As Colorado's oil and gas overhaul bill continues to sail through the halls of the state legislature, pro-drilling advocates have taken a page from the opposition's playbook and are pursuing a ballot initiative that would effectively void the bill if passed.
The bill aims to give more power to city and county governments in approving future drilling sites, as well as change the mission of the Colorado Oil and Gas Conservation Commission from fostering energy development to protecting public health and the environment.
Late Monday afternoon, the bill was being debated in the House Finance Committee. If it passes there, it will move to one last House hearing before going to the floor for a vote. It already passed through the Senate on party lines. And with Democrats possessing an even larger majority in the House, and Democratic Governor Jared Polis already showing support for the bill, its eventual passage appears a mere formality.
UNCERTAINTY ABOUNDS
Industry leaders fear passage of the bill could lead to a possible one- or two-year delay in the state issuing new drilling permits while the COGCC codifies the new law. Another worry is that with local governments gaining more control over drilling sites, it could lead to cities and counties instituting moratoriums on drilling.
"The bill, as it is currently written, will have tremendous impacts on the oil and gas industry in Colorado," said Rich Frommer, CEO of Great Western Oil and Gas, which operates solely in the Denver-Julesburg Basin. "The main focus is on public health and to give local governments more control. It is conceivable that individual towns and counties will now have power over issuing permits. It is very unclear at this point what standards we would have to meet for those local governments."
In an attempt to prevent a possible slowdown of new oil and gas projects in Colorado from Senate Bill 181, a Weld County commissioner, Barbara Kirkmeyer, and former Arapaho County commissioner John Brackney are backing four ballot questions, dubbed the Oil and Gas Independent Regulatory Act, which would repeal SB 181.
The organizers behind the ballot initiative have until April 4 to gather 124,632 signature from registered voters in the state to place it on the ballot. Last year, anti-drilling activists managed to place Proposition 112 on the ballot, which would have increased drilling setbacks fivefold and crushed future production. The industry spent nearly $50 million during the campaign to defeat the measure. Proposition 112 lost by a 57% to 43% margin.
MORATORIUM
Although Colorado lawmakers behind SB 181 said it would not lead to a ban on drilling, one county in the Denver-Julesburg Basin has already passed a moratorium on the issue. Late last week, Adams County commissioners unanimously passed a six-month moratorium as they wait for more clarification of what SB 181 will actually do once implemented.
"The temporary ban -- passed before SB 181 has even cleared the statehouse -- wasn't needed," said Dan Haley, president and CEO of the Colorado Oil and Gas Association. "It sends a negative message to businesses and workers in Adams County and could have a chilling effect on the economy. Oil and natural gas production is important to Adams County, its economy and its tax base and we shouldn't play these types of games with something that important."
Although oil and gas production is a drop in the bucket for total DJ Basin production outside of the prolific Weld County, it actually has been on the rise in Adams County over the past couple of years, and is more than every other county in the DJ besides Weld and Larimer counties. For instance, over the past five years, Adams County production has grown from 12.8 MMcf/d to average 17.7 MMcf/d in 2018, according to data from S&P Global Platts Analytics.
The counties of Adams, Denver, Arapahoe, Boulder and Broomfield combined for an average of 36.5 MMcf/d during 2018. In contrast, Weld County gas production averaged just over 2 Bcf/d in 2018.
