La Plata County may have been ahead of the curve on keeping gas development in check, but new state rules put in place to regulate, not foster, the industry will have an impact in Southwest Colorado.
In 2019, Gov. Jared Polis signed legislation to overhaul how Colorado regulates the oil and gas industry, at a time when communities along the Front Range were experiencing significant impacts from large-scale developments.
For years, the Colorado Oil and Gas Conservation Commission worked to “foster, encourage and promote” development. The sweeping reform, however, now places the emphasis on regulating for public health and the environment.
Last month, the new rules were finalized; they take effect Jan. 15.
In many ways, La Plata County was ahead of the curve in regulating the industry, said La Plata County Commissioner Gwen Lachelt, who has worked on oil and gas issues for years.
In the 1980s, the energy industry set its sights on the San Juan Basin natural gas field, which spans Southwest Colorado and northern New Mexico, for its vast reserves of coalbed methane.
But Lachelt said development of the field put intense pressure on the county and its residents during a time when there was little oversight or control to develop responsibly.
“We were a guinea pig,” she said.
Drilling was widespread and happened with little planning, groundwater became contaminated, neighborhoods had to be abandoned because of methane leak issues and in some extreme situations, houses blew up, Lachelt said.
“They drilled everywhere,” she said. “And there was no plan.”
La Plata County drafted its own set of localized regulations in the early 1990s, the first county in the state to do so. Today, there are more than 3,400 wells in the county, though the industry has taken a downturn in recent years.
While the new state regulations were driven by communities along the Front Range, they will have an impact on oil and gas operations in La Plata County, said Jeff Robbins, chairman of the COGCC.
Local governments will now receive notice of new permits, something that didn’t happen before, he said. And the new rules target coalbed methane to ensure older wells and operations move forward in a safe manner, he said.
“The La Plata County field is developed,” Robbins said, “so we ensured new measures around safety and good production practices.”
More than anything, Robbins stressed the new rules allow more transparency and involvement with the public, a longstanding critique of the COGCC.
“For the life of the agency, it has not been easy to be involved,” he said. “I’m proud to be a part of that transformational change.”
Lachelt said one of the major changes is that local governments can now regulate some of the adverse impacts of oil and gas production, such as noise, traffic, odor, dirt, air quality and leaks.
“We now have the ability to regulate what I call nuisance impacts of oil and gas development ... that affect everyday lives of our residents,” she said. “Until now, we as a county haven’t been able to regulate noise impacts. It’s our No. 1 complaint.”
Christi Zeller, who heads the Southwest Colorado oil and gas advocacy group, The Energy Council, criticized the new rules, saying the regulations were not tailored to the unique circumstances presented in the San Juan Basin.
“We’re very different down here,” she said.
Zeller said imposing a 2,000-foot setback on new wells from homes was the most disappointing aspect of the new rules. And new requirements on air quality are not practical, she said, given jurisdictional issues with the Southern Ute Indian Tribe.
Zeller also expressed concern that local governments now have the ability to impose even stricter rules, especially for an industry that is already struggling in Southwest Colorado.
“I can’t imagine any local government being more strict than what just happened and was finalized on Nov. 23,” she said of the new state rules. “There’s nothing that anyone could write that’d be harder to comply with.”
As a result, Zeller said it is likely there won’t be any new permits to drill in the immediate future.
Most local financial experts say La Plata County’s downturn in the natural gas industry is two-pronged: the result of a drop in natural gas prices nationwide and operators finding cheaper places to drill.
In 2005, among the peak years of production, 458,513,561 million cubic feet was produced. This year, however, just 200,000,000 MCF is expected to be extracted in La Plata County.
The downturn was also exemplified in La Plata County’s property tax revenues, driven by gas, which saw a drastic decline from $29.4 million in 2010 to $14.9 million in 2018, about a 50% reduction.
In recent years, the San Juan Basin’s major operators – BP America Production Co., ConocoPhillips, Williams Partners – have all sold their stakes in the natural gas field.
One major issue in La Plata County that’s expected to be addressed in the state’s new rules in the next few years is how to fund and cleanup abandoned or orphan wells, of which 74 have been documented in the county.
It’s all part of COGCC’s new mission to protect the state’s residents and environment, rather than paving the way for industry, Robbins said.
“No one was entirely happy where we ended,” Robbins said of the new rules. “But people felt heard.”