Colorado appeals court upholds Crestone's right to drill in eastern Boulder County
May 14—Boulder County's fight to stop a major oil and gas drilling proposal in the eastern part of the county was put on hold Thursday when the Colorado Court of Appeals upheld a district court decision that allows Crestone Peak Resources to continue its fracking plans.
According to the court's opinion, released Thursday morning, the county's appeal centers on one question: What constitutes "production" under an oil and gas lease?
"We hold that production means capable of producing oil or gas in commercial quantities," the opinion reads. "Thus, the district court correctly concluded that Crestone's wells never stopped producing and, consequently, the leases never lapsed."
In 2018, Boulder County sued Crestone, alleging that wells subject to two of Crestone's oil and gas leases had stopped producing, effectively terminating Crestone's leases. However, the district court disagreed and granted a summary judgment to Crestone. The appeals court on Thursday agreed with that decision.
"There was a disagreement over whether we still had the right to develop the leases because there was a lapse in production due to a mechanical issue on the surface of the pipeline," Crestone spokesperson Jason Oates said Thursday.
The case centers on two leases — called Henderson and Haley — that were negotiated in the 1980s.
Earlier reporting by the Camera said the county's lawsuit against Denver-based Crestone Peak Resources alleged four of the mineral rights leases — which the company was using to establish its right to drill 140 wells on three drilling pads along Colo. 52 north of Erie — had expired or been violated. The lawsuit was filed shortly before the Colorado Oil and Gas Conservation Commission was expected to approve the company's comprehensive drilling plan.
Although the district court upheld Crestone's right to drill, Boulder County in 2019 opted to appeal the decision.
A news release from Boulder County at the time announced its intent to appeal in September 2019 notes that Crestone in 2017 proposed a large-scale industrial oil and gas drilling operation in eastern unincorporated Boulder County on county open space lands and conservation easements.
"In examining the mineral rights affected by that project, the county discovered and argued in its lawsuit that several oil and gas leases had expired and that the county conservation easements on certain properties prohibited the massive well pads proposed by Crestone," the release states.
Boulder County has long been concerned about the potentially hazardous impacts of oil and gas development. The county in late 2020 approved a comprehensive set of updates to its well-permitting rules, requirements, restrictions and conditions that have been in place since March 2017. While the county was updating those regulations, a moratorium on accepting and processing new oil and gas development and seismic testing was in place.
The County Attorney's Office acknowledged that it had read the May 13 opinion released by the Colorado Court of Appeals but did not provide comment other than that.
"Our office will confer with the Board of County Commissioners soon to determine our next steps," Assistant County Attorney Kate Burke wrote in an email.
From Crestone's perspective, the court's decision "confirmed what we had thought all along," Oates said.
"But to the larger extent, it's good to have verification from the Colorado courts on some of the rights that we operate under as oil and gas companies in this state," he said.
Oates said the decision upholds the company's belief that it was "sound in our judgment in pursuing our rights to develop the mineral acres in Boulder."
"We will continue to work in that direction in the future," he said.
