On Thursday, March 7, the Yale Center for Environmental Law and Policy invited Tom Hunt from the Colorado Energy Office (CEO) to present a webinar on “The Future of Oil and Gas Production in Colorado” as part of the Center’s ongoing Policy Workshop Webinar Series on Emerging Issues in Shale Gas Development. CEO, a department within the Governor’s office, oversees energy investments and facilitates the growth of the state’s energy market and industry.
In his presentation, Mr. Hunt discussed the history of oil and gas production in Colorado and the unique political and environmental considerations required for regulating recent growth in the state’s natural gas production, driven primarily by shale gas. Natural gas is a fast moving issue for Colorado, as the state looks to balance the large shale gas reserves now accessible through horizontal drilling and hydraulic fracturing with conventional fossil fuel sources and renewable energy, such as wind. As this energy landscape shifts, CEO faces difficult challenges from private citizens, advocates, local governments, and energy companies. Mr. Hunt touched on these many complexities in his presentation.
You can watch Mr. Hunt’s full presentation below, in which he discusses the role of shale gas in Colorado’s energy portfolio and how the state has approached regulation of the natural gas industry. You can also download his presentation slides separately here.
Colorado’s Changing Oil and Gas Landscape
Oil and natural gas exploration is relatively “ancient history” in Colorado. First discovered and tapped in the late 19th century, oil and gas production has followed a boom-bust cycle, but the economies of several of the state’s counties, as well as the broader state economy to a certain degree, depend on these energy resources. Traditionally, oil and gas production and drilling has been concentrated in only a few counties. Mr. Hunt highlighted two of these, Weld and Garfield counties, during his presentation.
But while Colorado has been an oil and gas producing state for many decades, the dynamics of natural gas production in the state are rapidly changing. Since 1999, production of both fuels in Colorado has been on the rise with oil growing 125% and gas 83%. In 2009, a hydraulic fracturing operation also first unlocked a large previously inaccessible reserve of natural gas. In the subsequent years, a hydraulic fracturing boom has increased both the intensity of gas production in Colorado and expanded this industry into new areas of the state. These new areas include some of Colorado’s most populated towns, including parts of the Denver metropolitan area. As oil and gas production has entered new communities, it has sparked debates and spurred staunch opposition from some citizens and towns dotting the state’s new gas regions.
Regulating Natural Gas Development
The changing field of oil and gas in Colorado has forced new considerations of benefits and concerns, regulatory options, and legal issues. Mr. Hunt explained that in its energy-planning role, his office must weigh the interests of all of the state’s 5 million residents and the long-term protection of the state’s economy and environment. A major factor in this debate is the fact that the oil and gas industry currently employs 40,000 workers in Colorado and is a major economic driver. For example, the state exports (sells) three quarters of the gas that it produces.
Responding to concerns about air quality, health, noise, water scarcity, threats to the state’s world-renowned open spaces, and other issues, Colorado has striven to become a national leader in the regulation of natural gas. For example, Mr. Hunt noted that almost half of the policy recommendations contained in the International Energy Agency (IEA)’s 2012 report “Golden Rules for a Golden Age of Gas” are taken from Colorado state rules. You can find the details of the IEA’s report here. Among the policies that Mr. Hunt highlighted are new rules for impact mitigation, safety buffers around residential areas, and transparent communication for operations. These rules require drilling buffers of 500 feet around residential areas and disclosure of hydraulic fracturing fluids, although with exemptions for companies wishing to protect fluid components as “trade secrets.” Future steps will include a new interstate partnership coordinating natural gas vehicle programs and investments as well as several air emissions studies.
Colorado’s current hydraulic fracturing regulations are largely the result of two hotly debated rulemakings in 2011 and 2012, which involved companies, stakeholder groups, and legislators.
Ongoing Questions for Natural Gas in Colorado
In the complicated future of natural gas production in Colorado, renewable energy and questions about local versus state jurisdiction over gas regulation are likely to take center stage.
Wind and solar energy are among Colorado’s rich natural resources, and while these clean energies have traditionally represented a small fraction of the state’s energy portfolio, wind in particular is a promising source of current and future revenue and energy. Colorado is ranked 10th in the country for wind production and is home to the North American offices of Vestas Wind Systems, the world’s largest wind company. To encourage growth in this industry, Colorado has some of the country’s strongest renewable energy policies including a Renewable Energy Portfolio, which diversifies the state’s energy and helps build toward a clean energy future. CEO is responsible for balancing renewable energy with natural gas, coal, and other energy resources.
As new communities in Colorado react to new gas production within their boundaries, local legal fights have begun to dominate the debate in Colorado as they have in many other states that are looking to regulate and develop their shale gas resources. Some of Colorado’s most politically conservative towns have enacted moratoriums to gas, including two bans in the last few months, but it remains unclear if towns and cities have the legal authority to adopt such protections under Colorado law. In recent years, some states including Pennsylvania have explicitly prohibited such actions by local authorities. In Colorado, the City of Longmont and more recently the City of Fort Collins have adopted hydraulic fracturing bans, and these measures are now battlegrounds in the state debate. Longmont is currently being sued by the Governor to overturn its moratorium.
Next Time in Emerging Issues in Shale Gas Development
The Emerging Issues in Shale Gas Development webinar series will pick up next with a presentation by reporters Scott Detrow and Susan Phillips on “The Community Impacts of Marcellus Shale Gas Development,” which will draw on their award-winning coverage of hydraulic fracturing in Pennsylvania as part of National Public Radio (NPR)’s StateImpact Pennsylvania series. Mr. Detrow and Ms. Phillips’s webinar will take place on Friday, March 29, from 12-1:30pm EDT.
To register for this webinar, please click here. As always, the webinar will be free and open to the public, but registration is required to participate.