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A change of vision for Banning Lewis Ranch

When Pinky Lewis started selling pieces of land that made up the 38,000-acre ranch he and his wife, Ruth Banning, built throughout their marriage; many people predicted the Banning Lewis Ranch would absorb much of the growth in Colorado Springs.With space for 75,000 houses and 79 million-square-feet of commercial development, the BLR was an obvious target for the city’s eastward expansion, especially when the city annexed the ranch in 1988 at the behest of real estate developer, Frank Aries.All that changed this summer when the U.S. Bankruptcy Court in Delaware split the ranch into two pieces and auctioned them off. According to court documents, the split plan provided the “best opportunity for the maximum recoveries” for creditors.KeyBank National Association bid on 2,400 acres on the ranch’s north end that includes 550 single-family home sites and about 300 homes already built. The company’s winning bid was $24.5 million.Ultra Resources, a subsidiary of Ultra Petroleum Corp., an oil and gas exploration and development company based in Houston, purchased 18,000 undeveloped acres with a winning bid of $26.25 million.Ultra has other interests in the county, and south to Pueblo.According to the El Paso County Clerk and Recorder, Pine Ridge Oil & Gas LLC assigned about 80 of its El Paso County oil and gas leases to Ultra Resources July 20. Most of the assigned leases are on private property; a few on state land; and one on federal land.In general, the leases are south of Highway 94 and east of Ellicott Highway. Some are near Hanover.On July 12, Pine Ridge also assigned a lease in Pueblo County to Ultra Resources, according to the Pueblo County Web site.During Ultra Petroleum’s Aug. 10 earnings conference call, Ultra’s chief executive officer, Mike Watford, said the company has leased 100,000 acres in the Denver Basin – an area that extends from Weld County in northern Colorado to Crowley County in the south. Watford did not specify the exact location.”We’re still adding to our acreage position and it’s pretty competitive out there right now,” Watford said. “That’s about as specific as we can get at this point.”Ultra is targeting the same Niobrara formation that has drawn oil and gas companies to Weld County in northern Colorado and Laramie County in southern Wyoming in the past few years.Doug Selvius, Ultra Petroleum’s director of exploration, said the leases were acquired at costs much lower than leases in Weld and Laramie counties.The company’s decision to explore the Niobrara in Colorado is based on several types of mapping, a 30-foot core sample taken from the center of its leasehold and 21 square miles of 3D seismic, gravity and aeromagnetic data, Selvius said.”Everything we’ve seen so far indicates our leasehold is every bit as prospective as Weld and Laramie counties,” Selvius said. “From the standpoint of porosity, oil saturation, lithology and brittleness; our rock looks every bit as good, if not better, than … those areas.”According to its Web site, Ultra Petroleum operates natural gas fields in Wyoming’s Green River Basin and has entered into a joint venture to develop natural gas in five counties in north central Pennsylvania.But in El Paso County’s Niobrara formation, Ultra Petroleum is looking for oil.The company’s Colorado acreage could be capable of producing more than 100 million barrels of oil, Selvius said.”We plan to test the resource with horizontal wells early next year,” he said.Watford said the company is in a great position in terms of water for fracking, a process in which the rock is fractured by the pumping of water, sand and chemicals into the well at high pressure, causing the release of oil and gas molecules.”Water is not going to be an issue,” Watford said.Ultra Petroleum will have to negotiate water rights with the surface owners of its leased land, but by purchasing the BLR property, the company could get rights to the water underlying that property.However, on July 29, the Gazette reported that the annexation agreement between the BLR and Colorado Springs gives ownership of the water under the BLR acreage to Colorado Springs Utilities.Ultra has asked the bankruptcy court to set aside the annexation agreement, as well as the master plan and other land-use controls put in place when Colorado Springs annexed the ranch.According to an Aug. 2 Gazette article, “The city accused Ultra of trying to evade its responsibility to fund millions of dollars worth of roads, utilities and other public improvements on the land, and has said uncertainty over the annexation agreement could complicate the city’s acquisition of easements for its Southern Delivery System.”If the bankruptcy court releases Ultra from the annexation agreement, the company, like any user, will be limited in its use of the Denver Basin water underlying its 18,000 acres.At the Oil and Gas Summit in Falcon in August, Kevin Rein, assistant state engineer, said all users of Denver Basin water are limited to pumping 1 percent of the water to which they have rights per year.The Niobrara formation itself could be a source of water.Rein said the Niobrara is a deep source of brackish water and not nearly as good as the drinking water produced by the shallower Denver Basin aquifers.On Aug. 1, Ultra Resources representatives, including Watford, were in Colorado Springs to discuss a settlement with city representatives, but no settlement was announced at that time.On Aug. 24, the bankruptcy court judge announced approval of the sale of 2,400 acres on the ranch’s north side to KeyBank.Editor’s note: In a call to Larry Larson, city planner, he said he could not talk to the press because city attorney Patricia Kelly wanted all media calls directed to her. Kelly did not return NFH phone calls.

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