Seven municipalities and one county scattered around the Denver-Julesburg Basin had passed some sort of drilling or permitting moratorium through Monday since the Colorado governor signed a law giving local governments greater control over oil and natural gas development, and that number may be higher by Tuesday.
Commerce City council is set to vote on whether to impose a six-month moratorium at a meeting later Monday.
The latest community to halt development was Broomfield, where the city council voted last week to stop the processing or approval of applications for use by special review or operator agreements to allow oil and gas operations in Broomfield for the next six months.
"I want to believe that the oil and gas companies want to produce this product and respect everybody that's around them," council member Mike Shelton said during the meeting. "I just haven't seen it that way. We definitely need a six-month moratorium if we're going to have companies operate under new regulations."
"We are disappointed that Broomfield City Council has chosen to impose a moratorium on new energy development," Lynn Granger, executive director of the Colorado Petroleum Council, said in a statement, adding: "Its decision is misguided and harmful to our state. We have and will continue to stand ready to engage in good faith discussions about Colorado's energy future. We remain hopeful that Colorado's local and state governments will do the same as the many elements of Senate Bill 181 are implemented in the months and years to come."
Extraction Oil and Gas is the most active driller in Broomfield. It is currently developing up to 84 new wells within the city limits. However, Extraction reached an agreement with the city in 2017, and its plans are not affected by the state law or the moratorium.
PRODUCTION CONTINUES
The Colorado Oil and Gas Conservation Commission, the state agency charged with overseeing oil and gas development, is currently in the process of updating its rulebook to align with Senate Bill 181. The bill grants greater authority to local governments in approving drilling permits and shifts the main aim of the COGCC from fostering energy development to protecting health and the environment. The process might take as long as two years.
In May, COGCC commissioner Dan Gibbs said lawmakers never intended for regulators to stop issuing drilling permits while the rules are updated.
In addition to Broomfield, the Front Range communities of Erie, Superior, Lafayette, Berthoud, Timnath, Boulder and Adams County, have all passed similar moratoriums. However, most of these moratoriums are being imposed outside of Weld County, where the vast majority of Denver-Julesburg oil and gas is produced and where most local leaders are supportive of the industry.
Adams, Arapahoe, Boulder, Broomfield and Denver counties combined to produce an average of 36 MMcf/d in 2018, according to S&P Global Platts Analytics. In comparison, Weld County produced an average of 2.06 Bcf/d in 2018. Denver-Julesburg gas production is currently at 2.09 Bcf/d while oil production averages 512,000 b/d.
The recent acquisition of Anadarko Petroleum by Occidental Petroleum for $57 billion demonstrates major producers are still willing to invest in Colorado despite the political uncertainties. Anadarko is the largest producer by volume in the Denver-Julesburg and Occidental cited this as one of the reasons for the deal.
Other large-scale Denver-Julesburg producers, such as Noble Energy and Extraction, say they have established strong relationships with local governments and are well positioned to operate under Senate Bill 181. They said during their most recent investor meetings they have no plans to alter their 2019 production aims due to the bill being signed into law on April 16.
According to Platts Analytics data, Denver-Julesburg gas production rose 3% in the first quarter of 2019, compared with the fourth quarter of 2018, and is forecast to see annual growth of 7% for oil and 19% for gas.
