New oil and gas rules costing Garfield County in industry investment and jobs, study concludes

It wasn’t exactly surprising news to the Garfield County commissioners Tuesday, but an economic impact study gauging the impacts of new oil and gas regulations in Colorado finds the county is taking a sizable financial hit.

Commissioners heard the findings of Wyoming-based consultant Timothy Considine at a Tuesday work session.

During 2021 alone, factoring the increased cost to energy companies to comply with the state’s new regulations, that cost was $2.8 million, including a 7% increase in the capital cost to drill new wells, Considine found.

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For the county’s economy, that meant an investment decline of $13.4 million, a $6.3 million drop in labor income, 180 fewer jobs and a decline in taxes to the county of $1.6 million, Considine said based on his modeling and calculations.

Considine owns and operates Natural Resource Economics Inc. He was retained by the county last year for $65,000 to put numbers to the impacts the county has seen during the downturn in new natural gas development in recent years.

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While some of that pullback has been related to global markets and lower natural gas prices, Considine said there’s evidence the renewed interest in new development as markets improve is steering away from Colorado and into neighboring states such as Utah and Wyoming.

That’s likely related to the increased costs of doing business in Colorado due to new regulations that have come about as a result of Senate Bill 19-181, he said.

The landmark legislation shifted the focus of the Colorado Oil and Gas Conservation Commission from one of “fostering” oil and gas development in the state to regulation and environmental protection.

Several new regulations related to oil and gas operations, from new air quality standards to a 2,000-foot setback for well pads and other facilities from occupied buildings, have been put into place through a lengthy rulemaking process. That process is continuing.

Considine said the county can expect cumulative declines in the ensuing years.

“This is not surprising, but it is nice to see what the figures are,” Commissioner Tom Jankovsky said. “A result of these regulations is that Colorado is not as attractive an investment as, say, Utah.”

Because the new 2,000-foot setback has not been largely put into effect yet, there are future consequences for Garfield County, Jankovsky added.

The county estimates that 40% of its existing wells are within that setback distance, meaning those same well pads could not be used to drill into the deeper Niobrara formation, where vast natural gas reserves are known to exist, he said.

The findings were also not surprising to Leslie Robinson, who chairs the Grand Valley Citizens Alliance, one of the many groups that have lobbied in favor of stricter industry regulation.

“Garfield County will not accept any results that are against their own oil and gas policy,” she said. “We know from the start with these studies that they will be skewed to support oil and gas.”

In reviewing Considine’s economic impact study, Robinson also said it fails to consider that many wells in Garfield County are low-producing “stripper wells.”

“For a bonafide economic study to be complete and accurate, the info about stripper wells should have been included, because it represents a big chunk of Garfield County’s lost tax income from oil and gas in the recent past,” she said.

Many of the state regulations are also still being tweaked and refined, “so elements of this study are a guesstimate,” she said.

In any case, the new regulatory structure is simply the cost of doing business in Colorado.

“That’s a problem for the companies to figure out, not for Garfield County to try to figure out at taxpayers expense,” Robinson said.

Commissioner Mike Samson said in response to the findings that it puts numbers to the message Garfield County and other energy producing counties have been trying to send.

“Our energy independence is not only important to Garfield County, the state, and the U.S. … it’s important for all nations,” Samson said. “This gives us more ammunition to espouse that view.”

Considine is planning to attend and present his findings at the Garfield County Energy and Environment Symposium, taking place April 13-14 and co-presented by the Colorado Mesa University Unconventional Energy Center. The event takes place at the New Creation Church gathering hall in New Castle.