Regulators defend proposed Colorado oil, gas rules
The Associated Press
Aspen, CO Colorado
DENVER ” Some legislators want to put off passing new oil and gas rules because of the industry’s fears that they will further darken an already gloomy economic outlook ” plunging natural gas prices, tight credit, little or no room in pipelines to ship the gas out.
State regulators argued against that tack Friday in a hearing by a legislative committee looking at ways to jump-start the economy. The same panel heard a week ago from an industry trade group that the new rules are creating uncertainty, which could discourage investment in Colorado.
“What concerns me, in light of feedback from industry, is somehow we’ve missed the mark,” said Sen. Mark Scheffel, R-Parker.
A recession is not the time for Colorado to tighten regulations on a thriving industry, he and other Republicans said.
Harris Sherman, head of the state Department of Natural Resources, spoke against delaying the changes, mandated by two laws giving more weight to the environment, wildlife and public health when approving oil and gas development. He said the 2007 laws were in response to concerns from landowners, hunting and angling groups and environmentalists about air and water quality and other effects of Colorado’s energy boom.
“These issues are still there. We need to address these issues,” Sherman said.
And while the industry is blaming the new regulations for some of its economic woes, Sherman said a 60 percent drop in natural gas prices and a lack of pipelines to get gas to markets are bigger factors.
“We’re in a recession,” said Rep. David Balmer, R-Centennial. “Should we be constraining industry at this most difficult time?”
The rules, Sherman said, are an attempt to strike a fair balance between encouraging oil and gas development and the high-paying jobs and revenue it generates and protecting other parts of Colorado’s economy ” hunting and fishing, recreation, tourism agriculture.
Western Colorado, which has led the state in the number of drilling permits issued, is home to some of the nation’s largest elk and deer herds as well as rare native trout.
Areas covered by the rules range from waste pits to well locations to protection of wildlife and will take effect April if approved by the Legislature. Permits issued until then would be covered by the existing rules.
The state issued a record 8,027 drilling permits last year, nearly double the 4,323 approved in 2005. Most of the permits were for natural gas.
Colorado’s total number of permits last year was second only to Texas, which issued 20,980.
As the recession has deepened, however, companies have said they will cut back drilling in western Colorado. Several have announced plans to reduce spending or shift their focus elsewhere, including large gas shale deposits in Texas and in the East.
“Companies aren’t dropping all their investment. They’re dropping investment in Colorado,” said John Swartout of the Colorado Oil and Gas Association, a trade group. “Regulatory uncertainty is a factor.”
Legislators have introduced bills to change or postpone the oil and gas rules. One introduced Friday by Rep. Wes McKinley, D-Walsh, proposes barring rules protecting wildlife if existing oil and gas development would be harmed.
A proposed one-year moratorium on the new rules appears headed to defeat. Sponsor Sen. Greg Brophy, R-Wray, told the Journal Advocate in Sterling Thursday that his bill was assigned to the State Affairs Committee, where bills are frequently sent by the majority party to be killed.
Democrats control both the Senate and House.
The Colorado Oil and Gas Conservation Commission, the main regulatory body, worked about 18 months on the roughly 100 new or amended rules. The commission held public hearings across the state and dozens of work sessions attended by industry and government officials, landowners and conservationists.
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