More than 10,700 jobs could be displaced for part of the year if proposed new permitting and drilling rules under consideration in Colorado are enacted, according to the Colorado Oil & Gas Association (COGA) and the Colorado Petroleum Association (CPA).
The Colorado Oil and Gas Conservation Commission (COGCC) in late March unveiled draft regulations that would restructure some of the state’s energy rules (see Daily GPI, May 19; April 2; Nov. 29, 2007). Statewide hearings are taking place this month, and the final rules could take effect by Nov. 1. COGA and CPA have launched a week-long advertising campaign to fight the rules change.
“Altering 30 years of stable energy policy in Colorado, the administration [of Gov. Bill Ritter] is proposing sweeping changes to the rules and regulations governing Colorado’s natural gas and oil industry, including a requirement that all drilling west of Interstate 25 shut down operations for three months out of the year,” the trade associations said.
“This one move by the administration could very well be the tipping point that moves Colorado from being one of the most insulated to being one of the most impacted states in the national recession.”
The groups claim that as the proposed rules are currently drafted, the state’s economy in the Piceance and San Juan-La Plata basins would come to a standstill. “With more than 90 rigs in the Piceance Basin and 27 more in the San Juan-La Plata Basin, each of those rigs were employing 50 Colorado jobs that are now lost for at least three months of the year,” the groups said. “That’s 5,850 direct jobs.” With economic multipliers applied, that amounts to 10,700 jobs that would be disrupted for three or more months during the year, the groups said. “The ripple effect will consume counties and local communities whose tax base and economic stability are energy dependent.”
However, environmentalists have said the groups are mischaracterizing the proposed rules changes. “Industry’s position is absolutely false,” Matt Sura of the environmental group Western Colorado Congress told the Rocky Mountain News. Suzanne O’Neill, executive director of the Colorado Wildlife Federation, told the paper that the energy industry is characterizing the rules as a requirement “rather than a backstop in a situation where an operator doesn’t want to consult with the [Colorado] Division of Wildlife or isn’t interested in other tools available.”
At least one producer has threatened to reallocate spending if the rules changes are implemented. “Obviously we’re concerned about the impact of the new rulemaking,” Jeff Wojahn, president of EnCana USA Region, told financial analysts during a conference call in April (see Daily GPI, April 23). EnCana’s Colorado operations are focused in the Piceance Basin. The company acquired its first Piceance property in 2001 and added to its Rocky Mountain position when it bought Tom Brown Inc. in 2004 (see Daily GPI, April 16, 2004).
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