Industry says oil, gas rules could cost consumers billions

Judith Kohler
The Associated Press
Aspen, CO Colorado

DENVER ” A report done for a Colorado oil and gas trade group says proposed new state regulations could cost natural gas customers billions of dollars over the next decade.

The report commissioned by the Colorado Oil and Gas Association says the proposed rules could slow down approval of new natural gas wells and facilities, limit when companies can drill and increase operating costs.

That could boost natural gas prices by up to $1.7 billion in Colorado over the next decade and up to $32 billion nationally, according to ICF International, a policy, management and technology consulting company based in Fairfax, Va.

The report is part of the information from the industry in preparation for hearings later this month and over the summer on a comprehensive rewrite of state’s oil and gas regulations. The new rules would implement two laws approved last year that require giving more weight to public health, the environment and wildlife when approving oil and gas development.

Colorado is experiencing record gas drilling rates. The state issued 6,368 drilling permits last year, six times the total in 1999.

Gathering the data for the economic report was “a Herculean effort” because of the tight schedule for reviewing and adopting the new rules, Meg Collins, president of the oil and gas association, said Thursday.

“Given the pace of the rulemaking, we thought it was imperative to develop this data to inform our statements,” Collins said.

The Colorado Oil and Gas Conservation Commission, the main regulatory body, released preliminary proposals in January, followed by five public hearings across the state and dozens of work sessions attended by landowners and representatives from the industry, local governments and environmental groups.

The draft rules were released at the end of March. Regulators plan to adopt final rules by late summer.

Dave Neslin, acting oil and gas commission director, said his staff asked companies for their numbers on the potential costs of the new regulations five weeks ago and the companies declined.

“Unfortunately, they seem to be taking an adversarial rather collaborative approach,” Neslin said.

Collins said the state didn’t request the financial information until April and then gave the industry a two-week deadline. She said the figures are part of the statements and exhibits to be presented by the industry, which opposes the proposed rules.

“I think it’s the state’s obligation to develop that data,” Collins said.

Neslin and an economist for The Wilderness Society questioned some of the industry report’s findings and conclusions. Neslin said the report seems to ignore ideas to streamline the permitting process and the fact that companies could seek exemptions from some rules.

The commission is writing an analysis of the potential economic costs of the new rules.

Pete Morton, an economist with regional office of The Wilderness Society, said ICF International’s report doesn’t explore both the costs and benefits of Colorado’s energy boom. He said in a written statement that some of the costs are air and water pollution, loss of critical wildlife habitat, increased demands for police and emergency services and damage to roads from truck traffic.

Morton also questioned the argument that the new regulations would decrease gas production and drive up prices for consumers. He said Coloradans’ natural gas prices have increased despite rising production because more of the gas is being shipped out of state as more pipelines have been built.