Sweeping drilling reforms advance in Colo.

By Mike Lee | 03/06/2019 07:08 AM EST

Colorado is weighing a bill that could overhaul the way the state regulates oil and gas drilling. Pictured is a gas drilling site near Rifle, Colo.

Colorado is weighing a bill that could overhaul the way the state regulates oil and gas drilling. Pictured is a gas drilling site near Rifle, Colo. Plazak/Wikimedia Commons

Updated at 9:02 a.m. EST.

Colorado legislators early this morning passed a bill to overhaul the state’s oil and gas regulations following a 12-hour hearing that drew testimony from hundreds of people around the state.

More than 350 people signed up to speak in person and by video feed from locations around the state. And competing rallies drew hundreds of supporters and opponents to the Capitol in Denver.


The state Senate Transportation and Energy Committee approved the Democratic proposal on a 4-3 party-line vote at 2 a.m. local time, according to the Greeley Tribune. The measure must now be approved by at least one other Senate committee and the full Senate before going to the state House of Representatives.

The bill has already churned up a fight that’s drawn the attention of national energy trade groups like the American Petroleum Institute. If it passes in its current form, Colorado would be one of the few oil patch states to allow broad oversight of drilling by local governments.

The measure, S.B. 181, would require the Colorado Oil and Gas Conservation Commission — the state’s main energy regulator — to focus on protecting health and safety. Currently, state law requires the commission to balance health and environmental concerns against the need to foster energy development.

The language, sponsored by Senate Majority Leader Stephen Fenberg and House Speaker K.C. Becker, both Democrats, would also clarify that cities and counties can control the location of wells, tanks and other facilities, and regulate surface impacts such as noise and traffic. Other provisions would require pollution monitoring, new bonding requirements for oil and gas wells and changes in the state’s forced pooling system for assembling blocks of mineral rights into drilling units.

Opponents at yesterday’s hearing said the changes could cripple the state’s oil and gas industry, leading to job losses that would primarily harm rural areas.

"If you recently visited rural Colorado, you know well-paying jobs are hard to come by," said Gary Melcher, speaking on behalf of the Colorado Farm Bureau. "The few jobs that are available will be gone."

Trade groups including the Colorado Oil and Gas Association said they’d been denied a chance to help write the bill and questioned why it was being considered two business days after it was introduced Friday.

But the bill’s backers, who believe they have a strong chance of winning because of Democratic gains in the 2018 elections, countered that Colorado’s current system doesn’t protect homeowners from pollution, the downsides of drilling.

They were joined by Erin Martinez, whose husband and brother were killed two years ago in a pipeline explosion that destroyed their home (Energywire, March 1).

"Under the current system … local governments simply do not have a seat at the table when it comes to oil and gas decisions," said Eva Henry, a commissioner from Adams County.

"With proper regulations and inspections and pressure testing, this entire tragedy could have been avoided," Martinez said, according to the Tribune.

A political signal

The oil and gas industry spent the Obama years arguing that state agencies — not the federal government — are best-positioned to regulate development. The industry also pushed back against cities and counties.

In 2015, Texas and Oklahoma both enacted laws that curtailed local governments’ authority after the city of Denton, Texas, passed a local ban on fracking.

Several cities and counties in Colorado have tried to pass limits on fracking in their jurisdictions, but the state under former Gov. John Hickenlooper (D) maintained that they were exceeding their authority.

In November, voters rejected a statewide initiative that would’ve imposed a 2,500-foot setback between oil and gas facilities and surrounding buildings. But at the same time, voters elected Democratic Gov. Jared Polis, who favors stricter oil and gas regulation, and gave Democrats control of both legislative chambers.

For Democratic state Rep. Chris Hansen, the election was a clear signal from voters.

"The signal is, ‘We want you to address these problems,’" he said on a conference call sponsored by analysts from Robert W. Baird & Co.

Hansen predicted the bill would be amended but ultimately passed. It would likely result in some production cuts, particularly in Boulder County and other suburbs outside Denver. But Weld County, the heart of Colorado’s shale boom, wouldn’t see much impact.

Indeed, Anadarko Petroleum Corp., the state’s largest driller, said Monday that the bill would have little impact on its operations. Most of its Colorado acreage is in Weld County.

"We have sufficient approved permits and inventory of drilled, uncompleted wells to maintain planned activity into next year and fully expect to continue working collaboratively with communities in the DJ Basin to responsibly and safely produce oil and natural gas in the years to come," the company said on its website.

Yesterday, Anadarko issued a second statement opposing the bill, saying, "More time is necessary to debate, assess, and amend a bill this complex."