Colorado Lawmakers Advance Oil, Gas Regulation Bill

Workers tend to a well head during a 2013 hydraulic fracturing operation outside Rifle, in western Colorado. (AP Photo/Brennan Linsley, File)

DENVER (CN) – Over concerns about the health of the economy, a bill aiming to overhaul how Colorado regulates its oil and gas industry passed the state House Finance committee Monday by a 7 to 4 vote.

A proposed amendment requiring a voter referendum to approve the bill was also shot down 7 to 4 by the committee.

“I went knocking door to door to talk to my neighbors, and they didn’t know what was going on or how they can get involved,” said Laurie Anderson, a resident of Broomfield who can see drilling structures from her home. She drove to the state capital Monday to testify before the committee in support of Senate Bill 181.

“We don’t have a lot of open spaces in Broomfield and it’s a dense community,” said Anderson who estimates her city paid $3 million out of pocket for inspections, air quality monitoring and a hazard report. “The operator didn’t do the risk report, so we did. With Bill 181, we could have fined them or at least have them pay some of the costs.”

Although criticized by many industry stakeholders and Republican lawmakers, the Protect Public Welfare Oil and Gas Operations bill is supported by the Democratic majority in the capital and Gov. Jared Polis, who campaigned on a promise to convert the state’s power supply to carbon-free renewable energy by 2040.

The most fundamental change proposed by the bill is in the very mission of the Colorado Oil and Gas Conservation Commission which would shift from fostering the development of natural resources to regulating them “in a manner consistent that protects public health, safety, and welfare.”

Kelly Sloan, a fellow at the Centennial Institute and industry lobbyist points out that the need to “foster” development and “avoid waste” came from early drilling technology.

“In the early days of the oil industry, we realized we can drill holes in the ground and this wonderful black stuff came up that we could burn, but they didn’t really understand the petrophysics behind it and what they saw was people would drill haphazardly and depressurize fields early,” Sloan said to Courthouse News. “You’d end up leaving 80 to 90 percent of the oil in a particular basin or particular field or particular play unrecoverable.”

“One of my biggest concerns is changing the mission of the COGCC, I think that’s very fundamental,” Sloan said. “You have the Colorado Department of Public Health and Environment and other organizations that are tasked with that role, well now we’re not going to have any state agency that’s tasked with making sure we make the most efficient use of our most critical natural resource in the state.”

The bill also gives local governments the ability to self-regulate local drilling operations in addition to increasing the number of mineral owners who need to consent in order for forced-pooling to occur.

“I don’t think you’ll see a system that will arrive at numerous different types of regulations. We will work with local governments in a neighborly manner,” said Oil and Gas Conservation Committee Director Jeff Robbins to the committee. “If local governments opt to not employ their own discursion, we will continue to serve to be the regulator.”

A number of constituents worried that the changes to the industry would lead developers to invest out of state, severely altering the $31 billion industry that the Colorado Petroleum Council reported supports more than 232,000 jobs.

The House Finance Committee considered how shifting control of the oil and gas industry to the local level would affect severance taxes which fund schools and roads in local economies, but fiscal analyst Josh Abram admitted, “We do not include dynamic impacts in our fiscal notes.”

Others worry that the bill doesn’t take things far enough.

“I support it even though I think it’s a weak bill,” said Tricia Olson, a resident of Boulder County, who had hoped to see the state enforce stricter air quality restrictions. “It is not the bill it was.”

The bill, which passed the state Senate in February, is expected to pass the House.

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