Erie has reached a tentative agreement with Civitas Resources over the town\u2019s mineral rights within the contested Draco oil and gas project, a deal that could bring the town more than $21 million in combined cash and future revenue, along with land transfers\u00a0and closures of certain wells.<\/p>\n
Details about the agreement came to light during a Tuesday night Town Council meeting, after months of private negotiation between the town and company. Erie officials said they were first contacted in spring 2025 by Civitas Resources \u2014 which earlier this year merged with SM Energy Company \u2014 about acquiring Erie\u2019s mineral rights within the proposed drilling area for Draco.<\/p>\n
That drilling area was approved with conditions<\/a> by the Colorado Energy & Carbon Management Commission in March 2025. But before drilling can begin, the operator must demonstrate it has access to the underground mineral resources included within the approved plan.<\/p>\n Mineral rights allow their owners to access and extract underground resources or lease and sell that access. Erie owns about 180 acres of unleased mineral rights within the roughly 3,900-acre underground drilling area approved for the Draco Pad, according to the town, proposed to sit northwest of the Garfield Road and County Road 7 intersection in unincorporated Weld County.<\/p>\n Under the agreement discussed by the Town Council on Tuesday, in exchange for the mineral rights, Erie would receive three parcels owned by what the town called an SM Energy \u201csubsidiary\u201d totaling about 160 acres on County Line Road, a $4.5 million cash payment and 2% of production revenue for the lifespan of the Draco project. The town estimated that revenue share could exceed $17 million over the next 20 years or more.\n<\/p>\n The\u00a0potential\u00a0agreement includes \u201cadditional safety provisions,\u201d a Tuesday presentation from town staff says. Those include plugging and abandoning 17 wells within or near town limits, beyond the 22 wells the state commission previously ordered closed as part of the Draco plan. Local oversight woven into the agreement would also allow Erie to conduct on-site inspections of the Draco Pad, despite the site being located outside town limits.<\/p>\n Mayor Andrew Moore said during the Tuesday meeting that the town plans to publish the full agreement later in the week, along with a \u201cQ&A\u201d document. A meeting has been scheduled for June 16, when the Town Council could decide whether to approve the agreement through an ordinance after public comment.<\/p>\n Erie\u2019s leverage<\/p>\n The Draco Pad \u2014 approved by the state ECMC in March 2025 despite objections from members of the Erie community \u2014 is proposed to include 26 wells.<\/p>\n Those wells would be drilled from a pad in unincorporated Weld County and extend more than 7,000 feet underground before turning horizontally and running west for more than 4 miles, beneath portions of Erie and\u00a0unincorporated Boulder County.<\/p>\n \u201cMost of Erie\u2019s neighborhoods have been drilled and fracked under, either before they were built or, in many cases, after, so this isn\u2019t a terribly unusual process,\u201d David Frank, Erie\u2019s environmental services director, said on Tuesday, while displaying a map crowded with earlier drilling lines in the area.<\/p>\n Frank said the package negotiated with Civitas reflects the leverage Erie gained under a recent change in state law.<\/p>\n Under Senate Bill 24-185<\/a>, local government-owned mineral rights cannot be force pooled. Forced pooling allows operators, with state approval, to combine mineral interests within a drilling area even when some owners object.<\/p>\n \u201cThe leverage is with the oil and gas producer in normal circumstances,\u201d Frank said. \u201cIn this circumstance, the leverage instead shifts to the local government. Because if our terms are not reached, if negotiations are unsuccessful, then our minerals cannot be forcibly pooled and therefore must be avoided.\u201d<\/p>\n Civitas \u201cinitially\u201d offered Erie only one parcel of land, totaling about 31 acres and appraised at roughly $2.85 million, in exchange for mineral rights, according to town staff.<\/p>\n A valuation of the town\u2019s mineral rights reviewed by the council in executive session last year was considered \u201cextremely conservative,\u201d Frank said, because it did not fully account for the leverage created by the new law.<\/p>\n He described the agreement on the table now as the strongest offer that could be secured from Civitas.<\/p>\n \u201cThis will never see value this high ever again,\u201d Frank said. \u201cWe are moments from imminent production. There\u2019s a permit to produce these minerals.\u201d<\/p>\n The potential agreement\u2019s requirement that 17 additional wells be plugged and abandoned also provides benefits that likely would not have occurred as quickly without the deal, Frank added.<\/p>\n \u201cThey will eventually be plugged and abandoned, as will every well in the state of Colorado,\u201d he said. \u201cBut the timeline of when that would occur without this agreement is very uncertain. Certainly, a longer timeline than with this agreement.\u201d<\/p>\n If Erie doesn\u2019t sell<\/p>\n