Oil and Gas:

Colorado Oil & Gas' Schuller discusses state's efforts to expand regulations

With local municipalities taking steps to ban hydraulic fracturing in their areas, what impact will costly lawsuits by the oil and gas industry have on the future of hydraulic fracturing and natural gas development? During today's OnPoint, Tisha Conoly Schuller, president and CEO of the Colorado Oil & Gas Association, discusses the role of local and state governments in regulating oil and gas operations and Colorado's efforts to expand oversight of the oil and gas industry. Schuller also explains why she believes Colorado's renewable portfolio standard will not be scaled back from its 20 percent by 2020 target.

Transcript

Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi, and joining me today is Tisha Conoly Schuller, President and CEO of the Colorado Oil and Gas Association. Tisha, thank you for coming on the show.

Tisha Conoly Schuller: Thank you for having me.

Monica Trauzzi: Tisha, there's a lot happening in your state right now on regulations for the oil and gas industry. There are efforts in the state legislature to move forward with more stringent regulations. What's your view on Governor Hickenlooper's handling of sensitive energy issues, in particular, on the regulation front?

Tisha Conoly Schuller: Well, Governor Hickenlooper has been a supporter of all forms of energy in Colorado, and he has been a steadfast supporter of the oil and gas industry, although I will also say he is our strongest critic in the sense of wanting to ensure that Colorado has the strongest regulations in the country. At the legislature, we've seen more than 10 oil and gas bills introduced this year. In very few of those did the sponsors come and engage with the oil and gas industry, so we actually have a difficult situation in the legislature, that we have legislators that are wanting to pass bills that affect over 40,000 people in the state, but they haven't engaged with our industry. We hope that we'll have a better conversation next year.

Monica Trauzzi: It's moving pretty quickly; what do you think will happen?

Tisha Conoly Schuller: My hope is that when the legislature ends that none of the bills that were brought forward simply to be punitive or to send a message that we don't want oil and gas in this state, my hope is that none of those will pass and that several that we were able to work with the sponsors, such as to increase fines, or to have more disclosure in the state, that those, if we can't get them through this year, we'll be able to get them through next year.

Monica Trauzzi: What's your take on the state versus federal debate? Should the state be leading the way on energy policy? Should the federal government be stepping in?

Tisha Conoly Schuller: I absolutely think the state should lead the way. In Colorado alone, we have several basins that are quite different, and state regulation allows our commission to create custom regulations that protect ground water, that identify special air resource opportunities, where we can reduce emissions in areas, say, of nonattainment. State level of regulation is really important in Colorado.

Monica Trauzzi: Can a national policy help, too, in terms of investments, especially for those companies that have business in several states?

Tisha Conoly Schuller: I think when we hear about federal regulation, we hear about a minimum or something that will be across the country. Still, in a place like Colorado, you're going to have an agreement between industry and the environmental community and regulators that we need a higher standard. I think our energy is best spent on ensuring that we have the right regulations for our cities and our basins.

Monica Trauzzi: Colorado has, in many ways, led the way on renewable energy; in particular, on wind. It's ranked ninth in installed wind capacity. There's a 20 percent by 2020 renewable portfolio standard in your state, but despite the successes, there is talk right now about rolling back some of those standards on the RPS. Do you think that's a shortsighted view that's just paying attention to current market trends, and what role do you ultimately think renewable energy should be playing?

Tisha Conoly Schuller: There's broad support in Colorado for both renewables and traditional oil and gas resources. I expect that as we move forward, you're going to see strong support from the public, from regulators, from our legislators for all forms of energy in Colorado, as Colorado continues to grow and continues to set the trend of having a high level of expectations. My hope is that we'll have oil and gas development and we'll continue to see wind be very successful in Colorado.

Monica Trauzzi: Does that mean the RPS needs to stay as is?

Tisha Conoly Schuller: I don't think there's any question that the RPS is going to get smaller in Colorado. I think it will stay.

Monica Trauzzi: With Colorado being the home of the National Renewable Energy Lab, what signal do you think that sends nationally about renewable technologies?

Tisha Conoly Schuller: Colorado is blessed with many academic institutions. In fact, the Colorado Oil and Gas Association partners with groups out of NREL. I think their presence is very important, and you'll continue to see leadership about how natural gas, wind, and solar can work together coming out of Colorado.

Monica Trauzzi: Is one of the main factors here with the RPS the fact that natural gas production, which you're involved with, is doing so well and that the price is low and competitive?

Tisha Conoly Schuller: The price of low natural gas is certainly putting pressure on renewables across the country, but I think that we all have to maintain a long term view that we need that kind of diversity that wind and solar provide. Surely, in Colorado, we are both a significant natural gas producer and a growing oil producer. These resources create diversity and create opportunities for jobs and economic support for our state and for our local governments. I think you're going to continue to see them all grow in Colorado.

Monica Trauzzi: Let's talk about fracking for a second; it's a hot topic in Colorado as well as many states throughout the country. Recently, in Colorado, we saw that the Fort Collins City Council moved to ban fracking. Will you seek legal action in that case?

Tisha Conoly Schuller: We haven't decided yet if we'll seek legal action in Fort Collins. Our focus is that, across Colorado, we're all completely interdependent with oil and gas resources, and so any community that decides that they want to ban fracking is saying, "This oil and gas resource needs to be produced by another community and brought into mine." We wanna fundamentally change the nature of the conversation to one of personal responsibility and admit that we're integrated with this oil and gas and we need to each be a part of producing it.

Monica Trauzzi: Does that mean, then, that local communities should not have a say about what's happening in their own back yards?

Tisha Conoly Schuller: The amazing thing is, Colorado is actually a leader in giving local communities a say through the state process. Every local government designee has a role through permitting. They can appeal any decisions made up until final site reclamation. Local governments have a very important role in the state process, and we actually encourage that engagement and involvement.

Monica Trauzzi: We're seeing lawsuits sprouting up throughout the country. This is expensive stuff. At what point does it become too expensive to deal with all these lawsuits?

Tisha Conoly Schuller: Well, I think the focus for us, right now, we're involved in two lawsuits in Longmont, Colorado, where fracking has been banned. I think that the important thing is that we set that legal precedent. We believe that the law in Colorado is clear, so we want to make sure that that's re-articulated, re-affirmed in those cases, and I don't think you're going to see a lot more lawsuits going forward. Communities across Colorado have been engaging with the oil and gas industry for 100 years and are successfully doing so today.

Monica Trauzzi: Recently we saw a study coming out of Harvard pointing to serious flaws with the FracFocus website. What's your take on how reliable of a source that website is in terms of the disclosure of what chemical companies are using?

Tisha Conoly Schuller: Colorado has mandatory disclosure using FracFocus, and in fact, is in the process of rolling out a new version of FracFocus. That discussion didn't address the changes and the upgrades that are coming in FracFocus to address requirements in Colorado law. We're quite comfortable that as we move forward, FracFocus continues to improve and companies get better at disclosing and engaging with our communities.

Monica Trauzzi: All right, Tisha, we'll end it right there. Thank you for coming on the show. Nice to see you.

Tisha Conoly Schuller: It's my pleasure. Thank you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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