Oil & Gas in your Neighborhood
The Town of Frederick supports the energy industry in conducting responsible operations that adhere to ethical practices and operational standards. We maintain that their responsibility extends beyond mere resource extraction; it carries the obligation of proper remediation from its operations, including plugging and abandoning wells properly and prioritizing the health, safety welfare of the people who live and work in the community.
According to Colorado’s financial assurance rules, adopted last year, there are three layers of protection to address the risk of operators walking away from their obligations to plug and abandon wells.
- Option levels. The new rules require increased financial assurance obligations for those operators that represent the greatest threat to the state. Operators are required to carry increased financial assurance as their average daily production decreases.
- Single well financial assurance for low producing wells. The new rules also require increased financial assurance for “low producing wells.” Low producing wells (uneconomic) wells are those wells that are most likely to be orphaned if an operator files for bankruptcy.
- $100,000 for each location (reclamation) and $10,000 - $40,000 per well (plugging costs)
- Orphan Well Fund. Recognizing that the state is not going to get to zero risk, the Commission has also created an enhanced $20 million / year “orphan well fund” that will be capable of plugging and abandoning up to 200 wells per year.
KP Kauffman (KPK), an independent oil and gas production and well service company, owns 107 of the wells in the Town of Frederick, 95 of which are considered “low producing” or uneconomic. KPK’s current proposed financial assurance plan to clean up and remediate (plug and abandon) these wells is gravely deficient.
To uphold the well-being of our community’s public health, safety and welfare and prevent undue financial strain to taxpayers, the Board of Trustees as well as State Representative Jennifer Parenti, are advocating for the State of Colorado and the Colorado Energy and Carbon Management Commission (ECMC) to reject KPK’s proposed financial assurance plan and mandate a plan that provides more security and protection for the welfare of our community.
On Oct. 26, 2023 the ECMC unanimously voted against KPK's plan for financing the environmental cleanup of its wells. KPK originally proposed $10.3 million to ensure the proper closure of its wells. ECMC members voted to require KPK to provide roughly $133 million over the next 10 years to meet its obligations to plug and reclaim these wells.
Mayor Crites, expressed her appreciation to the ECMC for their findings and support in holding KPK accountable. The hope is this decision will lead to operators committing to stronger financial assurance planning and fewer orphaned wells throughout the State of Colorado.
Frederick is located in the Denver-Julesburg Basin, a subsurface, a geologic formation containing significant deposits of oil, natural gas, and other minerals. As a result, more than 500 wells exist within Frederick's municipal boundaries.
Town staff is in close contact with local operators and the State of Colorado Energy and Carbon Management Commission (ECMC), the agency that regulates oil and gas in Colorado. The ECMC has a "local government designee" program through which it communicates with municipalities.
Town staff, the oil and gas industry, and the ECMC cooperated to develop a list of Frequently Asked Questions (FAQs).
For information on existing wells and wells that are being drilled, please refer to the environmental constraints map on the Town's website.
Always keep in mind that these sites are industrial in nature, contain combustible materials and other chemicals, and may be dangerous, so please refrain from entering a well site. Please call 911 in the event of a fire, explosion or similar emergencies.
For non-emergency concerns related to potential hazards, gas leaks or chemical spills, please contact the Frederick-Firestone Fire Protection District, ECMC, well operator and/or local government designee. Well sites should be clearly marked with the name and telephone number of the operating company.
Report any activities you observe including trespassing and vandalism to the Frederick Police Department, Oil, and Gas Conservation Commission, or the well operator.
If you have concerns related to the location, construction or operation of an oil and/or gas well, contact the well operator, local government designee, or the ECMC representative.
- Energy and Carbon Management Commission Phone: 303-894-2100 Fax: 303-894-2109 Complaint: 888-235-1101
- Town of Frederick Police Department Non-Emergency Number: 720-652-4222
- Frederick-Firestone Fire Protection District Non-Emergency Number: 303-833-2742
- Utility Locate: Colorado 811 or 1-800-922-1987
- In an Emergency always call "911"
- Well sites should be clearly marked with the name and telephone number of the operating company.