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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The amount and way that oil and gas is extracted in Colorado is expected to change dramatically once Colorado Governor Jared Polis (D) signs a sweeping new bill into law. That could come in a matter of days; Polis has publicly supported tighter control on the industry for years as a congressman. The bill that will become law, Senate Bill 19-181, was passed earlier this month by Democratic majorities in the state House and Senate on party-line votes.
The new law, which must be implemented by the state's regulatory authorities, changes the mission of the Colorado Oil & Gas Conservation Commission (COGCC) (Denver, Colorado) from fostering and regulating oil and gas development in the state to prioritizing health, safety and environmental considerations when issuing drilling permits. The commission's composition also will be changed, and new professional staff with experience in public health and environmental protection will be added. As well, the new law gives communities the right to use zoning laws to regulate oil and gas development. Previously, the law gave the COGCC the exclusive right to regulate all aspects of oil and gas development, including siting and setbacks from schools, homes and waterways.
Among states with unconventional oil and gas production, Colorado's Niobrara formation is projected to be the fourth-largest producer of oil in April, trailing the Permian, Bakken and Eagle Ford formations, according to the U.S. Energy Information Administration (EIA) (Washington, D.C.). On the unconventional gas side, Colorado is the fifth-largest producer of gas, trailing the Appalachian, Permian, Haynesville and Anadarko regions, the EIA said in its March Drilling Productivity Report.
Some analysts had projected Colorado's oil and gas production could double over the next 10 years, but that the changes codified in SB 19-181 could cut projected future growth in half or more.
Industrial Info is tracking 66 active oil and gas projects in Colorado with a total investment value (TIV) of $2.66 billion. Production projects accounts for 40 of those projects, valued at $1.6 billion. There also are 22 active Pipeline projects with a TIV of about $986 million and four Terminals projects under development valued at $68.5 million.
In a heavy slate of television and radio advertising, the oil and gas industry campaigned against the bill, warning it would devastate the state's economy. A report paid for by the Colorado Oil & Gas Association (COGA) (Denver) said oil and gas production employs 89,000 people in Colorado and pours $1 billion in tax revenues to state and local governments. Another study, from American Petroleum Institute (API) (Washington, D.C.), the oil and gas industry's main lobbying organization, said the industry and its supporting businesses employ about 232,000 people and create about $31 billion in economic value to the state.
The industry did not say all of that economic value of drilling would be vaporized overnight, but they did say the bill would hurt an "economic juggernaut." Neither did the ads claim the bill would place an outright moratorium on new drilling, but they made it clear that a checkerboard of local regulations would hurt workers, families, schools and supporting businesses like restaurants and hotels.
During the bill's mark-up process, state lawmakers adopted about two dozen amendments to the bill, most of which the industry had sought. But oil and gas interests still opposed the final bill.
The fight doesn't appear to be over. Ballot initiatives have been drafted to repeal SB 19-181. And the Colorado Oil and Gas Conservation Commission and the Colorado Department of Public Health and the Environment must now write rules to implement the law, where the industry could again make its voice heard.
The new law caps a multi-year process in which local communities, environmental organizations and Democratic elected officials clashed with the oil and gas industry and Republican elected officials over drilling in the Centennial State.
In 2014, a proposed voter initiative to dramatically increase drilling setbacks was pulled at the 11th hour after then-Governor John Hickenlooper pledged to create a blue-ribbon panel to investigate the way the state regulates oil and gas development. For more on that, see August 7, 2014, article - Oil & Gas Industry Sees Brisk Business in Colorado after Withdrawal of Voter Initiatives. Hickenlooper's panel changed few minds, and in 2016 another voter initiative was launched. This one did not collect the required number of signatures. For more on that, see September 2, 2016, article - Oil & Gas Industry Urged to Continue Personal Outreach After Measures to Restrict Drilling in Colorado Fail to Make the Ballot. In the 2018 election cycle, enough signatures were gathered to get a proposal on the ballot, but voters defeated Initiative 112 by a 57% to 43% margin. For more on that vote, see November 12, 2018, article - Oil & Gas Industry Welcomes Colorado's Rejection of Limits on Drilling.
But as the oil and gas industry cheered the voters' sound rejection of Initiative 112 last November, they had some concerns over the election of Jared Polis, a fracking foe, as governor. Last November, the Democrats increased their majority in the state House and flipped the state Senate from Republican control. A Republican majority in the state Senate had for years stood as a bulwark against tighter regulation of the oil and gas industry.
