Subdivisions targeted for drilling
Calpine Natural Gas Co. is seeking state approval to drill 16 gas wells in three Dry Hollow subdivisions, according to Garfield County Planner Mark Bean.At present, one well is allowed on the 640-acre area, which includes the Sierra Vista, Sierra Pion and Sierra Bluff subdivisions.The land was formerly owned by Barton Porter, but surface ownership is now held by 27 owners.The Garfield County commissioners must decide Monday whether to ask state officials to hold a local public forum on the density request.”We’ve got no authority to stop it,” said Commissioner Walt Stowe of the well density increase.”Right. But we can influence how the spacing is allowed,” Bean said.Through the forum process, the county could call for several wells to be grouped on one well pad, using the directional drilling technique.Calpine has used directional drilling elsewhere in the Mamm Creek gas field, said Tricia Beaver, spokeswoman for the Colorado Oil and Gas Conservation Commission. Commissioner Larry McCown said he would not favor holding a forum if Calpine plans to use directional drilling, which would reduce the well pads from 16 to four.”If they take it down to four pad sites, that’s a critical difference,” McCown said.But Calpine has not indicated that it plans to use the technique, Beaver said.Calpine is currently slated to present its well density application to the Oil and Gas Commission on April 22, she said.But that hearing will be delayed until June if Garfield County calls for a local public forum, which would be held in late April or May.Beaver said she doubted that Calpine would object to the delay. The company applied for the density increase months ago and repeatedly continued the matter. “They’re not in a big hurry,” she said.The density request applies to lands in Township 6 South, Range 92 West, Section 22.The mineral rights for the land have been severed from the surface, with 400 acres of mineral rights held by the federal government and 240 acres of minerals held by private owners.Meanwhile, stock market shares of Calpine Corp. the parent company of Calpine Natural Gas, were sharply lower Tuesday after Standard & Poor downgraded its credit rating the day earlier, according to the Dow Jones News Service.Calpine shares fell $1.50, or nearly 11 percent, to close at $12.18 on heavy volume on the New York Stock Exchange. They had slipped as low as $11.90 earlier.Late Monday, ratings agency S&P lowered the San Jose, Calif.-based Calpine’s corporate debt one notch to double-B from double-B-plus and brought down unsecured bonds three notches to B-plus from double-B-plus. Even before the downgrades, Calpine’s debt was considered junk, or below investment-grade.The credit-rating downgrade follows Calpine’s decision to raise about $2 billion of debt by pledging some of its assets as collateral. S&P said the magnitude of the secured debt will likely make it difficult for Calpine to obtain unsecured financing in the near future.The development isn’t likely to have any “noticeable near-term impact” on Calpine, which isn’t likely to attempt to tap the debt markets in the coming months, said Merrill Lynch & Co. analyst Elizabeth Parrella. But next year may be a different story, according to Parrella.
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