DENVER – Colorado senators expected to give initial approval late Tuesday to a sweeping rewrite of the state’s oil and gas regulations that would give local governments greater control over energy development.
Senate Bill 181 is an affirmation of efforts begun by La Plata County three decades ago to impose local regulations on drilling, but it will also rewrite the mission of the state’s oil and gas regulator, impose stricter air-quality monitoring and protect mineral rights owners from having their land forcibly drilled.
But in Southwest Colorado, where county budgets are reliant on revenue from energy companies, the bill seems tailored for a Front Range crisis driven by a shale boom in the Denver-Julesburg Basin and a rapidly expanding population, neither of which exist in the Southwest, industry representatives say.
“Maybe the Denver-Julesburg basin needs its own rules,” said Christi Zeller, executive director of the Energy Council, which advocates for energy companies in La Plata, Montezuma, Archuleta and Dolores counties.
In the late 1980s, La Plata County was the first in Colorado to impose local regulations on natural gas drilling, a movement that helped create statewide standards for drilling setbacks and land use. But the power of counties to regulate oil and gas operations waned as a shale boom hit northeastern Colorado, turning the state into one of the nation’s top producers of oil and natural gas. Colorado has some of the country’s strictest oil and gas regulations, but in recent years, Front Range communities have tried and failed repeatedly to halt the spread of drilling into neighborhoods.
But SB 181 would draw a line in the sand, defining how far local governments can go to foster or prohibit drilling, said Sen. Steve Fenberg, D-Boulder, one of the bill’s sponsors.
“It was a strategic mistake for the industry to oppose everything ... because it has created a groundswell of fear,” Fenberg said. “They have also spent much time in courts because it is not clear where local control starts and ends.”
Under Fenberg’s bill, approval for drilling would start with local, not state, permits. Industry representatives on the Colorado Oil and Gas Conservation Commission, the state’s oil and gas regulator, would be cut and replaced by a person with a public health background. Operators would also be required to continually monitor equipment for hazardous air pollution, like the 2,5000-square-mile methane cloud found hovering over the Four Corners in 2014. County governments could impose larger setbacks between wells and homes.
Residents from all corners of Colorado – including 25 residents from Grand Junction who called in to testify – cited concerns with abandoned wells, explosions and water quality. For Rifle resident Leslie Robinson, who was among the few Western Slope residents who came to Denver to testify, SB 181 will help break western Colorado’s economic reliance on the oil and gas industry.
“There is no economic stability. Any government that is really pro oil and gas won’t develop other industries,” she said. “I laid stake in the Western Slope, just like an oil and gas worker. I never knew if I could pay the mortgage.”
But farmers, ranchers and other rural Colorado residents decried the bill as a death blow to tax revenue and good jobs in isolated areas. Industry representatives warned that SB 181 would stunt new development and send aftershocks into county budgets and employment around the state.
While Weld County, the hub of Colorado’s oil and gas activity, is unlikely to limit drilling, cutting back on new production could cost Colorado millions in royalties and taxes, said Bernadette Johnson, vice president of market intelligence for Drillinginfo, which forecasts gas and oil prices and industry trends.
In 2020, the energy industry is expected to pay $420 million in state taxes and nearly $2 billion to royalty owners, Johnson said. She cautioned that SB 181 would encourage energy companies to steer clear of Colorado.
“It is not far-fetched to believe that significant portions of this industry could leave Colorado and head to other oil and gas producing states, which welcome their skilled employees and revenue they produce,” she said.