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Colorado Reports Gusher of Drilling Applications in March

Producers that operate in Colorado apparently were on a mission to secure drilling permits under the state's "old" natural gas and oil rules, with a record number of permit applications filed in March, according to the Colorado Oil and Gas Conservation Commission (COGCC). New rules to drill on state lands took effect last week; the federal lands drilling revisions are to take effect in May.

Although drilling in Colorado is down an estimated 60% from 2008 highs, the COGCC reported that 1,150 drilling permit applications were filed with the COGCC in March, well ahead of the prior one-month record of 784, which was set in April 2008. The COGCC did not have any applications for permits to drill in the first two days of April. The March permit applications accounted for more than half the total 2,110 permit requests received in the first three months of 2009, and were more than the 2,044 filed in the same period of 2008.

The COGCC overhauled the drilling rules late last year, and the Colorado Assembly last month signed off on the package and sent it to Gov. Bill Ritter for his approval (see NGI, March 30). Ritter, who supported the revisions, plans to sign the bill to enact the rules, but the rules would take effect with or without his signature, Neslin said.

"It will be important that he sign the bill prior to May 15," said acting COGCC Director Dave Neslin, because the bill allows the drilling revisions and other rules to continue indefinitely past mid-May.

Not all portions of the revised rules took effect last week, Neslin noted. Some rules will be phased in this year. Rules that cover drilling on federal lands are poised to take effect May 1, but they may be postponed to ensure Colorado regulators and the Bureau of Land Management (BLM) prevent any overlap between state and federal jurisdiction.

State and BLM officials already have met to discuss the rules changes, and more meetings are scheduled this month, according to the COGCC. The COGCC met last Monday but did not issue an extension for the rules that cover federal lands. The commission's next scheduled meeting is April 20.

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