Translation: Back to the "Table"...

Now that the hard fought political campaigns are over and we have elected our new state leaders, it's time to "get back to work", and that means for both the Environmental and Energy sides of the Oil and Gas Drilling debate, it means "getting back to the table" to begin working out their differences in how the 2008 Colorado Oil and Gas Conservation Act rules and regulations (Colo. Rev. Stat. § 34-60-100, et seq.), are to me "managed" between the parties.

In an article in Sunday's Denver Post, (11/28/10), there is a good summary article about the optimism on the part of both the Environmentalists and the Energy Producers regarding Gov.-elect John Hickenlooper's willingness to listen to their concerns about changing the regulations, or at least at a minimum how to work within and streamline the rules and regulations so both sides can get realistic results.

The Olive Branches Are Out

In the article, Tisha Schuller, president and chief executive of the Colorado Oil and Gas Association, which has tried to overturn the rules in court in a lawsuit that is still pending, says her group wants to cooperate with the incoming governor and the Colorado Oil and Gas Conservation Commission. "The rules are in place," Schuller said. "Our job now is to work within the framework of those rules." Her comments echo those of Stan Dempsey, president of the Colorado Petroleum Association, who was also was quoted in the article and said they are not seeking to repeal the rules. "We're taking a positive approach to making rules work," Dempsey said. "When issues come up, we discuss them. We all want timely and effective issuance of permits."

The Act, The Rules & The Regulations

For those of you who are not familiar with the Oil and Gas Rules, here is a good place to go for a comprehensive overview of both the 2008 Oil and Gas Conservation Act text, as well as an overview of the Rules and Regulations that were put in place by the Colorado Oil and Gas Conservation Commission (COGCC), (Stat. § 34-60-100, et seq.) which is the state agency charged with promoting the exploration, development, and conservation of Colorado’s oil and gas resources. The COGCC also handles the drilling permit process and ensures industry compliance with state-wide oil and gas statutes and regulations.

University of Colorado Law School
Natural Resources Law Center
http://www.oilandgasbmps.org/laws/colorado_law.php

Here is a quick summary from their web-site that puts it all into perspective:

Oil and gas development in Colorado is governed primarily by statutory provisions of the Oil and Gas Conservation Act (Colo. Rev. Stat. § 34-60-100, et seq.) and rules promulgated by the Colorado Oil and Gas Conservation Commission (COGCC) (2 CCR 404-1, et seq.). As the state agency charged with promoting the exploration, development, and conservation of Colorado’s oil and gas resources, the COGCC also handles the drilling permit process and ensures industry compliance with state-wide oil and gas statutes and regulations. Colorado’s Air Pollution and Prevention Control Act (§ 25-7-100, et seq.) and Water Quality Control Act (§ 25-8-100, et seq.) also play important roles in regulating the environmental impacts of oil and gas development throughout the state. Additionally, various guidelines and policy statements are issued by the COGCC and other state agencies, like the Air Quality Commission and the Colorado Wildlife Commission, to guide the future of oil and gas development in Colorado and to assist regulated industries in understanding and complying with Colorado’s statutes and regulations. See the following for more information and links to the above.

My Take and Perspective

One of the rules that is somewhat troublesome for the oil and gas industry are the provisions in section § 34-60-127 – "Reasonable Accommodation". It's here where the rules are targeted to operators that govern what kind of surface operations can be conducted in a manner that accommodates surface owners and minimizes intrusion upon and damage to surface lands is somewhat onerous... Not that these recommendations are not good in theory, but that recommending "alternative locations for wells, roads, pipelines, and production facilities" might actually "defeat" the process of drilling for oil and gas in a particular place that was obviously a choice made by detailed engineering and geological study and consideration. Furthermore, "employing alternative means of operations, where such alternatives are technologically sound, economically practicable, and reasonably available to the operator", as stated in the rules might in fact introduce more costs and overhead and turn what was going to be a profitable drilling operation into a money loser.

Gov-elect Hickenlooper's Position

It seems that Gov-elect Hickenlooper, (who is a former geologist for the energy industry), says there's no need for a rules overhaul... As he stated in the Denver Post Article: "Most of the senior executives I've talked to in the oil and gas industry don't want to reopen the whole process," Hickenlooper said earlier this month. "There are improvements that could come before the commission, but what they need is certainty. They're making capital investment decisions."

Basically Gov-elect Hickenlooper's point is that he believes industry concerns were not fully considered in the new rules... This drew an immediate and angry response from Gov Ritter who called Gov-elect Hickenloopers comment "a pretty bad mis-characterization" of the process, according to the article.

The gloves are off. The Emperor has no clothes. Fill in your own hip glib statement here: ________________ !

The Economic Development Council of Colorado conducted a survey of 500 likely voters between September 12 and 15 which data is now available in the 2010 Survey on its website.    The study was conducted by Vitale & Associates and is located HERE

The study asked questions which included:

"Do you feel things in Colorado/Your local area are going in the right direction, or do you feel things have gotten off on the wrong track?"   52% responded Wrong Track

"Which one issue do you think is most important for state govt leaders to address?"  42% indicated Jobs

"Would you say that Colorado is still in an economic recession?"  85% said yes

"Which do you think makes the most sense at this time.  In order to balance the budget, should we... RAISE STATE TAXES AND FEES by 15% OR SHOULD WE CUT STATE GOVERNMENT SPENDING by 15%?"  63% supported a cut

"Do you think that the State budget has been cut too much or would it be best for Govt. to keep taxes, spending, and regs. to a Minimum."  52% indicated keep taxes, spending and regs to a minimum.

To see the entire report, go to the link and click on Power Point 1.

As hurricane Katrina swept into New Orleans five years ago, government officials at all levels were reaching for copies of their emergency response plans to deal with the disaster.  The plans called for special activities to manage communications, relief and  transportation.  Despite these plans, the response was too slow as the magnitude of the disaster overwhelmed all planning efforts resulting in damage to the New Orleans community that is still felt today.

The State of Colorado just released a disaster plan for higher education in Colorado.  It details what may happen to the universities and colleges in the State if possible buget shortfalls force the State to cut support by 50%.

If the State has a disaster plan for higher education, it raises the question whether there is a similar plan for small businesses?  If not, why not.

When terrorists bombed the World Trade Towers (the first time), a study completed by the University of Austin, Texas revealed that over 90% of the small businesses who ran their businesses out of these buildings failed within the next 5 years.  Small businesses are more vulnerable to disasters than large businesses.  They can't simply work out of another location or accomodate higher costs of operations.

Since the State of Colorado does not have a disaster plan for small businesses and we are in a financial disaster, we - CIO Colorado - will need to build one.  We are developing initiatives now for immediate implementation to mitigate the ongoing harm to small businesses in our State.