A little bit of regulation can be a very good thing | AspenTimes.com

A little bit of regulation can be a very good thing

Jim Spehar
Aspen Times Weekly

The gas industry won the battle of the stickers that festooned people’s ball caps, chests and arms. Some 2,000 folks had gathered in Grand Junction to tell the Colorado Oil and Gas Conservation Commission their feelings about proposed new rules for oil and gas drilling in Colorado. It was easy to see that “Please don’t rule us out” outnumbered “Clean air, clean water, common sense,” the sticker handed out by conservationists.

But that was merely a warm-up to the final decisions the commission will make later this summer.

There will certainly be a few changes from the rules as proposed; that’s the whole point of listening to the public. No one disputes that the energy industry is an important piece of Colorado’s economy. The issue is not whether energy development will continue; it’s what sort of balance will protect the rest of our economy in western Colorado and the rest of the state. That other 70 percent includes agriculture, recreation and tourism, and they all are likely to be impacted by energy development if appropriate rules are not enforced.

The threat of job loss and industry retrenchment was frequently repeated at the June 10 hearing. It’s an emotional subject, but emotion doesn’t always track facts. Evidence of that was contained in a news story that quoted e-mails circulating from industry workers falsely claiming that five busloads of Greenpeace demonstrators were headed for the hearing.

Another rumor, later denied by the company, was that Williams’ employees “all will be looking for jobs in three or four months.”

That’s hardly likely. Independent research by Canada’s Fraser Institute, released last December, lists Colorado as the most industry-friendly place in the United States for energy development. In fact, it’s one of the top five spots in the world. The other four are all overseas, most of them Third World countries.

Drilling permits are being issued at a record pace again this year. Yet despite all its big trucks and heavy equipment, for the past several years the industry has drilled only about a third of the more than 6,000 permits it’s received.

Does that sound like a lack of opportunity?

Regulatory updates are not peculiar to Colorado. There have been recent overhauls in Wyoming, Montana and New Mexico, including new rules regarding lining waste pits in New Mexico that surpass those proposed for Colorado.

Other issues need to be addressed in the rule-making. One is well-setbacks from residences. Consider that a 150-foot distance separating your home from a well would be about the equivalent to two residential lots in a subdivision. A 500-foot setback would be about half a block. How close would you want to live to a 24-hour, seven-days-a-week industrial activity during the drilling phase? The regulatory answer here should be either larger setbacks or else letting the concerns of landowners and neighbors be heard in the permitting process.

Bonding requirements, which are not a fee but temporary insurance against long-term damages, are lower in the proposed new oil and gas rules than the impact fees enacted recently by Rio Blanco County. When you consider that an operator of up to 100 multiple wells can bond each of them for about $300, that’s hardly enough to cover cleanup or reclamation.

What about this fear of loss of jobs and an economic downturn caused by the new rules? In one sense, a decline is already occurring. From 2006 to 2007, according to the Colorado Geological Survey, the value of natural gas production in Colorado declined by 24 percent. This was not because of regulation or taxes, but because of depressed prices as production outstripped the ability to get that gas to market.

But that’s changing rapidly. Colorado Oil and Gas Association representative Kathy Hall says that every day, 1.8 billion cubic-feet of natural gas gets shipped to the Midwest via the recently completed Rocky Mountain Express pipeline. That’s just one of several recent multimillion dollar expansions of outgoing pipeline capacity. Feeding that beast will keep the industry active for many years, whatever regulatory scheme evolves.

It’s too bad emotion so easily overcomes reason, making it easy to imagine scenarios that don’t take into account everyone’s needs. Let’s hope the new regulatory decisions are based on facts and science and ” most of all ” a sense of what’s best for all the citizens of Colorado.