Boulder County to appeal rulings in lawsuit against Crestone Peak Resources over oil and gas leases

The court’s interpretation of mineral leases in the case is important not just for Boulder County, but for leaseholders across the state

On Sept. 23, 2019, the Boulder District Court issued the last of its orders in Board of County Commissioners of Boulder County v. Crestone Peak Resources Operating, LLC (filed by Boulder County in September 2018).

In 2017, Crestone 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.

Of the 34 total claims filed by the county, the court dismissed 20 without prejudice (meaning they can be refiled at a later date); the county withdrew nine claims related to six leases, due to information revealed during the discovery period; and, the court ruled in Crestone’s favor on five claims related to two oil and gas leases, based on its interpretation of particular language in the leases.

In addition, the court ordered that the county pay Crestone’s attorneys’ fees related to some of the claims the county withdrew. (The court set a hearing for Jan. 16, 2020 to take evidence on the amount of Crestone’s fees the county would be responsible for.)

The county disagrees with the court’s rulings on the leases and intends to appeal.

“The court’s interpretation of mineral leases in the case is important not just for Boulder County, but for mineral leaseholders across the state,” said Boulder County Commissioner Deb Gardner. “We feel it is imperative to continue to press the industry on its assumptions that it can drill on other people’s property without carefully examining its right to do so.”

“Also, by awarding Crestone attorneys’ fees, the court essentially said that oil and gas operators do not have to prove they have the right to drill on someone else’s property,” added Commissioner Gardner. “Instead, landowners like Boulder County have to prove that operators don’t have the right to drill and may even have to pay the operator’s attorney fees on top of that.”

“We knew going in that this was going to be a tough fight,” said County Commissioner Elise Jones. “With so much at stake for the residents of Boulder County, we are fully prepared to appeal this decision and continue to protect the county’s legal rights and preserve the lands that belong to the county under our open space agreements.”

Crestone’s state application to drill 140 wells in unincorporated Boulder County is on hold at the Colorado Oil and Gas Conservation Commission. Additionally, Crestone has not submitted an application to drill in Boulder County, and, under the county’s current moratorium (in effect through March 28, 2020 while the county updates its oil and gas regulations), the county is not accepting new applications to drill.

While these recent court setbacks are unfortunate, they are just the beginning of a long process to defend the county’s rights to safeguard our open space and they represent only part of the county’s multi-pronged efforts to protect our public health, safety, and the environment. We are in this fight for the long run and will continue to press forward on behalf of our residents to fully protect our public interests. - Elise Jones, Chair, Board of County Commissioners of Boulder County

Boulder County continues fight to protect agricultural lands and mineral rights in 8 North LLC case

Large well pad proposed in Weld County violates a Boulder County conservation easement and will access county-owned minerals in Boulder County

On Aug. 29, 2019, a Boulder District Court judge ruled in favor of 8 North, LLC, and its parent company Extraction Oil & Gas, in a lawsuit filed by Boulder County in September 2018.

In the lawsuit, the county alleges that 8 North breached several oil and gas leases when it sought and obtained Colorado Oil and Gas Conservation Commission approval of a 2,720-acre drilling unit in Weld County immediately south of Longmont and east of Boulder County along County Line Road.

Boulder County alleges that the leases prohibit the exceedingly large unit that 8 North initiated. The county also alleges that 8 North’s proposed 32-well pad site will violate the protections in the conservation easement that the county owns over the site in Weld County.

8 North and Boulder County submitted competing motions to the court, arguing that they each were entitled to a ruling in their favor based on the legal interpretation of the leases and conservation easement. The court issued an order agreeing with 8 North that establishing the drilling and spacing unit does not breach the leases and that the proposed well pad does not violate the conservation easement.

Boulder County intends to appeal this ruling.