Follow Judge Orr Road from its inauspicious start on U.S. Highway 24 just north of Falcon until it ends just as inauspiciously almost 30 miles later, and you can't miss El Paso County's only active drilling rig. What rises like a lonely factory looks like a pretty big gamble by Denver-area company NexGen, which has leased the rig and invested nearly $10 million to get to this point.
"It is a big gamble," says Bob Davis, NexGen Oil & Gas' vice president of land, as he stands at the drilling site. "The oil and gas business is a risky business."
Last week, NexGen was in the midst of what Davis guesses will be about three weeks of work drilling vertically, taking samples and ultimately hoping to find oil as deep as 11,000 feet. The well is what industry insiders call a "rank wildcat," meaning little is known for sure about the formations beneath it, and that it's as solitary as it seems on these plains.
Two other companies, Ultra Resources and Hilcorp Energy, drilled failed exploratory wells in the county, but they were looking at about half the depth.
"We're over 20 miles away from the nearest well that has penetrated and seen the target formations that we're drilling to," Davis says.
NexGen has been working for over two years on this, he says, leasing the subsurface mineral rights to more than 20,000 acres that stretch into Elbert and Lincoln counties, and obtaining 20 square miles' worth of 3D seismic data to a depth of more than two miles. It could be weeks or months before the company knows what it has. Depending on the outcome, he says, fracking could be a possibility.
El Paso County granted a permit for the test well, as did the state. Should NexGen find sufficient quantities of commercial-grade oil and wish to drill more, or frack, it would have to get more permits. However, the county would not require a hearing. And Diana May, the county's oil and gas local government designee, says thus far: "I have not had one citizen or public objection — not one."
Davis seems torn about discussing NexGen's plans, in part because of what he says is misinformation about fracking. "With how polarized our society is now, I don't know what angle you're going to present," he says. "There's talk about threats to groundwater from fracking — I know of no example where fracking has contaminated groundwater. Sally Jewell, the secretary of the interior, has come out in favor of fracking. And we need the energy."
Naturally, this high-risk industry also comes with high rewards. Sometimes. The day could come in the not very distant future when this rig is gone and NexGen along with it, leaving the few farmers and ranchers out here once again their uninterrupted views of flatness.
But if NexGen finds oil and confirms that there's enough to keep developing, and if the market is right, it could make handsome profits. And Davis says that for El Paso County, that would mean about $700,000 in tax money, per well, over the life of the well, and that a solid strike could mean several hundred wells. At, say, 200 wells, over a 20-year lifespan each, it could mean about $7 million a year.
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