Gas industry takes aim at Curry bill

An association for the oil and gas industry in Colorado said it will try to snuff a bill introduced Thursday by state Rep. Kathleen Curry, alleging it will drive some of the business out of the state.

Greg Schnacke, executive vice president of the Colorado Oil and Gas Commission, said Curry’s efforts to give more bargaining power to surface rights owners in negotiations with gas companies that want to drill on their land will create a more adversarial relationship than now exists.

In addition, Sch-nacke said, her bill would create delays that would force drilling companies to move their rigs to other states where work was more consistent.

“This bill is about slowing down drilling,” he said.

Curry said she doesn’t want to saddle the gas industry with undue burdens. She supports gas extraction but believes it must be done in a way that is more fair to landowners. Current regulations in Colorado unfairly favor the gas companies, she said.

Curry’s bill establishes a different process for handling disputes when landowners and gas companies cannot negotiate a surface rights agreement. Those agreements often include everything from compensation for damages to the land to road maintenance.

Curry said state regulations don’t go far enough to compensate surface rights owners for damage to their land from construction of drill pads, waste pits and roads to serve them.

Her bill would re-quire the gas companies to en-gage surface rights owners in good faith negotiations once they target land for development. If an agreement couldn’t be reached, the gas company would select an appraiser from an approved list of professionals. A report would be prepared on the value of the land and the anticipated damages. The cost of the appraisal would be shared by the gas company and landowner.

If the report wasn’t used as the basis of a settlement, the dispute would go to an arbitrator.

Schnacke said that process would take a minimum of 60 days, often longer. As a result, drilling companies wouldn’t stay busy enough. Some of the rigs would leave, and the state economy would suffer.

“You’ve got drilling rigs at a premium in this country,” he said.

The industry doesn’t believe a big enough problem exists to warrant Curry’s cure. Schnacke said surface rights agreements are successfully negotiated in more than 90 percent of the cases.

“This legislation is very much overkill for what’s going on,” he said. Plus, state regulations already give surface rights owners the option of filing an “unreasonable land damage claim” against a gas company. Those claims are rarely, if ever, exercised, according to Schnacke.

“What’s the problem, I guess we’d ask Representative Curry,” he said.

He claimed the bill is really designed to cripple the gas industry while masking itself as protection for landowners.

The bill appears popular with a substantial number of Garfield County residents. Numerous members of an audience spoke in support of it at a recent meeting of the Garfield County Energy Advisory Board. People will have a chance to speak their minds Feb. 14 when the House Agriculture, Livestock and Natural Resources Committee ventures out of Denver to gather testimony in Glenwood Springs.

Curry said she expects a tough battle on the bill. “I don’t see it breaking down on party lines at all,” she said. Instead, it threatens to pit rural versus urban legislators.

Rural legislators understand the effects gas drilling can have on landowners, Curry said, while urban legislators are unfamiliar with the gas industry. She said educating them will be a key factor in the battle.

Although debate hasn’t started yet on the bill, behind-the-scenes maneuvers are in full swing. “I’m seeing a lot of activity and hearing from legislators that they’re hearing from the industry,” said Curry.

Schnacke said property rights for the gas companies will be a major point the industry speaks on. The gas companies legally acquired the mineral rights that entitle them to extract the gas, even when they don’t own surface rights. Schnacke said he views Curry’s bill as a “takings” of the gas companies’ mineral rights.

Curry counters that nothing is being taken. She’s just trying to “bring a little more equity for the surface owners.”

Scott Condon’s e-mail address is scondon@aspentimes.com