Two oil and gas groups jointly expressed concern that a Colorado Senate bill was moving ahead before getting the necessary public input. SB 19-181 was scheduled for consideration by a Senate committee a business day after Senate Majority Leader Stephen Fenburg (D-Denver) introduced it on Mar. 1, the Colorado Oil & Gas Association and Colorado Petroleum Council’s leaders noted on Mar. 3.
“It would impact the livelihoods of Coloradans across the state, including many who live in rural areas and may not be able to make it to the Capitol to testify on such short notice,” COGA Pres. Dan Haley and CPC Executive Director Tracee Bentley jointly said.
“Our elected leaders can’t be asked to vote on a bill this complicated and this encompassing—and one with such grave impacts—without first a legitimate dialogue. No good can come out of legislation that is revealed on a Friday night and rushed through the legislative process,” they said.
The Senate Transportation and Energy Committee approved the bill in a 4-3 vote on Mar. 5 along party lines and referred it to the Finance Committee, Bentley told OGJ in a Mar. 6 e-mail. CPC is an American Petroleum Institute affiliate.
SB 19-181 “enhances local governments’ ability to protect public health, safety, and welfare and the environment by clarifying, reinforcing, and establishing their regulatory authority over the surface impacts of oil and gas development,” it said. House Speaker K.C. Becker (D-Denver) is its cosponsor.
In a Mar. 6 note, analysts at Moody’s Investors Service said the bill proposes sweeping changes not just to oil and gas regulation in Colorado but also to the Colorado Oil & Gas Conservation Commission (COGCC).
Negative credit impacts
This would have negative impacts on the credit of oil and gas operators in the state by raising regulatory risks and possibly impeding production growth and heightening the compliance and operational costs for companies in the Denver-Julesburg basin, they said.
It would give COGCC greater authority to regulate the oil and gas industry while increasing regulated operational requirements, making “forced pooling” (a form of eminent domain) more difficult and granting local governments the flexibility to set their own drilling rules, including setback limits, the minimum distance of production activity from certain, mostly inhabited, areas, the Moody’s analysis said.
“SB 19-181 also proposes big changes to the COGCC itself, requiring that just one of the nine commissioners have industry experience, down from three today, while changing the agency’s mission to regulating the hydrocarbon industry, instead of fostering its development,” they noted.
The measure came months after Colorado voters resoundingly defeated an initiative which would have established even farther setback limits (OGJ Online, Nov. 7, 2018). CPC and COGA were the oil and gas elements in a broad coalition of business groups and local governments in the state which worked against Proposition 112.
“Even though we still expect that the affected E&P companies and Colorado industry associations will keep meeting with political leaders and regulators in the state to negotiate elements of the proposal, the bill was written without apparent input from the energy industry, and its sudden appearance for consideration in a committee hearing heightens the legislative and regulatory risks for Colorado oil and gas producers,” the Moody’s analysis said.
Contact Nick Snow at [email protected].
