It’s time to give some props to the Colorado Oil and Gas Conservation Commission and the Colorado Department of Public Health and Environment.
The COGCC is approving a rule to require a 2,000-foot setback from the edge of an oil and gas well pad to a residential property line for well drilling, with some exceptions. And the Air Quality Control Division of the CDPHE will require oil and gas drillers to measure air quality from the start of drilling as well as once production begins.
Count these as starting point victories for the oil and gas regulation reform required by SB19-181. It’s taken about a year and a half to get here.
The oil and gas industry says that the 2,000-foot requirement will destroy the industry in Colorado. Jeff Robbins, chair of the new professional COGCC commission, disagrees. The industry is apparently OK with the air quality measurement requirements as drillers of new wells will be responsible for the measurements rather than independent entities. That’s the rub.
The industry says that different wells require different measuring tools. Their measurement plans will go to the Air Quality Control Division for approval. Skeptics wonder why the division doesn’t require independent monitoring by third parties using fees from the industry.
The industry states that it’s a good neighbor and that it has cut methane leaks and other deleterious oil and gas events substantially over the last decade. It has spent $37,560,894 on Protecting Colorado’s Environment, Economy, and Energy Independence (Protect Colorado), a political committee representing oil and gas interests, to make this case since 2018. This number reflects contributions to Protect Colorado listed in the secretary of state’s campaign finance platform.
The contributions by Anadarko, now owned by Occidental Petroleum that’s in shaky financial straits; Noble Energy, now owned by Chevron; Extraction Oil and Gas, now bankrupt; Whiting Petroleum, just emerged from bankruptcy; and the recently merged oil and gas companies PDC/SRC Energy are staggering. The industry spent over $30 million in 2018 to fight off the 2,500-foot setback requirement on the ballot, only to see the 2,000-foot setback rule put in place now. PACWest is the firm that received most of the public relations dollars. So, the industry ultimately got 500 feet better than the ballot initiative.
Oil and gas interests did send over $3 million to Protect Colorado during the 2020 General Assembly negotiating air quality measurement regulations related to legislation and rules, among other issues. The public relations campaigns worked, apparently, because Gov. Jared Polis declared he would not support any oil and gas initiatives on the ballot through 2022, which happens to be when he’ll be up for re-election. Polis’s commitment will undoubtedly save the industry many millions of future political dollars against pesky ballot issues.
After the COGCC’s announcement of its regulation revision, oil and gas associations cited the failure of the 2,500-foot setback at the ballot in criticizing the new rule. It’s true that the initiative failed in counties least affected by drilling, except for Denver, and in counties most affected by the financial bonanza, Weld and Garfield. It passed in counties most affected by the potential harmful consequences of drilling and insufficiently benefitting from the financial boosts. Go figure.
Weld County is the biggest financial beneficiary of the oil and gas industry now, but sooner or later the goop will hit the fan and it will be the biggest loser. That will happen when the bankruptcies in the industry spread more broadly. Right now, it’s Extraction Oil and Gas and Whiting Petroleum that have been most affected by the downward push on energy prices. Occidental Petroleum’s purchase of Anadarko may sink the Houston-based company. The stock price has dropped from over $60/share to the low teens since the purchase.
Any bankruptcy impact will be on the approximately 20,000 wells in Weld County, with another 3,500 permitted and ready to go. The bonding coverage on plugging these wells is woefully underfunded. At about $80,000/well, there’s a potential cost of $1.6 billion on the 20,000, not to scare anyone. The money put into two years of oil and gas public relations would cover the plugging of about 450 wells, better than a stick in the eye.
No one, in other words, should feel that the COGCC’s or AQCD’s work is done.