State to start work on new oil, gas rules |

State to start work on new oil, gas rules

The Associated Press
Aspen, CO Colorado

DENVER ” The larger, more diverse commission overseeing Colorado’s surging oil and gas industry will be balanced and professional and will seek input from the industry as new regulations are developed, the state’s natural resources chief said Wednesday.

Harris Sherman, executive director of the Colorado Department of Natural Resources, told industry officials at the Colorado Oil and Gas Association’s natural gas forum that state officials likely will start meeting soon with various groups and might offer draft rules for comment by November.

The deadline for the final rules is next spring or summer, Sherman said.

The rules will implement regulatory changes approved by the Legislature this year. The changes include a revamped Colorado Oil and Gas Conservation Commission, the main regulatory body, and providing for participation from other agencies, such as the Division of Wildlife, in oil and gas decisions.

Sherman, speaking on the last day of the trade group’s three-day conference, acknowledged the controversy surrounding some of the laws, particularly the one expanding and broadening the makeup of the oil and gas commission.

“We had many long, interesting discussions with members of your industry,” Sherman said. “Occasionally we had our differences about the legislation.

“But I think this bill will be a good bill,” he added. “It will work in the best interest of Colorado and it will be a good bill for your industry over time.”

The bill, promoted by Gov. Bill Ritter, who took office in January, and passed by the Democratic-controlled Legislature, expanded the commission to nine members from seven and decreased the number of members required to come from the industry to three from five.

Ritter and legislators have said they wanted to address concerns that the panel had become too cozy with the industry it regulates. Sherman said Ritter, a Democrat who succeeded two-term Republican Bill Owens, was asked repeatedly during the election about the “challenges and issues” of the state’s natural gas boom.

Development often occurs in scenic, isolated areas valued for wildlife habitat and recreation, Sherman said. Western Colorado’s Piceance Basin has tremendous resources underground and what are considered the largest elk and mule deer herds in the country, he said.

“The advent of a quasi-industrial imprint on a previously tranquil environment obviously causes issues, raises lifestyle questions,” Sherman said.

Industry officials have said some of regulatory changes could restrict production, reduce severance taxes paid to the state and possibly drive up gas prices for consumers.

The new law increases the panel’s diversity by requiring members with experience in reclamation, wildlife, environmental issues, mineral royalties, agriculture and local government. Sherman said six of the nine people recently appointed by Ritter currently work in the oil and gas industry or have years of experience working with energy companies, he said.

“I am hopeful, I’m confident this will be a balanced, hardworking, professional and problem-solving commission,” Sherman said.

The state will seek comments from the industry and the public as new rules are written for the commission, he added. State officials plan public meetings across the state and likely will release a preliminary proposal by February.

“Your industry is important to Colorado. It’s important to the nation,” Sherman said. “Colorado is blessed with a world-class hydrocarbon supply of energy.”

Echoing a theme of the trade group’s conference, Sherman said natural gas, cleaner burning than other fossil fuels, is a bridge to a future more reliant on renewable energy.

A recent, state-funded report said the Colorado oil and gas industry contributed nearly $23 billion in direct and indirect economic benefits to the state in 2005. Industry officials have said oil and gas operations provide about 70,000 high-paying jobs statewide.

The industry generated $515 million in severance and local property taxes and mineral royalties for the state last year. Sherman said the revenue, like the number of drilling permits, is expected to rise this year.

Nearly 6,000 drilling permits were issued last year. Sherman said the total has doubled over the past three to four years.

And gas drilling is increasing statewide, with some of the most intense development in western Colorado. With as many as 43,000 new wells possible on federal land in that part of the state over the next 20 to 25 years and tens of thousands more on private land, Sherman said he doesn’t see the energy boom abating for a long time.