On May 31, Dave Stewart introduced John Messner, Commissioner with the Colorado Energy and Carbon Management Commission – “CECMC” - (recently re-named from the Colorado Oil & Gas Conservation Commission or COGCC), who brought us up to date on recent changes in oil and gas regulations in the State of Colorado that resulted from legislative action (especially Senate bill 19-181). These changes reflect the shift in mission of the COGCC from an agency that fosters oil and gas development with consideration of public health and the environment to one that regulates oil and gas development in a way that protects public health, welfare, the environment and wildlife resources. He pointed out that these changes were touted by Conservation Colorado as making Colorado a national leader in protecting public health and safety and, simultaneously, touted by the Colorado Oil & Gas Association as being the toughest in the country, further protecting the environment and ensuring that the hydrocarbons produced here are cleaner than anywhere else in the world.
In summary, SB 19-181, signed by Governor Polis in 2019: reconstituted the Commissioners; gave a new mission to COGCC; gave local governments authority over surface impacts and siting; and directed the COGCC to undertake numerous rulemakings. Significantly, the changes included adding full-time staff to the commission, changing the focus from development of resources to regulating for health and the environment, and gave local governments more authority in controlling local development.
The completed rulemakings under SB 19-181 included:
Flowlines: strengthen oversight of flowlines and returning inactive wells to production or injection; create a map of paths of all flowlines n the state; ensure that flowlines are abandoned appropriately.
Wellbore Integrity: mandate regular testing and maintenance throughout the well’s lifecycle; protect groundwater by isolation of all fluids; increase public access and transparency of measures to protect groundwater and drinking water near homes.
Mission Change: increase public participation; increase protection for public health, safety, welfare, wildlife and environment.
At a more specific level, the rulemaking resulted in:
Establish due process and modernize processes for handling confidential information;
For permitting, define the relationship between local & state governments, improve consideration of disproportionately impacted communities, and develop comprehensive area plans;
Expand protection of public water systems and adopt statewide prohibition on some chemical additives in hydraulic fracturing fluids;
Expand public access to the commissioners;
Expand setbacks to 2000 feet but with narrow exceptions;
Strengthen protections for groundwater, including first-ever substantive regulatory requirements, and incentivize underground injection of waste fluids;
Prohibit routine venting and flaring of natural gas with exceptions for maintenance;
Maintain a database to evaluate cumulative impacts of oil & gas development;
Protect or mitigate impact on wildlife habitats;
Address financial assurance so that funds are available to address transferred, inactive, abandoned and orphan wells.
All of this was accomplished with significant industry cooperation so that, within the new framework, there has already been approval of hundreds of new wells and locations in a manner that is protective as well as the pursuance of Comprehensive Area Plans for more large-scale planning and evaluation with focus on addressing cumulative impacts. With the new rules in place, there is significant emphasis on local government permitting within the framework of the State rules.
The activity of the Commission in 2022 included approval of 1115 well permits, approval of plugging and abandoning of 1142 wells, closure of 261 existing locations, and removal of some 500 oil or condensate tanks, among others.
Questions:
Is data from the MARS satellite or other advanced real-time technology being used to identify methane releases and leakage? The COGCC has funded a couple of studies utilizing satellite technology in identifying methane releases and results of those studies have been utilized to locate methane leaks and super emitters within Colorado in a successful manner.
What is the impact on severance taxes of the new framework? Mr. Messner started by clarifying that there are two types of tax associated with the production of oil and gas. One is severance tax which is a fee on activities and the monies are distributed across a range of public uses. The other is property tax, a tax associated with production, which declines as production from a well declines, but goes directly to the governmental entity that collects the property taxes.