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HomeMy WebLinkAboutTB Study Session 2012-05-08 Town of Estes Park, Larimer County, Colorado, May 8, 2012 Minutes of a Regular meeting of the TOWN BOARD STUDY SESSION of the Town of Estes Park, Larimer County, Colorado. Meeting held at Town Hall in Rooms 201/202/203 in said Town of Estes Park on the 8th day of May, 2012. Board: Mayor Pinkham, Mayor Pro Tem Blackhurst, Trustees Elrod, Ericson, Koenig, Norris, and Phipps Attending: Mayor Pinkham, Mayor Pro Tem Blackhurst, Trustees Elrod, Ericson, Koenig, Norris, and Phipps Also Attending: Interim Town Administrator Richardson, Town Attorney White, Supt. Fraundorf, Dir. Bergsten, Finance Officer McFarland, and Deputy Town Clerk Deats Absent: None Mayor Pinkham called the meeting to order at 4:30 p.m., and welcomed Trustees Norris and Phipps, representatives from Platte River Power Authority, and Central Colorado Water Conservancy District. FIBER OPTIC INFRASTRUCTURE. In 1998, Platte River Power Authority (PRPA) and the Town of Estes Park installed a ring of fiber optic cable around the Town and down Highway 34 to the PRPA offices. Western Area Power Administration (WAPA) transmission towers carry the fiber optic cable down Highway 34 and WAPA has assumed the ongoing maintenance of the fiber. In addition to construction of the ring, several laterals have been installed off of the ring to service various areas in the Town of Estes Park. The cable itself is made up of six tubes, each containing 12 strands of fiber for a total of 72 strands of usable fiber. Currently, PRPA utilizes strands for communications to substations and the Town of Estes Park uses fiber strands for communications between Town-owned properties and treatment plants. Additional strands are allotted for use by WAPA, Level 3 and Front Range Internet, Inc. 36 strands of fiber remain unallocated at this time and the lit fibers that are in use are not being used to capacity. Brian Moeck stated that at the time the fiber optic cable rings were installed in PRPA member municipalities, each municipality was offered the option to keep the excess surplus and manage and maintain the excess fiber. Longmont, which is the only PRPA municipality that has a communications utility, opted to retain the surplus capacity, with all other excess remaining under the ownership of PRPA. He said that each municipality is independent in management of the excess fiber and that revenue generated from an economic development opportunity within a municipality’s geographical area is returned to that municipality by PRPA. Recently, several local companies have expressed an interest in leasing available strands of fiber from PRPA and the Town for business development in Estes Park. It would be the responsibility of the interested company to develop a business case to present to the Town for access to the fiber. If the Town received an acceptable business case from an interested company, as owner and manager of the surplus capacity, PRPA would negotiate a lease between PRPA, the Town of Estes Park and the business entity, and work with the business to build a lateral in order to receive service. The Trustees concurred that the excess fiber capacity is a valuable asset to the Town and may be a consideration in regard to economic development opportunities and negotiating incentives. PRPA WATER LEASE TO OIL AND GAS INDUSTRY. Town Board Study Session – May 8, 2012 – Page 2 Platte River Power Authority has been approached by the oil and gas industry with a request to supply water for hydraulic fracturing (fracking) operations. Leasing water to the oil and gas industry represents an economic opportunity for Platte River Power Authority to bring in revenues to offset rate increases to the wholesale power rate. The PRPA Board will be asked to deliver a decision on the lease at their upcoming board meeting. In hydraulic fracturing operations water, sand, and chemicals are injected at high pressure into wells causing the rock layer to fracture. Fissures are created and sand particles lodge in the fissures to hole them open allowing natural gas to flow up the well. This fracturing process in combination with horizontal drilling has provided a viable means to develop the Niobrara Formation shale oil resources. Hydraulic fracturing has been occurring in Colorado since 1947 and, although the Energy Act of 2005 gave exemptions to the oil and gas industry, the State of Colorado has developed the most comprehensive oil and gas regulations in the nation. Randy Ray of the Central Colorado Water Conservancy District, and Bill Emslie of Platte River Power Authority were in attendance at the meeting to provide background to the Board. PRPA has an average of approximately 1600 acre-feet of reusable effluent per year that in the past has been used for augmentation and agricultural purposes. The effluent represents a long-term, reliable source of Windy Gap second use water. Supplying this water to the oil and gas industry is a promising prospect for PRPA and the Central Colorado Water Conservancy District (CCWCD). In addition to revenue generated for PRPA which could amount to $500,000 annually, CCWCD will generate revenue by leasing water storage facilities. The capital realized from the lease will then be used to construct water storage facilities to increase storage capacity within the CCWCD system. In regard to the amount of water used in the process, Mr. Ray said representatives of Hydro Advisors, which is the company seeking the water lease, estimate that 30% of the water injected into a well is lost with the remaining water returning to the surface after the well pressure has been released. With treatment the remaining water can be cleaned up, recycled and reused. He said that the amount of water used for fracking is less of a concern than the amount of truck traffic generated by the process, as trucks deliver and haul water to and from well sites. The Trustees discussed the following: Hydro Advisor, LLC is a water broker, not an oil and gas developer; ensure that the entities water is leased to are responsible; ensure that the water is not used outside of the district; what measures are taken to avoid contamination of shallow aquifers; what types of chemicals are used in the fracking process; how is the water that resurfaces from the well cleaned up; how is the water that cannot be cleaned up disposed of; and the Town would have no liability related to the PRPA water lease. Trustee Norris expressed concern with the variety and amount of chemicals used in the hydraulic fracturing process and whether adequate monitoring is done to ensure the chemicals are not causing contamination. Mayor Pro Tem Blackhurst said this is an economic question related to whether a lease to the oil and gas industry is a good use of water and said monitoring of the oil and gas industry should be left to the state regulators. Trustee Koenig said there is also a moral and ethical question related to endorsing participation in an activity that may be detrimental to the environment. The topic will be brought to the May 22, 2012, Town Board meeting to allow for public comment. At that time the Board will decide whether to support PRPA in entering into the water lease. There being no further business, Mayor Pinkham adjourned the meeting at 6:28 p.m. Cynthia Deats, Deputy Town Clerk