Colorado’s proposed oil and gas rules — aimed at protecting wildlife and public health and adding more scrutiny — could lead to cuts in production and hikes in natural-gas prices, according to an industry analysis.
State officials and environmental economists disputed the findings in the report by ICF International for the Colorado Oil and Gas Association.
The ICF study looked at the impact of drilling reductions of 10 percent, 20 percent and 30 percent resulting from the regulations being considered by the state Oil and Gas Conservation Commission.
“The is the industry’s first view of the range,” said Scott Moore, an executive with Anadarko Petroleum. “We think it will be at least 10 percent.”
A 10 percent cut in wells drilled — about 2,670 of the nearly 30,000 projected wells over the next 10 years — would lead to a 4 percent drop in gas production and add $500 million in fuel costs to Colorado consumers, the study said.
The added fuel expense is part of a $7.4 billion cost to consumers nationally from the lost production.
“These costs to consumers are really part of it,” Moore said.
The reduction in drilling, according to the study, would come from delays because of a more complex permitting process and from requirements some land be closed for 90 days to protect wildlife or off-limits to protect water supplies.
“We were aware of these concerns, and we added a number of measures,” said David Neslin, acting director of the Oil and Gas Conservation Commission.
Among the additions to the proposed rules are shortening the time for approving permits to 60 days and the ability for a driller to ask for an expedited hearing.
There are also variances and waivers to continue drilling during the 90-day wildlife closure period or to operate within required drinking-water protection setbacks, Neslin said.
The commission is scheduled to vote on the proposal this summer.
Neslin said the energy companies had declined a commission request to provide economic data.
“They have taken an adversarial position,” he said.
Peter Morton, an economist with the Natural Resources Defense Council, said: “The industry study is only looking at the costs to the industry. There are other costs and benefits to the community.”
An analysis done by the Associated Governments of Northwest Colorado concluded that the region’s rural communities “have very limited ability to absorb and service new development.”
The region is facing a housing storage and $2.1 billion in needed infrastructure, the analysis said.
“Slowing the pace, which these regulations may do, could have a positive economic benefit,” said Ben Alexander, associate director of Headwaters Economics in Bozeman, Mont.
Mark Jaffe: 303-954-1912 or mjaffe@denverpost.com
