Colorado town council reaches tentative deal on mineral rights for proposed oil well project

One of the longest oil well projects ever proposed in Colorado moved a step closer to reality Tuesday night as the Town of Erie reached a tentative agreement with SM Energy to sell its remaining mineral rights connected to the proposed Draco oil and gas development.

The state approved the Draco project's 26 wells in Weld County last year. The wells would extend roughly five miles underground, stretching beneath parts of Erie. Before drilling can begin, however, the town must decide whether to sell the remaining 3% of mineral rights it still owns beneath portions of the community near the project.

The issue drew a packed room at Tuesday's meeting at the town council, where residents met in front to share concerns about property values, environmental impacts, and health risks.

Heather Sabo, who has lived in Erie for 17 years, said she is considering moving if the town approves the sale.

"It's a project that's drilling right under my home," Sabo said.

She added, "I don't know what that's going to do to the value of my home. I don't know what that's going to do to the environment. I don't know what it is, if it's going to have more negative health outcomes for my kids. I have all sorts of concerns."

Sabo was among several residents who urged town leaders to reconsider moving forward with the agreement.

However, the 2024 law, Senate Bill 19-181, requires state regulators to prioritize public health, safety, and the environment. It gives Erie more authority over its remaining mineral rights, rather than forcing the pooling of the resources.

"We saw that we had significantly more leverage than a typical mineral owner would have," said Erie Environmental Services Director David Frank.

Still, town officials acknowledged the challenge of negotiating with a large energy company.

"If Draco is going to move forward, regardless, what is in the best interest of the residents? Is it to prevent a small portion of that production? Is it to maximize revenue?" Frank said.

According to town officials, the tentative agreement would provide Erie with 158 acres of land, more than $20 million in revenue over the next 10 to 20 years, funding to plug additional abandoned wells, and access for inspections.

Even with those benefits, officials acknowledged concerns about locating oil and gas operations near neighborhoods and commercial areas.

"Any time you have, you know, residential neighborhoods, shopping centers, and oil and gas facilities in close proximity? Yeah, there are concerns. It's ripe for conflict," Frank said.

That conflict played out during Tuesday's council meeting as Erie leaders debated if the town still has an opportunity to challenge the project.

"We have a chance to push back on the expansion because we can't be forced to sell the mineral rights underneath the homes," Sabo said, "If there's a sliver of a chance that we can make Erie better and healthier... I would take that every time."

CBS Colorado reached out to SM Energy, the operator behind the Draco project, for comment, but had not received a response as of Tuesday night.

The Erie Town Council is expected to vote on the proposed mineral rights agreement on June 16.