Conflicting regulations, clashing priorities

Relationships between oil and gas companies and Northern Colorado have taken a decidedly chilly turn this year as calls for tighter regulations echo across the region.

Except for in Weld County. While moratoriums cropped up in one municipality after the next, Weld remained a friendly locale for oil and natural-gas drilling.

“Weld County is considered a very good place to do business,´ said Tisha Conoly Schuller, president of the Colorado Oil & Gas Association.

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That’s because the county has let the state take the lead on permitting for oil and gas development. That hasn’t been the case in a growing number of other communities.

Loveland, Erie, Longmont, Boulder County, Colorado Springs and other areas went so far as to pass drilling moratoriums while they review their regulations. Fort Collins was considering an eight-month drilling ban.

Fort Collins has not updated its drilling laws for years, said Karen Cumbo, director of Planning Development and Transportation. A moratorium would give the city the chance to review issues such as access roads, floodplains, buffers, noise and water and air quality.

“We really don’t have much of a process in place to deal with it,” she said. “Nor do our land-use regs really reflect both the current industry technology or current public concerns about it.”

How far Fort Collins might be allowed to go is up in the air.

The state Attorney General office has sent letters cautioning local governments to avoid passing oil and gas laws that clash with state regulations.

El Paso County, which received one of those letters in January, was told that it should abandon its proposed rules because they conflicted with the Colorado Oil and Gas Conservation Commission’s “regulatory regime.” The letter cited conflicts in laws regulating setbacks, wildlife, noise and lighting.

“Exhaustive local regulations are unnecessary,” the letter read.

Conflicting local regulations, in fact, now top the list of priorities for the state oil and gas lobby, Conoly Schuller said.

She explained that onerous local regulations on top of the state’s already stringent set of laws have forced some smaller oil and gas companies to postpone decisions on whether to locate rigs in Colorado.

Gov. John Hickenlooper’s administration responded earlier in the year by forming a task force aimed at helping clarify regulatory jurisdiction between state and local governments on oil and gas development.

The task force was supposed to address noise, wildlife protection, distance of drilling from buildings, traffic, air quality and other issues.

“This is an important step to better define state and local jurisdiction regulatory structures as Colorado’s oil and gas industry continues to grow,” Hickenlooper said in announcing the formation of the task force.

In its report, the panel did not call for new laws or changes to old ones to clarify how energy operations should be regulated in the state, but rather recommended “a collaborative process through which issues can be resolved without litigation or new legislation.”

That, however, didn’t stop Loveland or Fort Collins from passing or considering at least temporary bans while they reviewed their own regulations, just as the town of Erie did earlier in the spring.

Erie’s Board of Trustees passed a six-month prohibition on oil and gas drilling in March.

The ordinance does not affect current wells, but additional drilling applications will not be accepted.

The moratorium followed a study indicating that Erie, a town of 18,000 people that straddles Weld and Boulder counties, contained significantly higher levels of certain kinds of pollution associated with oil and gas development than either Houston and Pasadena, Calif.

While the moratorium is in place, the town will review its oil and gas development code to enact possible changes, town spokesman Fred Diehl said.

Even before the moratorium, town officials were meeting with representatives of Noble Energy Inc., Anadarko Petroleum Corp. and Encana Corp., as well as state Oil and Gas Conservation Commission officials, to discuss a local drilling agreement.

The town wants that local agreement to supplement state regulations, Diehl said.

“It is fair to say that the town of Erie is pushing the limits of local authority,” he said. “We do that … to make sure we can provide the greatest degree of protection in terms of human health and the environment.”

As communities like Erie weigh their own regulations, the oil and gas industry fears a patchwork of complicated laws.

Companies already follow “hundreds” of state regulations to maintain air and water quality, Schuller said. Air-quality regulations present the No. 1 permitting challenge for producers.

“It would just be overwhelming to meet all the current requirements and then additional local regs as well,” she said.

The state already does a “good job” of regulating the oil and gas industry in Colorado, Encana spokesman Doug Hock said. Encana drills natural gas wells near Erie.

On the other hand, “counties and municipalities do have concerns that need to be addressed,” he said. “That’s the challenge really at more of a state and local level.”

That’s why Encana has worked with Erie to develop a set of guidelines that the company will follow when drilling in town limits.

As for other regulations, Encana tries “to go above and beyond those where we can” by adopting methods not yet required by state law, Hock said.

As an example, the company uses “closed-loop” systems to capture drilling fluids from hydraulic fracturing in tanks. Also known as fracking, the method involves pumping water, sand and chemicals into a drilled area to release natural gas from shale.

Encana also tests water before and after drilling in areas where people own wells to determine its quality and quantity.

“We try to stay ahead of the curve on regulations,” Hock said.

That, of course, might not be enough.