Colorado lawmakers announced an effort Thursday to give cities and counties in Colorado control over some oil and gas regulation, which could include well setbacks, just months after voters rejected a measure that some said could cripple energy companies.
Gov. Jared Polis, Senate Majority Leader Steve Fenberg and House Speaker KC Becker announced legislation that would grant municipalities local control and refine the mission of the Colorado Oil and Gas Conservation Commission, the state’s energy regulator. Polis made resolving conflicts between oil and gas development and Colorado residents a campaign focus, and on Thursday, he said the new legislation would ease legal battles in cities that want to limit oil and gas development.
“There is not a one-size-fits-all approach, and yet under current law, communities are hamstrung,” he said.
What does it mean for Southwest Colorado?Front Range lawmakers called the legislation “sweeping,” but disclosed few details. They released a bill fact sheet and expect to introduce the bill in the coming days. The new legislation would focus on promoting health and safety, including adding a regulator with a public health background to the state’s oil and gas commission; creating a certification process for oil and gas workers; and increasing disclosure of pipeline and flowline locations.
But Thursday’s announcement left many unanswered questions for Southwest Colorado officials and oil and gas representatives who said they had not seen copies of the proposed legislation, or heard only rumors about what it would include. For the region’s energy companies, the proposed legislation seems to target Front Range conflicts with oil and gas development that are far removed from the natural gas operations in La Plata, Montezuma, Archuleta and Dolores counties, where oil is limited, wells are decades old and energy is a necessary source for most county budgets.
In the past, most counties in the southwest corner of the state have voted against measures that would restrict the industry.
“We are just so different down here,” said Christi Zeller, executive director for the Energy Council, which advocates for the industry in all four counties. “You don’t have to change the way that operators have responsibly drilled in other areas outside of Denver.”
State has strict regulationsColorado is a major oil and gas producing state – it ranks fifth in oil production and sixth in natural gas production, according to the U.S. Department of Energy. In the mid-2000s, a shale boom triggered an explosion of oil and gas development in Front Range communities surrounding the northeastern Denver-Julesburg basin, the hub of Colorado’s oil and gas activity.
Colorado has some of the strictest oil and gas regulations on the books, but in recent years, Front Range communities have launched repeated efforts to push wells and drilling far from homes and schools. Efforts to halt the spread of drilling into neighborhoods came to a head in 2017, when a leaking gas well owned by Houston-based Anadarko Petroleum caused an explosion and killed two people in Firestone.
On the Front Range, much of the controversy over oil and gas development has been driven by hydraulic fracturing, or fracking, a process that injects water, sand and chemicals into wells to crack shale rock and release oil and gas.
But fracking is limited in La Plata County, which has 3,300 active wells, two-thirds of which are coalbed methane wells and are several decades old, Zeller said. Neighboring Montezuma County is home to the McElmo Dome, one of the world’s largest known CO2 reservoirs, which does not rely on fracking.
While less than 2 percent of residents in La Plata and Montezuma counties work in the energy industry, both counties’ budgets depend heavily on oil and gas development. La Plata’s property tax revenue has been cut in half since 2010, largely because of low natural gas prices, and nearly half of Montezuma County’s revenue comes from the oil and gas industry.
Despite their dependence on natural gas production, several southwestern counties supported Proposition 112, which would have blocked most drillable areas in La Plata County. La Plata, San Miguel, San Juan and Ouray counties all voted in favor of the proposed 2,500-foot setbacks, while voters in Montezuma, Dolores, Archuleta, Hinsdale and Mineral counties voted against it.
La Plata a leader in local control
But La Plata County has long been a leader when it comes to local control over oil and gas regulation, said Gwen Lachelt, a county commissioner who co-chaired an oil and gas task force under former Gov. John Hickenlooper. La Plata County is one of Colorado’s top natural gas producers and was among the first to put local regulations on the books after a natural gas boom in the 1980s. The county has been taken to the state Supreme Court twice over its regulations and has been instrumental in changing the makeup regulators who sit on the oil and gas commission.
In La Plata County, energy companies must consult with landowners about drill sites, give adequate notice, have water protection plans and pay the county a road-impact fee, Lachelt said.
“We consider companies that operate here partners,” she added.
Lachelt had not seen a copy of Polis’ proposed legislation and could not comment further on its proposals. But she said the legislation is expected to address an issue known as forced pooling, where mineral rights owners who do not want drilling on their property are forced to accept it when a neighboring mineral right is drilled.
“I’m anxious to see the bill and read it,” she said.