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Mission Change CO, regulators sweeping oil, gas reforms

By Judith Kohler, The Denver Post, from The Denver Post eEdition, July 12, 2020

State regulators writing new oil and gas rules have carried on through a global pandemic and massive turmoil in the industry. That might have been the easy part for the Colorado Oil and Gas Conservation Commission, now poised to plunge into the heart of the law that mandates sweeping changes. A new, full-time commission will take the hand-off from a volunteer commission to take on what’s being called “mission change.” The proposed rules range from where wells should be located to assessing the cumulative impacts of development, protecting important wildlife habitat to deciding who has the right to comment on new drilling.

The broad swath of proposals is intended to enact what’s considered the core of Senate Bill 181. The bill signed into law in April 2019 shifted the language of the COGCC’s mission from “fostering” oil and gas development while protecting public health and the environment to “regulating” the industry in a way that safeguards the public and environment. The new five-member professional commission, another change required by SB181, will hear from various interest groups leading up to a multi-day hearing scheduled to start Aug. 24. The state Air Quality Control Commission is also writing rules aimed at cutting emissions from well and gas sites. “This mission-change rule making is really where we see how successful Senate Bill 181 can be,” said Kelly Nordini, executive director of Conservation Colorado. “The old mission used to be about promoting oil and gas development. That’s not a modern charge for an agency that people expect to protect public health, neighborhoods and the environment.”

Last year, the Democratic-controlled legislature approved the bill revamping oil and gas regulations after stepped-up drilling in and near communities along the northern Front Range fueled growing concerns and complaints about air quality and health. In 2019, Colorado was the country’s fifth-largest oil producer and seventh-largest natural gas producer. However, low oil prices — due to an oversupply and a severe drop in demand after the corona-virus pandemic hit — have changed the landscape for energy companies nationwide. Even before the pandemic, many companies had scaled back spending and development plans because of heavy debt loads. 

“The industry is on its knees. You already had significant capital constraints. You had oil and gas prices that were already weak and then the pandemic just exacerbated all of that,” said Howard Boigon, an oil and gas lawyer who just stepped down from the commission after three years. Boigon expects the COGCC to get requests to slow down or delay the rule-making. Does he think the calls should be heeded? “My short answer is yes,” he said.

The commission and COGCC staff completed work in two important areas, Boigon said. The commission approved new rules for underground flow lines, which carry oil and gas from wells and run on or near a well site. And, in June, the commission adopted stronger rules for maintaining the integrity of the well bore, the hole that’s drilled to access oil or gas. The new rules are intended to better protect groundwater. They order more frequent checks of the cement and pipes that are part of the well construction. The mission-change rules are more general and “will require a lot of discussion and argument,” Boigon said. Oil and gas companies have laid off or furloughed people and are trying not to spend money. “To add this kind of intensive rule making and to do it in a setting where you have to do a lot of it virtually is really a big challenge.”

But Nordini said it’s been clear for a while that the industry is one of boom and busts and regulations need to take that into account. “For instance, how do we handle abandoned wells? How can the public have confidence that when they’re in a bust cycle we don’t end up holding the bag on abandoned wells, orphan wells?” Nordini asked. The commission will consider requiring bigger bonds to cover costs if companies abandon wells without cleaning and securing the sites, but not until the mission-change rules are adopted. Boigon favors moving the financial proposals to the head of the line because they deal with a specific, important issue.

Dan Haley, president and CEO of the Colorado Oil and Gas Association, said there was a lot of agreement on the rules adopted so far because people from all sides worked for months on them. “Now, we’re moving into the much broader mission-change proposals,” Haley said. “You hear us talking about needing more time. There really are technical, important things that we think you need to spend a little time getting right.”

The pace is the problem, but not in the way the industry says, said Anne Lee Foster with Safe and Healthy Colorado, which advocates for strengthening regulations. “It’s been an incredibly slow process in which permits have continued to be approved without health and safety regulations in place,” Foster said. “The few rule makings that have been completed have not addressed the real heart of Senate Bill 181, to protect public health and safety. Many concessions were made to industry to protect their profits.” Foster points to the requirement in the flow line rules that companies publicly map the location of the thousands of miles of oil and gas lines over which people live and work. The COGCC didn’t require the degree of detail on maps that reform advocates sought after companies raised concerns about security. A house explosion in Firestone in 2017 that killed Mark Martinez and his brother-in-law, Joey Irwin, made dealing with flow lines a priority when investigators determined the cause was an inactive but uncapped and leaking line.

Jeff Robbins, the former COGCC director who is now chairman of the commission, said although the pandemic delayed work, he expects approval of the mission-change rules to be only six weeks behind schedule. The commission has held a number of hearings online, sometimes drawing hundreds of participants. Dave Devanney of the Western Colorado Alliance said he’s looking forward to decisions on the upcoming rules, particularly well setbacks. He recently moved from Battlement Mesa to the Front Range but is still involved in fighting the location of well pads near homes in the Western Slope community and near the Colorado River. And Devanney supports requiring companies to detail the potential cumulative impacts before they can drill. “As a resident of Battlement Mesa, a community surrounded by oil and gas development and with development in the community, you can’t help but ask how much is too much,” he said. “When do we draw the line and say that’s all the pollution we can introduce into the environment?”

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