Released May 01, 2024 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)-- A truce has been declared in Colorado's long-running energy wars that for years pitted oil and gas companies against environmental organizations. Like all cessation of hostilities, this one needs to be codified with documents, in this case legislation, which is said to be forthcoming.
Governor Jared Polis (D) brokered the deal, which was announced late Monday. The agreement requires Democrats in the state legislature to abandon four bills that would have significantly tightened regulation of the oil and gas industry. Environmental groups will drop their numerous proposed ballot initiatives aimed at more closely regulating the industry. And oil and gas groups agreed to abandon their own ballot initiative efforts, at least one of which took aim at the state's renewable portfolio standard (RPS).
An earlier legislative effort to prohibit drilling new wells after 2030 was defeated in late March by a state senate committee. For more on this year's skirmishes, see April 1, 2024, article - Colorado Senate Halts Bill to Ban Future Oil & Gas Drilling.
Oil and gas companies and environmental organizations have crossed swords repeatedly in recent years. For more on this year's battle, see February 16, 2024, article - Energy Wars Return to Colorado.
The truce brokered by Polis followed by a few days the certification that one industry-backed ballot initiative, Proposed Initiative 77, had gathered enough signatures to appear on the November ballot. This measure would have required that all future ballot initiatives appear below an extensive economic impact statement, which must include the estimated effect on jobs, state and local tax revenue and the overall state gross domestic product. The Colorado Secretary of State's Office on April 22 said the measure had collected enough signatures to qualify for the ballot.
A package of legislation is being prepared that will codify the ceasefire between the warring parties. Democrats control both branches of the legislature, as well as the governor's office, so the to-be-introduced package likely will pass, but it must be approved before the legislative session closes May 8.
A statement from the governor's office, released Monday, said, "The legislative package set to be introduced at the state legislature will generate significant new funding for transit and rail, as well as land conservation and habitation protection, from modest fees placed on oil and gas production in Colorado. The legislation will also create more permitting and enforcement authority for the state to reduce emissions, new strategies and authorities to protect and improve air quality and reduce pollution in Colorado communities. The bills drive further collaboration between air regulators and the Colorado Energy and Carbon Management Commission to continue reducing pollution from oil and gas, and put in place new protections for communities disproportionately impacted by pollution."
"Leading our state often means pulling together people with different viewpoints to work together and forge the best path forward for Colorado," said Polis in a statement. "This important agreement does just that by taking important steps to improve air quality, transition away from emissions-causing transportation systems and protect our lands, while also pulling down opposing ballot initiatives. I thank my staff for their hard work, and responsible industry and environmental groups for coming to the table and stepping back from costly, risky and divisive actions."
He continued: "Reaching a consensus with this diverse group of stakeholders, who rarely agree on anything, is a strong step for Colorado and our future. The unintended consequences and unpredictability of proposed ballot measures would take Colorado in the wrong direction."
News reports said the to-be-introduced legislation will include an increase in per-barrel extraction fees paid by drillers that would generate about $138 million in annual incremental revenue to the state's coffers. Most of those new funds would be spent supporting public transit in the state. Some would be earmarked to help plug abandoned or "orphaned" wells and restore lands that were impacted by drilling.
The bill also would codify a 30% reduction in oxides of nitrogen produced by the oil and gas industry by 2025 and a 50% cut by 2030, said Colorado House Speaker Julie McCluskie, according to a report in The Denver Post. The permitting and air quality bill also would strengthen "enforcement mechanisms," she added.
In return, lawmakers and several environmental groups agreed to abandon recent attempts at regulatory legislation and ballot initiatives that have been backed by deep pockets.
The governor's statement said, "The state will need time to implement the new, agreed-upon policies and make the investments. The Polis administration, legislators and the state are committed to regulatory certainty and putting Colorado on a path to achieve climate goals. This agreement represents a commitment to work together to achieve these goals and enact this legislative package."
It continued: "This consensus between major oil and gas producers, the ozone coalition including major environmental NGOs, the ozone legislative bill sponsors, Democratic legislative leaders, and the Governor, means divisive legislation that threatens the oil and gas industry's existence and ballot initiatives that roll back environmental protections are no longer desired or needed as Colorado leaders roll up their sleeves to do this work."
The governor's statement said the following organizations worked on the agreement and supported the legislation to be introduced: Earthjustice, Conservation Colorado, Southwest Energy Efficiency Project, major oil and gas operators (Occidental, Civitas, Chevron), Green Latinos, CoPIRG, Earthworks, Western Resource Advocates, Healthy Air and Water Colorado.
