In the midst of a drilling boom, the U.S. House of Representatives passed a $92 billion energy bill last month that includes $8 billion in new tax breaks and a host of environmental rollbacks designed to eliminate impediments to even faster industry growth.
Several provisions sought by energy lobbyists may affect Colorado, including one last-minute amendment that could potentially exempt thousands of new natural-gas wells from environmental review.
“They’re just wiping the slate clean on regulation while piling on subsidies,” said David Slater of the Wilderness Society.
The House has passed similar legislation each of the last four years only to see it die in the Senate. But with Republicans now in firmer control of Congress, the Bush administration is hoping that the fifth time is the charm.
The debate comes as the Rocky Mountain states struggle to cope with record drilling activity. The Colorado Oil and Gas Conservation Commission predicts it will set a third consecutive record by approving about 3,700 new drilling permits in 2005, including more than 1,000 in Garfield County, in western Colorado.
Brian Kennedy, a staffer with the House Resources Committee, said committee members believe added incentives for the industry are needed to reduce dependence on foreign gas and oil.
But taxpayer groups question whether it’s appropriate for the government to subsidize the energy industry when the federal budget is running $400 billion annual deficits.
“These sorts of subsidies shield the industry from market forces,” said Jill Lancelot, president of Taxpayers for Common Sense. “These things never stop. When you open up the faucet, it never gets turned off.”
Among the provisions is a package of exemptions slipped into the House bill at the last minute by Pennsylvania Republican John Peterson that environmental groups say undercuts the cornerstone of environmental regulation – the National Environmental Policy Act.
NEPA requires that all major projects on federal land are reviewed for their potential environmental impact, and it establishes a comment period during which the public can voice concerns.
The Peterson amendment would exempt several kinds of projects from NEPA review, including projects that disturb an area smaller than 5 acres and new wells that are added to existing fields that already have been analyzed.
In some parts of Colorado, companies have asked to space wells 20 acres or even 10 acres apart.
Delays caused by environmental regulations remain a major focus of Republican policymakers. The energy bill would also require the government to identify the most burdensome restrictions on drilling, such as winter closures to protect wildlife, with an eye toward reducing or eliminating them, Kennedy said.
The new bill also contains provisions Democrats have long fought, including:
A permanent exemption for most well pads from storm-water permit regulations. This spring, Colorado’s Water Quality Control Commission rejected an effort to cement a similar exemption in state law.
An exemption from the Safe Drinking Water Act for a process called “hydraulic fracturing.”
The National Petroleum Council estimates that 60 percent to 80 percent of all wells drilled in the next decade to meet natural- gas demand will require fracturing, which injects chemicals such as diesel fuel into rock formations at high pressure to facilitate gas production.
A go-ahead to explore for oil and gas in Alaska’s Arctic National Wildlife Refuge.
The bill comes at a time of record profits in the industry, including major players in Colorado.
EnCana, the Canadian energy giant, recently reported that operating earnings increased 34 percent per share, compared with the first quarter of 2004. BP reported a 26 percent increase in profits. And Williams Energy, which has invested heavily in western Colorado’s Piceance Basin, reported a stunning $1 billion turnaround from 2003. Williams’ first-quarter earnings in 2005 were 20 times higher than last year.
The House proposals may face a stiff challenge when the Senate Energy and Natural Resources Committee takes up its version of energy legislation.
Staff writer Theo Stein can be reached at 303-820-1657 or tstein@denverpost.com.
