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December 16, 2008
COGCC adopts final draft of new oil, gas regulations
TRINIDAD, Colorado (STPNS) -- The Colorado Oil and Gas Conservation Commission (COGCC) approved the final draft last Thursday of its new regulations for the oil and gas industry following a final three-day batch of deliberations on the rules.
The new regulations require a number of increased restrictions on oil and gas company practices, as well as new practices designed to protect public health, the environment and state wildlife. Regulations that made the final cut include rules designed to require companies to share records of chemicals used in the drilling process with the state and with emergency responders, rules that would prohibit drilling within close distance of public drinking water sources, rules to prevent water pollution around oil and gas operators during storms and snow run-off seasons and, specifically to northwestern Colorado, rules to reduce odors where oil and gas development is occurring near school and homes.
The new rules also operators to forego reviews of individual drilling sites in exchange for the development of a comprehensive drilling plan for larger geographical areas.
Harris Sherman, Director of the Colorado Department of Natural Resources and the oil and gas commission's chair, called the new rules, "...a modern framework that will allow one of our most important industries to thrive while protecting the things that make Colorado such a great place to live and work."
The COGCC stated in a Dec. 10 release that many of the new rules would apply primarily to new drilling operations. "The rules grandfather most existing operations," the release stated. "And will be phased in over several months to provide for a smooth implementation."
With a few specific exceptions, the new rules will take effect at the start of May 2009 on federal lands and that start of April 2009 on all other lands. Some rules, however, such as requirements to line production pits, will not go into effect until as late at January 2011.
The final formulation of other rule series, such as those determining wildlife reclamation and distances drilling operations would be required to keep from homes, have been delayed to allow for additional information gathering by the COGCC over the coming year.
The COGCC's regulatory changes were mandated by state legislators in 2007. In HB 1298 and HB 1341, they directed the COGCC to work with the Colorado Division of Wildlife (CDW) and Colorado Department of Public Health and Environment (CDPHE) to revise state energy regulations.
Hearings and meetings both public and private concerning the proposed changes spanned the latter part of 2007 and nearly all of this year. The COGCC conducted numerous stakeholder meetings, several public meetings including one in Trinidad in January and hearings in Denver during the last week in June and July 15-18, as well as deliberations on the rules during Aug. 19-20, Sept. 9-11 and 22-23, Oct. 26-27 and Dec. 9-11.
Following the approval of the rules' final draft, critics of the changes repeated charges that the regulations would have a detrimental effect on the state's energy industry. "Particularly during these uncertain economic times, Colorado's natural gas and oil industry needs a stable regulatory environment to thrive and today what the COGCC Commissioners approved were rules that create uncertainty and instability...the rules approved today do not achieve last year's legislative intent to create a 'timely and efficient' process for Applications for Permits to Drill (APD) because of the numerous and burdensome layers added to the already cumbersome process," John Swartout of the Colorado Oil and Gas Association said. "Now, even after an operator receives approval on an APD, a host of new parties - (the CDWW), the (CDPHE) and surface owners - can appeal, thus expanding an already burdensome and time-consuming process."
He added, "Nowhere else in the nation is this even possible."
Stoutwart also accused of the COGCC of potentially damaging the wider Colorado economy through its regulations. "Not only is today a disappointing day for Colorado's number one economic contributor, it is a sad day for Colorado's economic well-being," he said. "The COGCC Commissioners approved rules that create the most expensive, time consuming and burdensome regulatory environment in the nation - all at a time when Colorado should be fighting to keep jobs."
Critics of the regulatory changes, statewide and here in Las Animas County, have complained since the pre-draft proposals were announced in January that increased regulations would have a catastrophic effect on the oil and gas industry, trickling down to a ruinous effect on local economies in Colorado when increased regulations chased off energy companies. However, before the regulatory changes were finalized, Las Animas County's largest energy industry operators, Pioneer Natural Resources and XTO Energy, announced in November that they massively scaling back their operations within the county due to falling natural gas prices.
The total economic effect of the companies' large-scale, pre-regulation change slowdown in Las Animas County has yet to be completely determined.
Copies of the new regulations and a slew of other documents pertaining to every step of the regulatory change process are available for download at COGCC's website at www.oil-gas.state.co.us. The Colorado legislature is expected to review the new regulations during its 2009 session.
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