The energy industry is seeking to shoot down a bill (HB 1341) pending in the Colorado General Assembly that would significantly change the make-up of the state commission that manages oil and natural gas operations.
The bill, which cleared the House Agriculture, Livestock and Natural Resources Committee Wednesday, could cut to three from five the number of energy industry members on the Colorado Oil and Gas Conservation Commission, while increasing the overall number of members on the panel to nine from seven. It also would revise the definition of “waste” associated with oil and gas production.
The bill is now headed to the House, where the outlook is unpredictable, said Stan Dempsey, president of the Colorado Petroleum Association (CPA), which represents 50 major producers and refiners in the state. While on the House floor, he noted his group will urge lawmakers to offer two amendments to the bill — one striking the proposed changes to the definition of “waste,” and a second that would make two members of the governor’s cabinet who would sit on the commission nonvoting members.
In the meantime, CPA hopes to have more discussions with Harris Sherman, executive director of Colorado’s Department of Natural Resources, who designed the bill and also is the current executive director of the commission, Dempsey said.
The Senate may not be as receptive to the measure, he noted. It “has a stronger understanding of the benefit that industry provides to the state,” Dempsey told NGI.
CPA opposes the bill because it “would have a negative effect upon the development of Colorado oil and gas resources,” Dempsey said. “We think it could slow down the issuance of permits” in the state. And it might deter investors from developing the state’s oil and gas resources, he believes.
“It’s creating uncertainty in terms of the regulatory structure in Colorado,” Dempsey noted. “If you radically change the regulatory structure in Colorado, companies that are looking to invest in Colorado will say, ‘We’ve got other places to develop our assets. We’ll wait this out.'”
Dempsey said other bills also are on his radar screen. He noted that one bill (HB 1223) in the General Assembly “would have the Health Department reviewing permits in addition to the oil and gas commission.”
The bills come at a time when natural gas production in Colorado is “booming,” Dempsey said. The state issued an estimated 6,000 permits for oil and gas drilling last year and the number will continue to grow, he noted.
The commission, by reducing the number of industry representatives, “would lose the expertise and technical [knowledge] that it needs to do its job,” he said. In addition, CPA members find the proposed increase in the number of commission members “problematic,” Dempsey noted. “Our members have said to us a smaller commission works best.”
Gov. Bill Ritter campaigned on the promise that he would reform the commission, which has been dominated by industry in past years. In addition to the industry majority on the commission, the public has complained that they are seeing a lot of oil and gas production near residential areas, especially in the western part of the state.
The House bill, as proposed, would provide for a more diverse membership on the commission. It calls for the panel to include three members with substantial experience in the oil and gas industry, with two of them having a college degree in petroleum geology or petroleum engineering; one member who is a local government official; one member with a background and expertise in environmental or wildlife protection; one member with a background and expertise in soil conservation or reclamation; and one member who is actively engaged in agricultural production and who may be a royalty owner, as well as the executive directors of Colorado’s Department of Natural Resources and Public Health and Environment or their designees.
The measure, in revising the definition of waste, calls for the commission to consider public health, safety, environment and wildlife issues in order to determine the amount of resources to be recovered. The bill “moves us away from the general acceptance of the definition of waste,” Dempsey said.
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