Oil in Routt County

Interest in oil rising
Texas company pays $30.5 million for mineral rights west of Steamboat
By Tom Ross (Contact) - Steamboat Pilot & Today Reporter
Monday, June 23, 2008

Steamboat Springs — Driving from Steamboat Springs west to Yampa Valley Regional Airport, it’s difficult to envision the giant lake of oil beneath the surface of U.S. Highway 40 and the winding Yampa River.

But the oil is down there, and there are increasing signs that the escalating price of crude is sparking fresh interest in getting at Routt County’s natural supply.

Less than two weeks ago, a San Antonio-based limited liability company, NRC-CO 1, created by another LLC in San Antonio, Texas, paid $30.5 million for subsurface mineral rights beneath 12 parcels of land. The parcels are in the vicinity of Milner and the abandoned coal mining town of Mount Harris. Timothy Hasler, a Fort Collins attorney who is the registered agent with the Colorado Secretary of State for NRC-CO 1, declined to characterize his clients’ interest in the Routt County mineral rights. The San Antonio entity that created NRC-CO 1 is called NRC Group, LLC.

There is a large Russian holding company also called NRC Group that has interests in oil exploration as well as banking, hotel development and commercial aviation. Hasler said he is unaware of any connection between the company he represents in Texas and the Russian company.

Routt County Assessor Mike Kerrigan says he sees the evidence of increased interest in energy exploration every day in his office at the Routt County Courthouse.

“For the last month and a half, we’ve had at least two land men in our office daily,” Kerrigan said. “Sometimes, there are five or six. We aren’t equipped to handle them, and they take turns,” using computers to research the status of mineral leases in the valley west of Steamboat.

Land men, in industry parlance, are agents who seek to tie up oil and mineral leases and then market them to oil exploration companies.

“These people are looking for oil,” Kerrigan said.

A Web page maintained by the Colorado Oil and Gas Commission confirms that a well on Wolf Mountain Ranch in North Routt consistently has produced between 5,000 and 7,000 barrels of oil a month since May 2005. That well recently changed hands from Infinity Oil to Forest Oil.

Andy Lydyard told the Steamboat Pilot & Today in the summer of 2007 that there could be nearly 200 million barrels of oil — enough to meet U.S. demands for about 10 days — underground between Steamboat and Hayden. It’s contained in a geologic feature known as the Tow Creek Anticline.

“It’s a very large anticline cut through the middle by the Yampa River,” he said at the time. “When you drive from Steamboat Springs to Hayden, you go right through the middle of an oil field.”

Lydyard is the managing director of an Australian exploration company, Comet Ridge Limited.

Comet Ridge currently is reopening old oil wells that were capped in the 1940s and using modern technology to get at oil that wasn’t accessible 60 years ago.

Routt County Commissioner Diane Mitsch Bush said Comet Ridge is an example of a responsible energy exploration company.

“They’ve been very good to work with,” she said. However, learning from the experience of neighboring Rio Blanco County, she and her fellow commissioners have been tightening county regulations. The commissioners are preparing for the day when the number of energy exploration companies working here could boom as it has in nearby counties.

“Several years ago, we saw an increase from almost no drilling permit applications to several,” Mitsch Bush said. “We were already acutely aware of the boom in Garfield and Mesa counties for oil, natural gas and coal bed methane,” she said.

Routt County has tightened up its energy exploration regulations particularly when it comes to protecting water quality, she added.

One of the lessons Routt County has learned from Rio Blanco County is that coal companies are relatively easy to deal with because they are large and there are only one or two of them in a county. When it comes to oil, gas and coal bed methane, Mitsch Bush said, local governments can find themselves dealing with dozens of companies.

Routt County Planner Chris Brookshire said her office has not seen a rush of oil exploration companies applying for permits this year.

“We saw some seismic (testing) and oil drilling in the 1980s, but then it dropped dead for years,” Brookshire said. “Lately, it’s been slowly gaining speed heading up from Garfield” county.

— To reach Tom Ross, call 871-4205 or e-mail tross@steamboatpilot.com



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