Ultra Resources Inc., the Houston-based company that bought 18,000 acres of the Banning Lewis Ranch in October, filed permits with the state last week to drill two wells on the sprawling property, despite a six-month drilling moratorium enacted by the city.

It’s the first step Ultra has taken to drill within city limits. The company already plans to conduct exploratory drilling for gas and oil on three to four sites in unincorporated areas of El Paso County early next year.

Ultra filed its applications with the Colorado Oil and Gas Conservation Commission on Dec. 15, but several processes must play out before they can be approved. There’s a 10-day completeness review, followed by a 20-day comment period, according to Margaret Ash, manager of the commission’s field inspection group, who was in Colorado Springs Wednesday night for a public meeting to explain the state’s oil and gas regulatory procedures. About 20 people attended the meeting.

The commission has up to 75 days to issue or deny the Banning-Lewis drilling requests. If the state OK’s the permit, it’s unclear how the moratorium would affect Ultra’s ability to begin operations before it expires at the end of May.

“Our position is, the moratorium stands,” said Steve Cox, Mayor Steve Bach’s chief of staff. “Other than that, we just have to see how it plays out.”

But Howard Boigon, a Denver attorney hired by the city of Colorado Springs to provide guidance through the oil and gas drilling regulation process, was less certain about the moratorium’s role.

“I don’t think we know yet,” he said. “We’re in the early stages of dealing with all this, so we have to work through that.”

From documents filed with the commission, one of Ultra’s proposed wells appears to be just southwest of Colorado Highway 94 and Meridian Road. The other is just northwest of U.S. 24 and Meridian.

Cox said city officials were unaware of Ultra’s application for two drilling permits until they heard from City Councilman Val Snider, who learned about it when he was at a meeting in Denver. Snider is chairman of a city task force on drilling.

“We haven’t talked to them at all,” Cox said.

City and county officials are working on their own set of drilling regulations for an industry that has had little presence in the area until recently. El Paso County commissioners will hold a work session at 2 p.m. Dec. 29 at the Pikes Peak Regional Development Center, 2880 International Circle, to discuss a draft copy of regulations for areas in their jurisdiction, then follow up with a public hearing at 9 a.m. Jan. 4 at the same location.

The county has given tentative approval to Ultra to do exploratory drilling on three sites, but it’s waiting for some minor revisions to the company’s plans before giving final approval, said Craig Dossey, county project manager/planner.

Ultra also has approval to start exploratory drilling on a fourth site in an unincorporated part of the county that it took over from Pine Ridge Oil & Gas over the summer. Dossey said Ultra received a renewal of the Pine Ridge permit on Nov. 8, and because the site is ready to be drilled they can start at any time. However, an Ultra spokeswoman said Wednesday that operations have not started.

Ultra paid $20 million to buy most of the Banning Lewis Ranch east of Powers Boulevard. City officials have said that the property will have to be rezoned and the annexation plan amended, but Ultra is challenging that stance in U.S. Bankruptcy Court in Denver. The city has until Friday to respond to Ultra’s contention that land-use controls should not apply to the property.

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Gazette reporter Rich Laden contributed to this report.

An Ultra Petroleum drill rig in Pennsylvania. The company has applied to drill in Banning-Lewis Ranch. Photo by Ultra Petroleum