The Colorado Oil & Gas Conservation Commission (COGCC) on Nov. 23, 2020, unanimously adopted rules changes promulgated in the wake of SB 19-181 “Protect Public Welfare Oil and Gas Operations,” passed into law Apr. 16, 2019. Adoption of the changes concluded 4 months of rulemakings designed to “increase protections for Colorado’s public health, safety, welfare, wildlife, and environmental resources.” Before passage of SB 19-181, COGCC’s mission had been to foster oil and gas development.
Included in the rules were tougher requirements for permitting new oil and gas wells, including increasing the setback between wells and public spaces or homes to 2,000 ft from 500 ft. Dan Gibbs, executive director of Colorado’s Department of Natural Resources, described the rules as “nation-leading” and as having established “the right safeguards…while providing certainty and a streamlined process for oil and gas operators.” The rulemaking hearings were overseen by a new professional commission seated July 1, 2020, by Gov. Jared Polis (D), the creation of which was also an SB 19-181 requirement.
The American Petroleum Institute’s (API) initial reaction to the new rules was guardedly collaborative. API Colorado said that the state’s industry was resilient, but that it was “critical” that it have a “seat at the table as guidance is developed and the rules are put into practice.” API also noted that the “lack of conversation around economic impacts throughout this process” made it “equally important” for COGCC to honor its “pledge to address any unintended consequences should they come up.”
Aside from adjusting drilling setbacks, issues addressed included redefining the relationship between state and local governments, establishing streamlined permitting, and prohibiting routine flaring or venting. Operators must now comply with local regulations if they are stricter than state regulations. COGCC and local permitting will now happen collaboratively, reducing duplication. Flaring and venting will now only be permitted when the well is disrupted, during emergencies and with written permission during maintenance, during production evaluations at wildcat wells, as part of an approved gas-capture plan, when necessary to complete a well, or when an operator can show it will minimize adverse impacts.
New Mexico’s Environment Department and Energy, Minerals, and Natural Resources Department proposed rules in July 2020 that would reduce methane emissions by 21% and volatile organic compounds by 19%. Environmental groups, however, insist that closing loopholes in the draft regulations related to low-producing wells (95% of the state’s inventory) could nearly triple these reductions.
Colorado’s methane emissions targets are even more aggressive. Its ‘Greenhouse Gas Pollution Reduction Roadmap’ aims for a 50% reduction in total greenhouse gas emissions by 2030 from a 2005 baseline.
The next level
The Colorado permitting rules take effect Jan. 15, 2021. Five days later, Joe Biden will be sworn in as the 46th President of the United States. One of Pres. Donald Trump’s most fully delivered campaign promises was the rollback of various regulations that impeded minerals extraction. His actions in this regard came through a combination of executive orders and legal challenges. The potential to craft lasting legislation during the first 2 years of his term—when the Republican Party controlled both houses of Congress—was squandered by a lack of both focus and leadership.
Colorado and New Mexico voters have increasingly favored the Democratic Party and the policies being pursued reflect this. The US electorate, however, remains more divided; making the course to be charted by the Biden administration perilous.
Biden’s executive team would be wise to avoid an overly prescriptive approach in attempting to reverse Trump’s policies, regardless of the mechanisms available to it through which to do so. Oil and gas operators, meanwhile, would serve themselves well by continuing to be as proactive and systematic as possible in crafting their own emissions reductions policies.
