Lawmakers ready for review of Colorado energy rules
December 16, 2008
DENVER ” Legislators challenging Colorado’s new oil and gas regulations will face push-back from others who argue the safeguards for public health and the environment are long overdue.
Approval last week of dozens of new rules ranging from waste pits to well locations to protection of wildlife prompted warnings that burdensome regulations could drive away oil and gas companies struggling with the economic downturn.
Rep. Steve King, R-Grand Junction, wrote in a letter Monday to Gov. Bill Ritter that it looks like the new rules “will make an already deteriorating economic environment in Colorado’s natural gas industry drastically worse.”
Lawmakers and companies claiming the rules will drive up costs must be specific rather than speak in generalities, said Rep. Kathleen Curry, D-Gunnison.
Curry, a sponsor of one of the bills mandating the overhaul of the rules, said she will be the lead person in the House on review of the results.
“I think it’s going to be a fight,” King said of the legislative review.
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Companies are cutting back drilling in western Colorado, one of the hot spots in the state’s natural gas boom, and people face losing their jobs and possibly their homes, King said in an interview Monday with The Associated Press.
“I just don’t think the way these rules are coming out right now serves the citizens of Colorado,” King added.
He said he voted for the two bills directing regulators to update the oil and gas rules, but believes the changes exceed what the Legislature intended.
The laws passed last year require consideration of public health, the environment and wildlife when approving energy development. The Colorado Oil and Gas Conservation Commission, the main regulatory body, worked about 18 months on the proposals, held public hearings and dozens of work sessions attended by industry and government officials, landowners and conservationists.
If approved by the Legislature, the rules will take effect April 1 on state and private land and May 1 on federal land.
“I think the commission engaged in a fair and comprehensive process that tried to come up with rules that reflected the intent of the Legislature,” Curry said.
Colorado has experienced widespread drilling the past few years. The state expects to issue about 7,800 permits by year’s end, up from 6,368 permits last year and just 1,529 in 2000.
But several energy companies have announced plans to scale back drilling and capital spending next year because of the credit crunch and low natural gas prices.
Natural gas prices, above $13 per 1,000 cubic feet during the summer, have dropped to below $6 per 1,000 cubic feet. The price is even lower for gas drilled in the Rockies because of transportation costs and a shortage of pipelines.
Companies and trade groups have also blamed uncertainty created by the rewrite of the rules for making the industry wary of increasing investment in Colorado.
“I think people claiming that the rules will diminish the industry’s enthusiasm for development should be taking into account that the commodity prices, over which we have no control, have hit rock bottom,” Curry said.
The explosive growth in drilling in Colorado has affected landowners and wildlife in parts of the state, including her House district, Curry said.
“I’m hearing from constituents that they support stronger rules,” Curry said.
Duke Cox, a western Colorado homebuilder, said he has been working with community and environmental groups for about five years to strengthen rules to protect air and water quality and wildlife habitat and lessen the impacts of the energy boom on cities and towns. He said activists are disappointed that some of the rules aren’t stronger, but understand compromises were necessary.
Regulators deferred action on reclamation standards and required minimum distances between wells and houses to give task forces time to craft agreements.
“This was a grass-roots effort on the part of hundreds, thousands of people ” sportsmen, interest groups,” Cox said.
He defended the work of Dave Neslin, the oil and gas commission’s acting director.
In his letter to the governor, Rep. King accused Neslin of “flippant comments” about fallout for the oil and gas industry because of the recession. Neslin has said after record drilling, he expects more moderate oil and gas development next year.
“(Neslin) is one of the hardest-working public servants in Colorado,” Cox said. “I’ve never gotten the impression in the many, many meetings I’ve had with him that he was anything less than objective.”