A news report in The Denver Post said that if the two new bills are approved, the environmental groups, legislators and key industry players agreed not to run any new ballot measures or legislation for the next few years. Polis and Senate President Steve Fenberg (D) told reporters the time-out was intended to give the new policies time to be implemented.
But if the bills fail, the report added, the state will continue along the "status quo," Fenberg said.
The statement released by the governor's office did not quote any of the parties to the agreement, but the Post article said Dan Haley, president and chief executive of the Colorado Oil and Gas Association (COGA) (Denner, Colorado) as welcoming the Monday deal: "Colorado's oil and natural gas industry has been leading the state in emissions reductions and has been at the table for more than two dozen rulemakings in just the past few years. But political and legislative stability and certainty is vital to our industry's future success here, and we're pleased to see our state's political leaders share that vision."
The Post article also quoted Kait Schwartz, director of the Colorado chapter of the American Petroleum Institute (API) (Washington, D.C.), praising the negotiated settlement because "stability for a vital industry is of utmost importance."
The oil and gas industry supported 54,420 direct jobs and 249,320 indirect jobs in the state in 2021, accounting for about 7.7% of the state's total employment, according to a year-old report from the API, which noted the industry contributed $48.7 billion to the state's economic output, or about 11% of the total.
The Post article also included this quote from Ean Thomas Tafoya, the Colorado state director of GreenLatinos: "These bills represent significant progress for disproportionately impacted communities, providing much-needed protections from pollution, resources to enhance the lives of transit-dependent individuals, and crucial remediation efforts for both the ecosystem and affected communities."
In 2022, Colorado was the nation's fifth-largest producer of crude oil and the eighth-largest producer of natural gas, according to the U.S. Energy Information Administration (EIA). The agency estimated that the Niobrara Shale Formation, which is mainly in Colorado, will produce about 711,000 barrels of oil per day (BBL/d) in May, close to its historic peak of about 800,000 BBL/d, set in 2019. Gas production from that formation will average approximately 5.4 billion cubic feet per day (Bcf/d) this month, not far below that formation's historic peak of about 6 Bcf/d, set in early 2020, the agency said.
Click on the image at right to see oil and gas production from the Niobrara Shale Formation.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Governor Jared Polis (D) brokered the deal, which was announced late Monday. The agreement requires Democrats in the state legislature to abandon four bills that would have significantly tightened regulation of the oil and gas industry. Environmental groups will drop their numerous proposed ballot initiatives aimed at more closely regulating the industry. And oil and gas groups agreed to abandon their own ballot initiative efforts, at least one of which took aim at the state's renewable portfolio standard (RPS).
An earlier legislative effort to prohibit drilling new wells after 2030 was defeated in late March by a state senate committee. For more on this year's skirmishes, see April 1, 2024, article - Colorado Senate Halts Bill to Ban Future Oil & Gas Drilling.
Oil and gas companies and environmental organizations have crossed swords repeatedly in recent years. For more on this year's battle, see February 16, 2024, article - Energy Wars Return to Colorado.
The truce brokered by Polis followed by a few days the certification that one industry-backed ballot initiative, Proposed Initiative 77, had gathered enough signatures to appear on the November ballot. This measure would have required that all future ballot initiatives appear below an extensive economic impact statement, which must include the estimated effect on jobs, state and local tax revenue and the overall state gross domestic product. The Colorado Secretary of State's Office on April 22 said the measure had collected enough signatures to qualify for the ballot.
A package of legislation is being prepared that will codify the ceasefire between the warring parties. Democrats control both branches of the legislature, as well as the governor's office, so the to-be-introduced package likely will pass, but it must be approved before the legislative session closes May 8.
A statement from the governor's office, released Monday, said, "The legislative package set to be introduced at the state legislature will generate significant new funding for transit and rail, as well as land conservation and habitation protection, from modest fees placed on oil and gas production in Colorado. The legislation will also create more permitting and enforcement authority for the state to reduce emissions, new strategies and authorities to protect and improve air quality and reduce pollution in Colorado communities. The bills drive further collaboration between air regulators and the Colorado Energy and Carbon Management Commission to continue reducing pollution from oil and gas, and put in place new protections for communities disproportionately impacted by pollution."
