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Colorado Commission Finalizing Drilling Rules
The Colorado Oil & Gas Conservation Commission (COGCC) plans to hire 14 staffers to help implement revised energy rules taking effect in 2009. The nine-member regulatory agency is formally approving the rules this week, and most of them are expected to take effect in April and May — well past the original schedule.
For more than a year the COGCC has been working on the rules package to implement changes from the 2007 Colorado legislative session, specifically, House Bills 1298 and 1341 (see Daily GPI, Nov. 29, 2007). The COGCC met Tuesday, and it plans to finalize the full package of rules by Thursday.
David Neslin, COGCC acting director, said the regulatory staff compromised on many of the contentious issues following lengthy hearings with industry representatives, affected landowners and environmental activists. Even though some energy companies have called the revisions unnecessary — and a possible hindrance to investment and jobs creation — Neslin said the recommended revisions would better protect the state’s environment, public health and local communities from the impacts of oil and gas drilling.
The 177-page rules package revises 108 sections of Colorado’s oil and gas regulations. Many of the revisions are minor, but there is a section that specifically addresses wildlife. Under the new rules, producers would be required to obtain consent from landowners on wildlife conditions before they could drill. If the landowners refused consent to drill, the COGCC director would have the authority to either issue or withhold a drilling permit.
The Colorado Division of Wildlife (DOW), which contributed to the regulatory language, got some but not all of the revisions it requested, said DOW’s Randy Hampton. However, the revisions will allow DOW to do a “more thorough job,” he said. “Things in the final rules are far, far better for wildlife than nothing.”
At least a dozen energy companies already have contacted DOW to discuss comprehensive development plans, which are part of the new rules, Hampton said.
Neslin acknowledged that Colorado’s energy sector may slow down in 2009, but he said the slowdown would be for economic reasons, which have hurt the energy industry nationwide.
“With the global economic downturn, reduction in commodity prices and pipeline constraints, it looks like the level of activity will moderate next year,” Neslin said. However, “we still are expecting a robust level of industry activity. Even if the level of drilling in the state were to decrease 20-30%, that would take us back to where we were a couple of years ago, not where we were 10 or 20 years ago.”
In the past few weeks several operators that drill in Colorado’s Piceance Basin, which is in Garfield County, have laid down rigs and announced reductions in their 2009 capital spending plans (see Daily GPI, Nov. 24). The COGCC, which now employs 54 people, had approved more than 7,200 drilling permits through the end of November. The agency expects to issue nearly 7,600 by the end of December. In 2007 the agency issued 6,368 drilling permits.
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