy plans second well on existing Dill Gulch pad and a new well to the north of U.S. 40

Tom Ross

— With national gasoline prices at the pumps remaining below $3 a gallon, 2015 has been a quiet year for the energy exploration industry in Northwest Colorado. Now, Southwestern Energy is preparing to break the silence with a permit application in Routt County for a second well bore on the existing Dill Gulch pad south of Hayden.

The new Dill Gulch application, proposing a horizontal drill in contrast to the original vertical bore, is scheduled to go to Routt County Planning Commission at 6 p.m. July 16, and the Board of County Commissioners at 1:30 p.m. Aug. 11.

Southwestern, which acquired the mineral leases of Shell Oil here for $180 million in 2012, also has a pending permit application at the Colorado Oil and Gas Conservation Commission (COGCC) for a new well, Flanders 7-88 1-34, north of Hayden.

During an intense few years early this decade, several energy exploration companies set out to find out if the Niobrara shale, a mile below the surface in Northwest Colorado, would yield the same strong production as the same layer delivered in Northeastern Colorado.

A description of the new well submitted to Routt County describes it as an "exploratory well being drilled to test the commercial potential of the Niobrara Formation in the area."

Routt County saw oil wells drilled on Wolf Mountain — one in 2011 and another in 2012. True Oil drilled on the Breeze Unit southwest of Hayden in 2011. The Dawson Creek well was drilled in 2012, and Gnat Hill, north of Hayden, followed.

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Trout Creek, southeast of Milner, was drilled in 2013, as was another well on Wolf Mountain. The first Dill Gulch well was drilled in 2014, with completion operations carried over into 2015. An administrative amendment to the original permit allowed for fracking.

The pad is just 2.25 miles south of Hayden off Routt County Road 53 and will be expanded from 2.4 to 2.8 acres to accommodate the second well.

County Planning Director Chad Phillips said the review of the new permit application is more tightly focused because of the fact that it is not creating a new well pad. Still, the expanded pad and the access road will be thoroughly scrutinized to determine if the original design was built to accommodate the heavier truck traffic, for example, which could result from having two wells on one pad.

County oil well permit hearings here were long and contentious in 2012 when Texas-based Quicksilver Resources was advancing the most oil well permit applications. Members of the public were concerned about the practice of fracking wells, and the former Board of Commissioners was at odds with the COGCC over local control of oil wells as they fit into local zoning regulations and natural resource protection.

After Quicksilver and Shell Oil joined forces, with the latter assuming the lead in the local permit process and backing away from fracking for its earliest exploratory wells, the conflicts settled down.

"When Shell and Quicksilver came into town we were reinventing the (approval) process,” Phillips said.

By the time Shell decided to exit the basin to focus its exploration capital elsewhere, and Southwestern scooped up its mineral leases, Routt County had smoothed out its process.

Southwestern is proposing to employ two shifts of up to 12 employees to work on a 24-hour basis during drilling of the new Dill Gulch well. The process is expected to last for 30 days. An enclosed loop system will be used to contain drilling fluids, and waste materials will be trucked to the Great Divide disposal site in Maybell.

To reach Tom Ross, call 970-871-4205, email tross@SteamboatToday.com or follow him on Twitter @ThomasSRoss1

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