NGI The Weekly Gas Market Report / NGI All News Access

Colorado, Feds Agree on Overlapping Drilling Strategy

Colorado regulators last week denied an energy industry request to delay implementing the state's new drilling rules on federal land. The rules take effect Wednesday (July 1).

The Colorado Oil & Gas Association (COGA) made the request at a regular meeting last Wednesday of the Colorado Oil and Gas Conservation Commission (COGCC). At the meeting COGCC approved an agreement with federal agencies, including the Bureau of Land Management (BLM), on how the new drilling rules would be applied on federal land.

The revamped rules took effect April 1 on nonfederal lands, but the COGCC had delayed implementing the rules covering federal lands until state and federal officials had a governing agreement in place (see NGI, April 27; March 30).

Under the agreement energy companies would be required to follow applicable state and federal rules, but producers are advised to incorporate the more stringent Colorado drilling rules when operating on federal lands. The agreement also encourages collaboration between Colorado and federal officials to avoid conflicts. However, it does not address how conflicts should be resolved.

COGCC Dave Neslin told the commission it would be difficult to write a "recipe book" to resolve abstract future conflicts. A substantial amount of western and northwestern Colorado is under BLM jurisdiction, he noted. In northwest Colorado, for example, ExxonMobil Corp. has a 300,000-acre leasehold, and 90% of its holdings are on federal land, he said.

However, COGA officials warned that regulatory delays could affect many producers unless the commission resolved all of the overlapping authority issues. The agreement "essentially kicks the can down the road on tough issues," said Howard Boigon, who represented COGA.

Conservation and citizen groups generally were supportive of the agreement. However, some objected to a provision that would allow the COGCC director to exempt producers from obtaining a state operations-location permit when federal approvals provide "substantially equivalent notice, comment and consultation procedures."

COGCC staff plans to continue to work on the dual regulations and staff was tasked by the commission to address how to resolve disputes that may arise between Colorado and federal rules.

©Copyright 2009 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.