1-211

1. Effective October 24, 2017, Extraction and the City and County of Broomfield (“Broomfield”) entered into an Amended and Restated Oil and Gas Operator Agreement (“Agreement”). Pursuant to the Agreement, Extraction and Broomfield agreed to certain surface locations within Broomfield and the number of wells that may be drilled from each such location for the development of oil and gas resources.

2. Extraction filed applications with the Commission for spacing and exception locations in Docket Nos. 170900602 and 170900603. At the October 30-31, 2017 hearing, the Commission removed Docket Numbers 170900602 and 170900603 from the consent agenda pursuant to Rule 520.

3. On October 31, 2017, the Commission entered Order No. 407-2220 which approved Extraction’s application in Docket No. 170900602 to among other things: Amend Order 407-1795 to require the productive interval of the wellbore of any permitted wells in the established 1,280-acre drilling and spacing unit to be located no closer than 150 feet from the treated interval of any other wellbore producing from the Codell and/or Niobrara formations, and no closer than 460 feet from the southern unit boundary and 150 feet from the northern, eastern, and western unit boundaries, without exception being granted by the Director.

4. On October 31, 2017 the Commission entered Order No. 407-2221 which approved Extraction’s application in Docket No. 170900603 to among other things: Establish an approximate 1,920-acre drilling and spacing unit for the Application Lands for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, and approve up to twenty horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

5. On October 31, 2017, the Commission requested that any Form 2: Permits to Drill or Form 2A: Oil and Gas Location Assessments related to those Orders be brought before the Commission by Commission staff upon completion for review and hearing. The Commission’s primary purpose in requesting review of any permit applications was to provide Adams County with the opportunity to speak to the Commission regarding their objections to the proposed surface locations in the permit applications.

6. Extraction subsequently submitted thirty-nine (39) Form 2s, Applications for Permits to Drill, and three (3) Form 2As, Oil and Gas Location Assessments, requesting the Director’s approval of permits for the drilling of wells and for the construction of surface locations within the lands encompassed by Order Nos. 407-2220 and 407-2221 (“Permit Applications”).

7. On July 5, 2018, the Commission Secretary made a request to the Commission Director for a Rule 502.b. variance which would allow Commission Staff to notice this matter less than the 35 days from hearing that is required by Rule 507.a. The Director granted the request.

8. This matter was noticed by Commission Staff on July 9, 2018.

9. On July 16, 2018, Adams County submitted a protest to the Permit Applications (“Protest”). As grounds for their protest, Adams County stated that the Permit Applications may cause significant adverse impacts to the public health, safety, and welfare of its citizens, that the potential impacts are not addressed by the Permit Applications, and that the potential impacts are not adequately addressed by the Rules and Regulations of the Commission. Adams County requested that the Commission allow Adams County to participate as a Relevant Local Government, and that the Commission not approve the Permit Applications until alternative locations are evaluated.

10. On July 27, 2018, Extraction submitted a response in opposition to the Protest (“Response”). Extraction argued that Adams County lacked standing to submit a protest, Adams County failed to state a claim for relief for intervention by permission under Rule 509, that the relief requested by Adams County is moot as Extraction has already completed alternative site analyses, and the proposed well pad locations would minimize impacts to all residents in Adams and Broomfield Counties.

11. On July 23, 2018, the Hearing Officer issued an order finding that Adams County did not have standing to protest. However, as the Commission requested that Adams County be allowed to present their position on the Permit Applications, the Hearing Officer granted Adams County permission to intervene.

12. The Forms under review are for the “Interchange A & B Pad”, the “Northwest A Pad”, and the “Northwest B Pad”. The Form Type, Document Number, and Facility Names are as follows:

