DENVER—The interest groups and people weighing in on overhauling regulation of the oil and gas industry in Colorado agree on one point—the stakes are high.
Proponents of change think it’s time to rein in an industry they say has run roughshod over landowners and is jeopardizing other parts of the state’s economy: tourism, hunting, recreation.
Oil and gas companies warn that proposed rules requiring input from health and wildlife agencies into projects will cause delays, drive up costs and undermine a booming industry that pumps billions of dollars into the Colorado economy. They complained they were excluded from helping write the preliminary proposal.
And all that came before state and industry officials, environmentalists and landowners sat down to start writing the rules.
Public hearings on the proposal are being held across the state. Five different groups will meet through mid-February to suggest regulations intended to broaden input into approval of oil and gas wells.
“This rule-making is the No. 1 priority for the industry and the Colorado Oil and Gas Association,” said Meg Collins, president of the association, a trade group. “Now’s our opportunity to fully participate and I don’t want us to waste our opportunity.”
The rules, which the public will get a chance to comment on, will incorporate two new laws overhauling how the Colorado Oil and Gas Conservation Commission does business. The laws were prompted in part by concerns that the commission was too close to the industry it regulates.
“We’ve been working for almost two decades to update Colorado’s regulations and hold industry more accountable,” said Gwen Lachelt, executive director of the Oil and Gas Accountability Project, a Colorado-based conservation group.
One of the new laws, promoted by Gov. Bill Ritter, who took office a year ago, 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.
That measure and a second one addressing energy development’s impacts on wildlife require the oil and gas commission to consult state health, environmental and wildlife agencies.
The Legislature passed the laws last year amid increasing concerns about the effects of the natural gas boom on the environment. The state approved a record 6,368 drilling permits last year. Most of those were for gas and more than a third were issued in western Colorado, where people have complained about the noise, traffic and health problems they blame on the operations.
Industry officials, though, question what the state is trying to fix.
“We believe the commission has a solid regulatory framework in place and that our industry is evolving,” said Wendy Wiedenbeck, spokeswoman for EnCana Oil and Gas (USA) Inc.
EnCana and Williams Production, two of the major energy companies operating in Colorado, contacted their contractors and area nonprofits and urged employees to attend recent public meetings in Greeley and Parachute. The new regulations could create uncertainty for companies and that “could impact EnCana’s capital investment decisions in Colorado,” EnCana wrote in a Dec. 27 letter to nonprofits
The La Plata County Energy Council, a trade group, bought ads in the Durango newspaper this week warning that the proposed rules are “fundamentally flawed and could cripple production,” resulting in less tax revenue, less money for community groups and fewer royalties for mineral owners.
“The ad’s outrageous. It makes me so mad,” said Jim Fitzgerald, a rancher near Bayfield in southwestern Colorado.
Fitzgerald said he and his wife, Terry, own some of the minerals on their property and get about half their income from royalties on production, but still support stronger rules. They joined another area ranch family in suing energy companies over the effects of drilling on groundwater.
“The industry for the first time might get a little regulated and they’re howling,” Fitzgerald said.
Steve Wells, who ranches east of Greeley in northeastern Colorado, said he’s afraid the state will clamp down too hard on an industry that has made many improvements. He has about 200 oil and gas wells on his property and worries that any production slowdowns will reduce the money flowing to local governments and property owners, like him, who own some of the mineral rights and get royalties.
“We just came through a 10-year drought,” Wells said. “If it wasn’t for the oil and gas, we would’ve been in a world of hurt.”
Industry representatives believe they should have been involved in writing the proposed rules.
“We would’ve liked to have been at the table to bring solid science and technology to that process,” Wiedenbeck said.
A state memo says the preliminary rules were intended to start a discussion, “not to dictate the terms of those rules.”
But Williams Production wrote in a Dec. 27 letter to contractors that it believed the state was “trying to railroad the process.”
“It just expresses that we’re very passionate about it,” Williams spokeswoman Donna Gray said of the language. “We really feel we have been diligently employing best management practices for wildlife and for public health.”
Gray added that the letter was written before the company started participating in the groups crafting the proposed rules. “Now we’re at the table and we’re hashing it out,” she said.
