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New Colorado Emission Rules Could Cost E&Ps $100M

Colorado's air quality regulators were told Tuesday by the oil and natural gas industry that the state's proposed rules aimed at curbing greenhouse gas (GHG) emissions could cost oil/gas operators more than $100 million to comply with the cost-per-ton of eliminated emissions being significantly higher than previously estimated by the state.

In a joint statement to the Colorado Air Quality Control Commission (AQCC), the Colorado Petroleum Association (CPA) and the Colorado Oil and Gas Association (COGA) questioned whether the state should regulate just one major industry (oil and gas) regarding GHG emissions, while exempting other industries that contribute to these emissions.

The filing by the industry was part of the prehearing phase for the air quality panel's proceeding to develop what the industry groups are hoping will be "reasonable provisions" for protecting air quality and further reducing volatile organic compound (VOC) emissions. Hearings have been set for Feb. 19-21 in Denver.

While the industry groups are supportive of the process and hoping for more refinement of the draft rules, they made it clear in their statement that they want changes to be made before the rules are finalized. Among their "key elements," CPA and COGA asked that the current "one-size-fits-all" approach in the rules be removed and future rules be applied to ozone nonattainment areas "to better reflect the realities of air quality, focusing on areas of greatest need."

The industry groups also urged AQCC to provide more implementation time for the industry, asserting that the proposed regulatory programs carry "extensive capital expenses addressing technical and operational constraints and considerations."

AQCC should "fully evaluate" and consider the full costs and benefits associated with the proposed rules, making sure the full costs are warranted in adopting certain rules language.

CPA President Stan Dempsey urged the state air officials to get more input from oil/gas operators of all sizes. "We look forward to discussing our ideas and concepts with [AQCC]," Dempsey said.

COGA's Doug Flanders, director of policy and external affairs, said his organization "supports many aspects" of the proposed rules, but it will take more collaboration between the industry and state officials "to ensure our air stays clean while allowing this critical industry to responsibly develop oil and natural gas."

Flanders stressed the role of natural gas in the state and nationally in recent year in helping reduce GHG emissions. "The conversions to gas-fired generation have allowed the United States to achieve the lowest CO2 [carbon dioxide] emissions since 1992."

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