It remains to be seen how dramatically the new law and its implementing regulations affect drilling in Colorado. But the prospects do not appear promising. In prior years, several local communities enacted bans or moratoria on drilling, all of which were overturned by the courts or the COGCC. As SB 19-181 was making its way through the legislature, Adams County enacted a six-month moratorium on new drilling permits. The center of oil and gas development in the state lies in Weld County, just north of Adams County. While expressing some concerns over the toll drilling was taking on its roads and citizens, Weld County elected officials and the community at large still appear to support continued drilling.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
The new law, which must be implemented by the state's regulatory authorities, changes the mission of the Colorado Oil & Gas Conservation Commission (COGCC) (Denver, Colorado) from fostering and regulating oil and gas development in the state to prioritizing health, safety and environmental considerations when issuing drilling permits. The commission's composition also will be changed, and new professional staff with experience in public health and environmental protection will be added. As well, the new law gives communities the right to use zoning laws to regulate oil and gas development. Previously, the law gave the COGCC the exclusive right to regulate all aspects of oil and gas development, including siting and setbacks from schools, homes and waterways.
Among states with unconventional oil and gas production, Colorado's Niobrara formation is projected to be the fourth-largest producer of oil in April, trailing the Permian, Bakken and Eagle Ford formations, according to the U.S. Energy Information Administration (EIA) (Washington, D.C.). On the unconventional gas side, Colorado is the fifth-largest producer of gas, trailing the Appalachian, Permian, Haynesville and Anadarko regions, the EIA said in its March Drilling Productivity Report.
Some analysts had projected Colorado's oil and gas production could double over the next 10 years, but that the changes codified in SB 19-181 could cut projected future growth in half or more.
Industrial Info is tracking 66 active oil and gas projects in Colorado with a total investment value (TIV) of $2.66 billion. Production projects accounts for 40 of those projects, valued at $1.6 billion. There also are 22 active Pipeline projects with a TIV of about $986 million and four Terminals projects under development valued at $68.5 million.
In a heavy slate of television and radio advertising, the oil and gas industry campaigned against the bill, warning it would devastate the state's economy. A report paid for by the Colorado Oil & Gas Association (COGA) (Denver) said oil and gas production employs 89,000 people in Colorado and pours $1 billion in tax revenues to state and local governments. Another study, from American Petroleum Institute (API) (Washington, D.C.), the oil and gas industry's main lobbying organization, said the industry and its supporting businesses employ about 232,000 people and create about $31 billion in economic value to the state.
The industry did not say all of that economic value of drilling would be vaporized overnight, but they did say the bill would hurt an "economic juggernaut." Neither did the ads claim the bill would place an outright moratorium on new drilling, but they made it clear that a checkerboard of local regulations would hurt workers, families, schools and supporting businesses like restaurants and hotels.
During the bill's mark-up process, state lawmakers adopted about two dozen amendments to the bill, most of which the industry had sought. But oil and gas interests still opposed the final bill.
The fight doesn't appear to be over. Ballot initiatives have been drafted to repeal SB 19-181. And the Colorado Oil and Gas Conservation Commission and the Colorado Department of Public Health and the Environment must now write rules to implement the law, where the industry could again make its voice heard.
The new law caps a multi-year process in which local communities, environmental organizations and Democratic elected officials clashed with the oil and gas industry and Republican elected officials over drilling in the Centennial State.
In 2014, a proposed voter initiative to dramatically increase drilling setbacks was pulled at the 11th hour after then-Governor John Hickenlooper pledged to create a blue-ribbon panel to investigate the way the state regulates oil and gas development. For more on that, see August 7, 2014, article - Oil & Gas Industry Sees Brisk Business in Colorado after Withdrawal of Voter Initiatives. Hickenlooper's panel changed few minds, and in 2016 another voter initiative was launched. This one did not collect the required number of signatures. For more on that, see September 2, 2016, article - Oil & Gas Industry Urged to Continue Personal Outreach After Measures to Restrict Drilling in Colorado Fail to Make the Ballot. In the 2018 election cycle, enough signatures were gathered to get a proposal on the ballot, but voters defeated Initiative 112 by a 57% to 43% margin. For more on that vote, see November 12, 2018, article - Oil & Gas Industry Welcomes Colorado's Rejection of Limits on Drilling.
But as the oil and gas industry cheered the voters' sound rejection of Initiative 112 last November, they had some concerns over the election of Jared Polis, a fracking foe, as governor. Last November, the Democrats increased their majority in the state House and flipped the state Senate from Republican control. A Republican majority in the state Senate had for years stood as a bulwark against tighter regulation of the oil and gas industry.
It remains to be seen how dramatically the new law and its implementing regulations affect drilling in Colorado. But the prospects do not appear promising. In prior years, several local communities enacted bans or moratoria on drilling, all of which were overturned by the courts or the COGCC. As SB 19-181 was making its way through the legislature, Adams County enacted a six-month moratorium on new drilling permits. The center of oil and gas development in the state lies in Weld County, just north of Adams County. While expressing some concerns over the toll drilling was taking on its roads and citizens, Weld County elected officials and the community at large still appear to support continued drilling.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
