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Colorado Republicans Try to Thwart Energy Rules Overhaul

A small group of Colorado's Republican-led lawmakers are trying to convince fellow state legislators to reconsider their plans to enact revised energy regulations, which are scheduled to take effect beginning in April.

The Colorado Oil and Gas Conservation Commission (COGCC) in December completed an overhaul of the state's oil and gas rules after more than a year of deliberation (see NGI, Dec. 15, 2008). The changes implemented Colorado House Bills 1298 and 1341, which were enacted in 2007 (see NGI, Dec. 3, 2007).

Among other things, the new rules would give more consideration to the environment, wildlife and public health and safety issues when oil and gas development is considered.

Assistant Senate GOP chief Greg Brophy of Wray, CO, has introduced a bill to delay implementing the rules because, he said, they will hurt the state's energy industry. In January Brophy explained, in an editorial that was published in the Denver Post, about why the rules should be delayed.

"So far, Colorado's energy industry has remained a rare bright spot in what are increasingly dark economic times, creating thousands of high-paying jobs in our state and providing badly needed tax revenues for state and local government coffers," said Brophy. "Thanks to Gov. Bill Ritter, however, all of that looks set to change." Ritter is a Democrat, and Democrats also control the Assembly's House and Senate.

"The energy sector has been struggling with a number of challenges in the last several months: fluctuating prices, inadequate transmission infrastructure, and increasingly unpredictable financial and credit markets," said Brophy. "Making matters worse, the governor's hand-picked Oil and Gas Conservation Commission issued far-reaching new rules -- rules that are adding to energy companies' uncertainty and forcing them to think twice about investing their money in Colorado."

EnCana Corp.'s U.S.-based subsidiary has announced it will cut around half of its capital spending -- or around $300 million -- in Colorado this year. Other producers also have announced budget cutbacks, and other announcements are expected as 4Q2008 earnings are announced in the next few weeks.

"Unfortunately, we are seeing the same disturbing trend across our state," Brophy noted. "While drilling activity has remained stable in neighboring states such as Utah and Kansas (and actually increased in Wyoming), one out of every 10 drilling rigs that was in Colorado one year ago has been pulled out of our state as energy companies look to relocate their capital investments, tax revenues and jobs to more business-friendly states.

"The picture looks to become even bleaker, as industry forecasters anticipate the number of rigs operating in Colorado to drop by another 40-60% in 2009, threatening to grind Colorado's already sputtering economy to a virtual standstill...While most Coloradans view these developments with alarm, the Ritter administration seems to view the impact of these job-killing rules as inevitable collateral damage in their effort to shore up political support among radical environmentalists."

Brophy said the legislature has the "opportunity to restore some balance to these draconian rules and to stop the movement of these family-wage jobs from Colorado into other states...And despite Gov. Ritter's shameful efforts to portray this as a zero sum game in which we must choose one over the other, I am confident that if legislative leaders are willing to put politics aside in favor of some common sense and moderation, we can indeed do both."

Colorado Senate Republican Leader Josh Penry of Grand Junction said the state did not need "another job-killer" in the weak economy. "There has been a lot of talk at the State Capitol in the last six weeks about creating jobs," he said. "This is a litmus test for all of that bold talk. Do we really want to create jobs, or risk strangling the only industry that is moving the ball forward in our economy right now?"

A hearing was scheduled last Monday on Brophy's bill before the Assembly's State, Veterans and Military Affairs Committee. However, the hearing was canceled, and Brophy was trying to get the legislation sent to another committee.

COGCC staff is to begin traveling through the state beginning in February to educate stakeholders -- including energy companies -- about the new rules, as adopted. For information, visit www.cogcc.state.co.us/.

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