Balancing the benefits, impacts of Colorado’s energy boom
The Associated Press
Aspen, CO Colorado
DENVER ” Amid the debate on proposed wide-scale changes to Colorado’s oil and gas regulations, one fact sticks out: The natural gas boom is changing the state’s landscape.
Colorado issued a record 6,368 drilling permits last year, six times the 1999 number. Currently, there are 34,000 active wells statewide. Tens of thousands of new gas wells are expected on federal land alone over the next 20 years.
Development could rev up even more if companies figure out economically feasible ways to tap the hundreds of billions of barrels of oil shale in northwestern Colorado, Utah and Wyoming.
“There has been an exponential increase in the activity of oil and gas development in Colorado,” said Harris Sherman, executive director of the state Department of Natural Resources.
It’s generated high-paying jobs and millions of dollars in tax revenue. A state-funded report last summer said the oil and gas industry contributed nearly $23 billion in direct and indirect economic benefits in Colorado in 2005.
The boom also has led to conflicts between landowners and gas companies, health complaints from people living near wells, and concerns about Colorado’s wildlife. Fishing and hunting make up a big part of the economy in some parts of the state.
Efforts to strike a balance drove the push last year for two new laws broadening the scope of how the oil and gas industry is regulated by involving state wildlife, health and environment experts and revamping the rules.
Another change is the overhaul of the Colorado Oil and Gas Conservation Commission, the state’s main regulatory body for the industry. Once assailed by critics as too cozy with the industry, the commission has been expanded and its makeup diversified.
State regulators writing rules to put the laws in place are seeking greater input from wildlife, health and environmental agencies as well as the public.
“Truly, what we’re striving for are regulations that will allow the industry to continue in a robust and profitable manner, but will also allow us to do a better job of protecting the environment and wildlife and other resources,” said Dave Neslin, the commission’s interim director.
Draft regulations could be sent to the commission by April. Formal hearings will follow. The goal is to adopt new rules by July.
“It’s a transparent process. The parties are vetting all the major issues,” Sherman insisted.
But industry officials complain all the parties should have been at the table from the start to hash out the plan. Because they weren’t, the industry says, the proposal is fatally flawed and goes beyond the Legislature’s intent. They point to a 30-page initial draft prepared by state employees ” one that likely consumed hundreds of hours of staff time ” said Ken Wonstolen, an attorney representing the Colorado Oil and Gas Association, a trade group.
“This obviously gives you insight into what they’re thinking and we think it’s so off-base in so many ways,” Wonstolen said. “It’s not reflective of business realities, doesn’t recognize the history of rulemaking and existing processes.”
For instance, industry officials estimate a new application for locating oil and gas facilities could take at least three months and up to $ 100,000 just to prepare. Wonstolen said it could take at least another three months to wade through the rest of the process, particularly if the state Division of Wildlife and Department of Public Health and Environment get involved.
State staffers estimate new applications will take an average 55 days to process if the other agencies aren’t involved and 85 days if they are. Permit and drilling applications could be filed simultaneously to speed things along. Neslin said the current average wait for approval is 65 days.
“My guess is that the vast majority of cases will not involve consultation” with the other agencies, Sherman said.
Neslin and Sherman also dispute the notion that the state took a “one-size-fits- all” approach. They said the need to involve wildlife and health officials will depend a great deal on the area being developed.
“An operator in Yuma County probably would not be consulting with the Division of Wildlife or Department of Health, and the process probably wouldn’t work too much differently than the process today,” Neslin said.
State officials have suggested giving companies the option of preparing development plans for large areas. Those plans would take an in-depth look at environmental and other issues with the idea that, once the plans are adopted, approval for individual wells could come more quickly.
Neslin said benefits would include possibly lifting restrictions on drilling during wildlife mating or birth seasons in return for companies avoiding certain sensitive areas.
Regulators have proposed notifying adjacent landowners whose property is within 500 feet of a proposed facility and allowing them to protest if they can show they would be adversely affected. Another measure would require companies to disclose to state and local emergency agencies the chemicals and materials they use. The state would protect trade secrets.
Neslin and Sherman acknowledged the furor some of the proposals have created, but urged people to allow the process to work.
“All of this is under review,” Sherman said. “The staff has not made any decisions about what it will recommend.”
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