"Leading our state often means pulling together people with different viewpoints to work together and forge the best path forward for Colorado," said Polis in a statement. "This important agreement does just that by taking important steps to improve air quality, transition away from emissions-causing transportation systems and protect our lands, while also pulling down opposing ballot initiatives. I thank my staff for their hard work, and responsible industry and environmental groups for coming to the table and stepping back from costly, risky and divisive actions."
He continued: "Reaching a consensus with this diverse group of stakeholders, who rarely agree on anything, is a strong step for Colorado and our future. The unintended consequences and unpredictability of proposed ballot measures would take Colorado in the wrong direction."
News reports said the to-be-introduced legislation will include an increase in per-barrel extraction fees paid by drillers that would generate about $138 million in annual incremental revenue to the state's coffers. Most of those new funds would be spent supporting public transit in the state. Some would be earmarked to help plug abandoned or "orphaned" wells and restore lands that were impacted by drilling.
The bill also would codify a 30% reduction in oxides of nitrogen produced by the oil and gas industry by 2025 and a 50% cut by 2030, said Colorado House Speaker Julie McCluskie, according to a report in The Denver Post. The permitting and air quality bill also would strengthen "enforcement mechanisms," she added.
In return, lawmakers and several environmental groups agreed to abandon recent attempts at regulatory legislation and ballot initiatives that have been backed by deep pockets.
The governor's statement said, "The state will need time to implement the new, agreed-upon policies and make the investments. The Polis administration, legislators and the state are committed to regulatory certainty and putting Colorado on a path to achieve climate goals. This agreement represents a commitment to work together to achieve these goals and enact this legislative package."
It continued: "This consensus between major oil and gas producers, the ozone coalition including major environmental NGOs, the ozone legislative bill sponsors, Democratic legislative leaders, and the Governor, means divisive legislation that threatens the oil and gas industry's existence and ballot initiatives that roll back environmental protections are no longer desired or needed as Colorado leaders roll up their sleeves to do this work."
The governor's statement said the following organizations worked on the agreement and supported the legislation to be introduced: Earthjustice, Conservation Colorado, Southwest Energy Efficiency Project, major oil and gas operators (Occidental, Civitas, Chevron), Green Latinos, CoPIRG, Earthworks, Western Resource Advocates, Healthy Air and Water Colorado.
A news report in The Denver Post said that if the two new bills are approved, the environmental groups, legislators and key industry players agreed not to run any new ballot measures or legislation for the next few years. Polis and Senate President Steve Fenberg (D) told reporters the time-out was intended to give the new policies time to be implemented.
But if the bills fail, the report added, the state will continue along the "status quo," Fenberg said.
The statement released by the governor's office did not quote any of the parties to the agreement, but the Post article said Dan Haley, president and chief executive of the Colorado Oil and Gas Association (COGA) (Denner, Colorado) as welcoming the Monday deal: "Colorado's oil and natural gas industry has been leading the state in emissions reductions and has been at the table for more than two dozen rulemakings in just the past few years. But political and legislative stability and certainty is vital to our industry's future success here, and we're pleased to see our state's political leaders share that vision."
The Post article also quoted Kait Schwartz, director of the Colorado chapter of the American Petroleum Institute (API) (Washington, D.C.), praising the negotiated settlement because "stability for a vital industry is of utmost importance."
The oil and gas industry supported 54,420 direct jobs and 249,320 indirect jobs in the state in 2021, accounting for about 7.7% of the state's total employment, according to a year-old report from the API, which noted the industry contributed $48.7 billion to the state's economic output, or about 11% of the total.
The Post article also included this quote from Ean Thomas Tafoya, the Colorado state director of GreenLatinos: "These bills represent significant progress for disproportionately impacted communities, providing much-needed protections from pollution, resources to enhance the lives of transit-dependent individuals, and crucial remediation efforts for both the ecosystem and affected communities."
In 2022, Colorado was the nation's fifth-largest producer of crude oil and the eighth-largest producer of natural gas, according to the U.S. Energy Information Administration (EIA). The agency estimated that the Niobrara Shale Formation, which is mainly in Colorado, will produce about 711,000 barrels of oil per day (BBL/d) in May, close to its historic peak of about 800,000 BBL/d, set in 2019. Gas production from that formation will average approximately 5.4 billion cubic feet per day (Bcf/d) this month, not far below that formation's historic peak of about 6 Bcf/d, set in early 2020, the agency said.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