Form Type	Document Number	Facility Name
2A	401477000	INTERCHANGE A & B PAD
2	401504401	INTERCHANGE A S16-20-19C
2	401504442	INTERCHANGE A S22-30-10C
2	401504444	INTERCHANGE A S22-30-11N
2	401504445	INTERCHANGE A S22-30-12N
2	401504447	INTERCHANGE A S22-30-13C
2	401504461	INTERCHANGE A S22-30-2N
2	401504462	INTERCHANGE A S22-30-3N
2	401504464	INTERCHANGE A S22-30-4C
2	401504465	INTERCHANGE A S22-30-5N
2	401504466	INTERCHANGE A S22-30-6N
2	401504467	INTERCHANGE A S22-30-7C
2	401504468	INTERCHANGE A S22-30-8N
2	401504469	INTERCHANGE A S22-30-9N
2	401475422	INTERCHANGE B N35-20-4N
2	401475423	INTERCHANGE B N35-20-5C
2	401475425	INTERCHANGE B N35-20-6N
2	401475428	INTERCHANGE B N35-20-7N
2	401475429	INTERCHANGE B N35-20-8C
2	401475430	INTERCHANGE B N35-20-9N
2	401504476	INTERCHANGE B S22-30-14N
2	401504480	INTERCHANGE B S22-30-15N
2	401504482	INTERCHANGE B S22-30-16C
2	401504485	INTERCHANGE B S22-30-17N
2	401504486	INTERCHANGE B S22-30-18N
2	401504487	INTERCHANGE B S22-30-19C
2A	401524113	NORTHWEST A PAD
2	401504490	NORTHWEST A S20-25-10N
2	401504524	NORTHWEST A S20-25-11C
2	401504528	NORTHWEST A S20-25-12N
2	401504529	NORTHWEST A S20-25-13N
2	401504530	NORTHWEST A S20-25-6N
2	401504531	NORTHWEST A S20-25-7N
2	401504532	NORTHWEST A S20-25-8C
2	401504533	NORTHWEST A S20-25-9N
2A	401525931	NORTHWEST B PAD
2	401504534	NORTHWEST B S16-20-1C
2	401504538	NORTHWEST B S16-20-2N
2	401504540	NORTHWEST B S20-25-14C
2	401504541	NORTHWEST B S20-25-15N
2	401504543	NORTHWEST B S20-25-16N
2	401504544	NORTHWEST B S20-25-17C

HEARING

1. On August 1, 2018, the Commission heard public comments, and presentations from Commission Staff, Adams County, and Extraction regarding the Permit Applications.

2. Residents of Adams County, as well as three Adams County Commissioners spoke in opposition to the Permit Applications.

3. Commission Staff presented its position on the Permit Applications to the Commission. Staff discussed the Commission’s permitting processes, the characteristics of the proposed surface locations, as well as the best management practices and conditions of approval that would be placed on the permits, if approved by the Director. Staff also informed the Commission that it reviews permit applications without consideration of jurisdictional boundaries, and that potential impacts to all Colorado citizens are treated with equal importance. Finally, Staff recommended approval of the Permit Applications as they were presented to the Commission.

4. Representatives of Adams County presented their objections to the proposed surface locations in the Form 2As. Adams County’s objection was that the locations are too close to residences, and that alternative locations, which were proposed earlier by Extraction, would be more suitable for oil and gas development. Adams County also argued that it was not afforded an opportunity to participate in the location selection process.

5. Extraction presented their response to Adams County’s objections. Extraction asserted that they communicated on multiple occasions with Adams County, that the proposed surface locations are in accordance with the Agreement with the City and County of Broomfield, that impacts on public health, safety, and welfare would be avoided or minimized by the best management practices and conditions of approval as well as by additional best management practices agreed to by Extraction in the Agreement with the City and County of Broomfield. Extraction also asserted that it had the right to construct the surface facilities at their proposed locations through agreements with the City and County of Broomfield or because Extraction owned the surface property.

6. The Commission also accepted and reviewed four written 510 statements objecting to the Permit Applications.

COMMISSION DELIBERATIONS

7. Commissioner Randall recused himself as he was not present for public comments, nor for Commission Staff’s presentation on the Permit Applications.

8. Commissioner Hawkins stated that, based on his review of the Permit Applications, as well as the submissions and presentations of the public, Commission Staff, Adams County, and Extraction, he was satisfied the Permit Applications as they were presented to the Commission protect public health, safety, and welfare and that the Commission’s Rules had been met. Commissioner Hawkins also stated that he approved of the consultation process between Extraction and the City and County of Broomfield, and that Extraction reviewed many alternative locations.

9. Commissioner Ager stated that she was satisfied that Extraction had followed the Commission Rules. Commissioner Ager also stated that it was clear from Staff’s presentation that Staff had reviewed all public comments submitted on the Permit Applications, and considered those public comments without concern for jurisdictional boundaries. Commissioner Ager also requested Staff to review the access road to the surface locations before the Director makes a decision on the Permit Applications.

10. Commissioner Boigon stated that the presentations showed that Extraction had substantially engaged with the local governments for a long period of time. The citizens of Broomfield and Adams County had also been engaged constructively by Extraction. The Form 2As reviewed by the Commission contained pages of best management practice he had not previously seen in approved permits. The Form 2As also included public comments and the response to those comments.

11. Following deliberations, the Commission voted unanimously to direct the Director to review the Permit Applications under the Commission’s standard practices and procedures, and to take whatever action the Director feels is appropriate regarding the Permit Applications.

COMMISSION FINDINGS AND CONCLUSIONS

12. Adams County requested two forms of relief in its Protest: 1) that it be allowed to participate as a Relevant Local Government; and 2) that the Commission not approve the Permit Applications until alternative sites are evaluated as potential alternative well locations.

