The industry is preparing its biggest political fight yet in the state.

industry

Colorado legislators are planning a bill to stop oil and gas drilling in the state by 2030, revoking the ability to permit new wells this decade and creating panic in the industry about its future.

Draft language has been discussed with industry leaders and environmentalists and a version of the bill is expected to be submitted to the state legislature within days.

Oil and gas industry members see the measure, which comes after years of tightening regulation on oil and gas, as an effort to kill a multibillion-dollar Colorado industry outright.

That’s prompted the oil and gas industry to start preparing to push back on a scale politically that it hasn’t done before, putting public pressure personally on moderate majority Democrats in an effort to defeat the bill, said Kait Schwartz, director of API Colorado, the local chapter of the American Petroleum Institute. She used the term “extreme force” to describe the intensity of the industry’s effort to stop the legislation.

“When you hear the words ‘phase out’ and ‘ban,’ it doesn’t leave much room for a compromise,” she said.

The legislation, according to a draft of the bill seen by the Denver Business Journal, would tell the Colorado Energy and Carbon Management Commission, the state agency that regulates oil production and well drilling, to stop issuing permits for new wells by Jan. 1, 2030. That deadline would follow two years in which the number of drilling permits issued would be capped at 660 and 330 to prevent a rush of drilling just ahead of the phase-out deadline.

Wells with permits approved between July 2024 and 2030 would have to start being drilled by 2032 or drilling permission would expire.

Sen. Sonya Jaquez Lewis, a Boulder County Democrat, is a drafting co-sponsor of the bill with Sen. Kevin Priola, a Democrat representing Adams and Weld counties. Jaquez Lewis said she’ll introduce the drilling phase-out legislation this session.

“Everybody knows we can’t keep drilling forever. Oil and gas emissions are negatively impacting public health,” Jaquez Lewis said. “This bill makes sure we put a definite end date on new well permits so we can work towards a more sustainable future.”

Colorado is the fourth-largest crude oil producer among U.S. states and is in the top 10 for natural gas production. Thousands work in the industry around the state.

It’s home to 48,000 active wells and about 50,700 inactive plugged wells, according to the CECMC. Wells were on track in 2023 to produce 165 million barrels of oil and much larger amounts of natural gas.

The agency reports approving 877 permits for drilling in 2023.

The introductory text of the legislation says the industry extracts several times more oil and natural gas than Coloradans use, existing wells will continue to produce for decades after permits are stopped and energy needs are increasingly being met by renewable sources.

The bill’s phase-out of well drilling by 2030 mirrors language in a ballot initiative that has been authorized to go before Colorado voters this fall if Safe & Healthy Colorado, the organizer of the initiative, gathers enough signatures.

While the efforts are separate, members of the broad anti-fracking coalition behind the ballot initiative have talked with drafters of the phase-out legislation, said Bobbie Mooney, a member of Safe & Healthy Colorado.

“We are aware of the bill and very supportive of it,” she said. “It’s a great bill.”

Safe & Healthy Colorado has been telling supporters about the impending legislation. The group isn’t stopping their organizing ahead of gathering signatures for the initiative this spring, Mooney said, but they’re watching the legislation closely.

“If it gets through the process and doesn’t get vetoed by the governor, it would save all that time, work and money required to run a ballot initiative,” she said.

Oil and gas Frederick

A pump jack in Weld County near Interstate 25 and Highway 52 in January 2021
KATHLEEN LAVINE | DBJ

Whether it’s done by the legislature or an initiative, setting a deadline to end drilling in the state would destroy the value of oil and gas mineral rights in Colorado and force their owners — tens of thousands of people — to seek help from the courts, predicted Neil Ray, head of the Colorado Alliance of Mineral and Royalty Owners, an advocacy group.

Meanwhile, oil company drilling plans, which are made years in advance, would come to a halt and investors that bankroll oil and gas activity would take their money out of the state. It would not be the longer-term phase-out legislators describe, Ray said.

“Bankers and others looking at what’s going on in Colorado would say, ‘That’s it, we’re done,’” Ray said. “The legislators might as well just say ‘phase it out next week’ because, financially, that’s what it’ll amount to.”

He said he’s hopeful the phase-out bill is so extreme it will never make it out of committee at the legislature.

The bill would be one of several covering ozone reduction, greenhouse gas emissions and phasing out the sale of gas-powered cars that Democrats are expected to introduce in this legislative session that oil and gas companies are concerned about, said Dan Haley, CEO of the Colorado Oil and Gas Association.

None of the others would have as severe an impact as the 2030 drilling phase-out, he said.

“Just the mere introduction should send a chilling message to every business across the state that lawmakers are willing to phase out an entire industry, one that creates a product that each one of them uses every single day,” Haley said.

Dan Haley

Dan Haley, CEO of the Colorado Oil and Gas Association.
PROVIDED BY DAN HALEY

He said he believes environmentalists behind the ballot initiative have pushed for the phase-out legislation because they aren’t going to succeed with a statewide vote for a ban.

“This idea is so unpopular they can’t put it in front of Colorado voters with a straight face,” Haley said. “Coloradans would reject it soundly. So they’ve turned to the people that they’ve helped get into office to do it for them.”

Supporters of oil and gas have their own initiatives to try to reverse the growing limits on the industry in Colorado.

Potentially on the ballot this fall is a measure that would make it law that Colorado consumers can choose what kind of energy they use in their homes and businesses. The measure could wipe out heating electrification requirements being enacted by local governments, like Denver, that replace natural gas-burning furnaces and water heaters in new buildings with electrified systems that draw on renewable energy.

The host of bills in the legislature and initiatives being prepared for the fall election suggest this year could be a bigger fight for the oil and gas industry than 2018 and early 2019, when a statewide drilling setback initiative was defeated at the ballot box but preceded a legislative session in which Senate Bill 181 remade oil and gas law and led to stricter limits on the industry.

Gov. Jared Polis declared then that the bill would end the oil and gas wars in the state.

The years since then have been a continuous string of rulemakings and additional bills trying to reduce industry greenhouse gas emissions, ozone pollution and impact, all of which oil and gas companies have so far met or exceeded, making Colorado drilling the cleanest anywhere, Schwartz said.

“So to now be met with a ban is so disappointing because it shows that a ban was the goal all along, right?” she said.

Source: Denver Business Journal

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