RIGS & REGS

New Drilling Rules Put Colorado at Forefront

By David Frey, 4-01-09

	A Colorado natural gas rig. Photo by David Frey.

Colorado has long lagged behind in mitigating oil and gas drilling impacts, but new rules passed by the state legislature have thrust the state into the forefront and created what conservationists hope could be a model for others to follow.

While tougher energy regulations in other Western states foundered, Colorado blazed ahead with a controversial set of rules meant to better safeguard landowners and the environment. They came after 18 months of discussions and years of failed attempts. Despite threats from the energy industry that the rules would spell doom for thousands of workers, they passed the Democrat-controlled state Senate last week along party lines.

Advocates for the rules say the problems don’t stop at the state line. After watching oil and gas rigs dominate Western landscapes, some see them as a model other states should pay attention to.

“The issues are really from Canada to Mexico,” says Steve Torbit, executive director for the Rocky Mountain region of the National Wildlife Federation. “The issues of the landscape are really continental in size, and impacts to wildlife – antelope, sage grouse – are also continental in size. What we hope is that we’ve established a reasoned, balanced approach to deal with these issues and other states will step forward.”

The Colorado rules give more weight to public health and safety, wildlife habitat and migration and environmental protection when state regulators consider applications for new oil and gas wells.

They follow a flurry of complaints from western Coloradans that the rush of new rigs was polluting the air and water and damaging the land. Joined by environmentalists and some hunters and anglers, they pressed for tougher regulations, but their attempts were routinely shot down.

Gov. Bill Ritter, a Democrat, made a priority of overhauling the state’s regulatory system. His Department of Natural Resources created or amended 100 rules, many of them geared toward the surface impacts of drilling. The new package requires companies to work more with affected landowners, and it directs state wildlife officials to play more of a role in protecting habitat. Some tougher regulations, including a proposed timeout during migration periods, were eliminated over industry concerns.

“I think it’s a well-rounded set of rules,” says Trési Houpt, a member of the Colorado Oil and Gas Conservation Commission and a county commissioner in gas-rich Garfield County. “Nobody got what they wanted. I would have loved to have seen stronger rules in some areas. But it is a well-negotiated tool.”

The energy industry has argued the new regulations will drive away companies and take away jobs at a time the energy sector is already waning due to plunging gas prices.

“We believe these rules have had significant impacts on Colorado,” said Nate Strauch, a spokesman for the Colorado Oil and Gas Association. “What’s really disconcerting is what’s going to be the impact on the business climate in the state? What’s going to happen once prices go back up?”

Rig counts have been dropping in Colorado and across the West, making it less cost-effective to drill in hard-to-reach gas fields where costs are higher and pipelines are maxed out.

“Gov. Ritter’s rules … will make a bad situation worse,” said Senate Minority Leader Josh Penry, R-Grand Junction, who opposed the rules and is considering a bid to oppose Ritter. “They will kill jobs and reduce energy production at a time we need more of both.”

Officials don’t think the regulations played a part in driving out the companies. A January Department of Natural Resources analysis found Colorado had seen a bigger drop than some states but a smaller one than others. Meanwhile, some 4,500 permits issued under the old rules haven’t been acted upon.

“We do not believe these rules and regulations are causing the current decline,” says DNR Director Harris Sherman.

The souring energy economy prompted New Mexico Gov. Bill Richardson to roll back some of that state’s new regulations on waste pits put in place last year. That includes giving the industry more time to install lined pits and allowing higher levels of chlorides to be buried.

“We had some good, solid regulations,” says Oscar Simpson, public lands organizer for the National Wildlife Federation and a former state oil and gas regulator. “I think it was the most proactive in the nation.”

Simpson says he’d like to see New Mexico follow Colorado’s lead, but a similar bill proposed by state Sen. Peter Wirth, D-Santa Fe, died in committee. In Montana, a bill to give landowners more warning about pending leases, stalled in committee on Monday and is unlikely to revive.

“The Montana legislature isn’t particularly fond of coming up with a bunch of regulations on oil and gas,” says Bill Geer, policy initiatives manager for the Theodore Roosevelt Conservation Partnership.

Wyoming has already had protections in place, but they’re recommendations, not regulations. New proposed changes would increase protections for species like mule deer and sage grouse.

“Wildlife has always been sort of an afterthought,” Torbit says.

During testimony on Tuesday, bill sponsor Gail Schwartz, D-Snowmass Village, held up a photo of the Maroon Bells, some of Colorado’s most picturesque peaks, to remind fellow lawmakers of what she said the rules were meant to preserve.

“We have a $3 billion industry right now from hunting and fishing that revolves around the quality of our backcountry and our wildlife,” Schwartz says. “That industry we’re also protecting. We’re protecting our tradition of agriculture. We must maintain a balance. We must have viable traditional industries that can also thrive during this time. When people think of Colorado, that’s what they think of. They think of these remarkable landscapes that we are stewards of.”

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