13. The Commission finds that while Adams County was not allowed to participate as a Relevant Local Government, it did participate at hearing as a permissive intervener and had a full and equal opportunity to present its position to the Commission. Adams County was allowed to intervene by permission under Rule 509 as it would serve the public interest for the Commission to hear Adams County’s objections to the Permit Applications. The process of consultation and negotiation followed by Extraction and the City and County of Broomfield is unique and unprecedented, and the Commission would benefit from hearing Adams County’s perspective on that process.

14. The Commission concludes Adams County did not have standing to intervene by right. Under Rule 509.a., only a “relevant local government” may intervene by right, and then only raise environmental or public health, safety, and welfare concerns. The Commission has consistently interpreted the term “relevant local government” to mean the local government within whose jurisdiction the proposed development is to be located. In this case, the relevant local government is the City and County of Broomfield as all proposed wells and surface locations are within Broomfield.

15. The Commission also finds that Adams County’s primary objection to the locations proposed in the Permit Applications is to the physical location of the well pads surface facilities. Adams County’s only request was that the Commission not approve the Permit Applications until alternative locations are evaluated. First, the Commission concludes that no siting rational document was required by Commission Rules. Rule 305A.b.(2) requires a “siting rational” only for Large Urban Mitigation Area Facilities. None of the three proposed surface locations are Large Urban Mitigation Area Facilities. Bates 000026; 000147; and 000248. As such, the alternative location evaluation requested by Adams County is not required by Commission Rules and the Commission cannot compel Extraction to perform such an analysis.

16. Nevertheless, Extraction voluntarily submitted an Alternative Site Analysis document to the Commission. Bates 000768-783. The Commission thus finds that Adams County’s request for an alternative site analysis was met prior to hearing and is therefore moot.

17. The Commission finds that the Permit Applications as presented by Staff meet the Commission’s Rules and prevent or mitigate significant environmental impacts to the extent necessary to protect public health, safety, and welfare, including protection of the environment and wildlife resources. §34-60-106(2)(d), C.R.S. The Interchange A & B Pad Permit Application contains 3 Conditions of Approval and 41 Best Management Practices that address lighting mitigation, require use of pipelines to transport produced fluids, requires a leak detection plan, requires automated safety systems, containment berms, quiet technology for completion activities, use of electricity-powered production equipment to reduce noise, installation of 32-foot sound walls, and a variety of emission and odor mitigation measures. Bates 000030-34. The Commission Staff reviewed and considered all public comments on the Permit Application and Extraction responded in writing and in detail to public comments submitted on the Interchange A & B Permit Application. Bates 000107-000114. The Northwest A and Northwest B Permit Applications contain very similar Best Management Practices and Conditions of Approval. Bates 000150-154; 000251-255. It is important to note that, for all three well pads, the owner of the surface property where the pad is to be located is either Extraction (Bates 000025) or Broomfield (Bates 000146 and 000247), who agreed to allow Extraction to construct the well pads at those locations.

18. Furthermore, the Commission finds that Adams County did not present any evidence that the Permit Applications violated a Commission Rule or the Oil and Gas Conservation Act. Nor did Adams County present any evidence that the total impact to public heath, safety and welfare would be substantially less at any of the proposed alternative locations.

19. The Commission recognizes that Adams County prefers alternative locations for the oil and gas development proposed in the Permit Applications. However, as the Permit Applications meet all of the Commissions Rule, meet the requirements of the Oil and Gas Act, as Broomfield has agreed to the proposed locations, and as the owner of the surface property where the well pads are to be located agreed to the location of the well pads, the Commission concludes it does not have the authority to require that Extraction propose alternative locations.

ORDER

IT IS HEREBY ORDERED:

1. The Director may proceed with review of the Permit Applications in accordance with the Commission’s standard practices and procedures, and may take whatever action is necessary regarding the Permit Applications.

IT IS FURTHER ORDERED:

1. The provisions contained in the above order shall become effective immediately.

2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

3. Under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.

4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

ENTERED this 28th day of August, 2018, as of August 1, 2018.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By____________________________________

Julie Spence Prine, Secretary

CERTIFICATE OF SERVICE

On August 29, 2018, a true and correct copy of the foregoing was sent by electronic mail to the following:

Jeffrey P. Robbins, Esq.

Goldman, Robbins, Nicholson & Mack, P.C.

PO Box 2270

Durango, CO 81302

robbins@grn-law.com

Attorney for Adams County Board of County Commissioners

Ghislaine G. Torres Bruner, Esq.

Polsinelli PC

1401 Lawrence Street, Suite 2300

Denver, CO 80202

Gbruner@polsinelli.com

Attorney for Extraction Oil & Gas, Inc.

Joseph C. Pierzchala

Welborn Sullivan Meck & Tooley, P.C.

1125 17^th Street, Suite 2200

Denver, CO 80202

JPierzchala@wsmtlaw.com

Attorney for Extraction Oil & Gas, Inc.

James Rouse, Hearing Officer