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Colorado Newspaper Coverage of OGCC Rulemaking


New rules blamed for cuts in oil, gas drilling
Up to $1 billion lost to state, legislators say


By Gargi Chakrabarty, Rocky Mountain News

Friday, April 18, 2008

As much as $1 billion in oil and gas investment is bypassing Colorado because of what the industry perceives as interference from Gov. Bill Ritter's administration, state legislators told the Rocky Mountain News this week.

Sen. Josh Penry, R-Grand Junction, said several energy companies have told him they are cutting back on new investment that amounts to up to $1 billion. Sen. Chris Romer, D-Denver, said he has heard similar complaints from energy lobbyists, but he puts the amount at $500 million.

The companies say the Ritter administration's overhaul of drilling rules is not only turning Colorado into an uncertain regulatory climate but also increasing the cost of doing business.

"It's clear that the energy sector is significantly scaling back new investment in Colorado," Penry said. "There's tremendous uncertainty regarding where the new rules are headed, or what they mean. The sooner the certainty can be established, the better it is for Colorado."

The proposed rules were prompted by mounting complaints from residents living near rigs about noise, odor and adverse impacts on health, environment and wildlife. Some rules are scheduled to go into effect July 1.

"We'd be disappointed to see a company reducing their investment in Colorado," said Dave Neslin, acting director of the Colorado Oil and Gas Conservation Commission - the state agency writing the rules.

State officials and environmental groups supporting the proposed rules were skeptical that investment was being cut down because of regulatory reasons. Rather, Colorado's weak gas prices - the result of pipeline constraints - is the probable reason, they said.

EnCana Oil and Gas has said the new regulatory hurdles caused them to bypass Colorado while deciding where to spend $500 million in additional investment. The money went to Texas and Wyoming, they told the Rocky.

But on its Web site, EnCana touts the Piceance Basin in Garfield County as its "fastest- growing and highest potential resource play in the U.S."

Also, in a 2007 report, EnCana said: "Natural gas per unit production and mineral taxes in the U.S. decreased $0.15 per Mcf - or 31 percent in 2007 compared to 2006 - mainly as a result of lower natural gas prices in the U.S. Rockies and a reduction in the severance and ad valorem effective tax rate for Colorado properties."

EnCana spokesman Doug Hock said the company hedges production; hence, lower prices don't impact investment strategy. Moreover, the newly built Rockies pipeline is pushing up prices.

"Regulatory climate is part of business. You can't separate those two," Hock said. "We looked at this jurisdiction versus others and chose to allocate the majority of investment elsewhere."

Pioneer Natural Resources says its budget this year is $100 million less than last year because of additional (proposed) rules and related costs.

But Neslin took issue. "In an investor presentation dated April 2008, Pioneer said profits are going to increase due to operations in the Raton basin," he said. "It's hard to reconcile that with a statement that they are reducing operations in Colorado."

EnCana and Pioneer are among 600 companies operating in Colorado. Their decision comes as the energy industry continues its boom, with requests for drilling permits already more than 400 ahead of last year and on track to break the 2007 record of nearly 6,400 drilling applications.

"I can guarantee the oil and gas is not going anywhere," said Mike Chiropolos with Boulder- based Western Resource Advocates. "Somebody will come along and be willing and excited about developing that oil and gas in compliance with new rules, and who can turn a profit."

Romer said he believed companies were changing their investment strategy, but it was a temporary phenomenon.

New pipelines, coupled with appropriate changes in the proposed rules, will return Colorado among the top oil and gas investment destinations - as ranked by the Fraser Institute in December, Romer said.

Revised rules

State regulators announced a revised draft of proposed drilling rules in March.

* Paperwork: New form eliminated. Information requests trimmed from 17 to eight.

* Consultations with other agencies: Must be conducted within 40 days instead of 60 and only if the operator seeks a variance

* Wildlife protections: Drillers restricted from habitats for a maximum of three months a year instead of most of year. Restrictions cut from 11 pages to four.

http://www.rockymountainnews.com/news/2008/apr/18/new-rules-blamed-for-cuts-in-oil-gas-drilling/


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State to study economic implications of overhaul of oil and gas regulations

By MIKE SACCONE, The Grand Junction Daily Sentinel

Monday, April 28, 2008

The Colorado Department of Natural Resources has agreed to study the economic ramifications of the state’s ongoing overhaul of its oil and gas regulations, state policymakers said Monday.

Sen. Josh Penry, R-Grand Junction, said the state agency and the Colorado Oil and Gas Conservation Commission recently agreed to study the possible effects of new energy regulations on the $23 billion industry.

“All we’re asking for is understanding the ramifications of the decision,” Penry said.

He said industry leaders met with state policymakers last week and secured the agreement.

The pact, Penry said, renders moot Senate Joint Resolution 22, which would have requested just such a study.

The Colorado Oil and Gas Conservation Commission embarked on a sweeping overhaul of the state’s energy regulations last year at the behest of the state Legislature. The overhaul incorporates public health and environmental factors into the state’s drilling regulations.

An early draft of the rules debuted last month. The final version of the rules is expected to come out in July.

David Neslin, acting director of the Colorado Oil and Gas Conservation Commission, said the decision to perform an economic analysis was not prompted by the resolution.

“This is something we’ve anticipated doing all along because of the importance of the rulemaking,” Neslin said,

He said the analysis will help form the “full record” the commission will need while crafting the final version of the energy regulations.

Rep. Wes McKinley, D-Walsh, said he was delighted to hear the state has agreed to comply with the resolution without much more of a fight.

“It’s just hard to believe we have to do so much pushing to get something that’s supposedly to be done already,” McKinley said.

He said he hopes the commission will focus as much on the economic impact of its forthcoming rules as it has on wildlife and other environmental concerns.

http://www.gjsentinel.com/search/content/news/stories/2008/04/28/042908_1b_DNR_analysis.html

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Commission weighs larger role in shaping rulemaking for oil and gas development

By LE ROY STANDISH
The Daily Sentinel

Wednesday, April 16, 2008

Mesa County has until Friday to decide whether it wants to play a greater role in the Colorado Oil and Gas Conservation Commission’s rulemaking process and apply for “party status.”

“I don’t see the need,” Commissioner Craig Meis said Wednesday morning during a discussion he initiated on the subject. He added Mesa County’s level of involvement has been enough to address county concerns.

But other groups — six county governments and three representatives of the energy industry — do have concerns and have filed for party status, which would allow them to present testimony during rulemaking hearings and cross-examine witnesses presented by other parties.

Judy Jordan, oil and gas liaison for Garfield County, which applied for party status Monday, said having party status elevates a county’s position within the rulemaking process.

“Whatever it is you have to say is going to bear more weight, in a sense, since you have gone through all the trouble of establishing yourself as a party,” she said.

Having party status would not obligate the county to participate any more in the commission’s rulemaking deliberations, said Deb Frazier, communications director for the Colorado Department of Natural Resources.

Mesa County, without party status, will still be able to have representatives attend meetings and comment on the commission’s recently released draft rules. But with the energy industry’s increasing presence on the Western Slope, some question why the county would be content to sit on the sidelines watching.

“Mesa County, in the next two to three years, is going to get hit like Garfield County is. I think the production is going to skyrocket. I don’t think people understand what is going on right now,” said John Martin, a Garfield County commissioner. “Every one of those (Mesa County) commissioners, and I know them all, they need to be involved and have knowledge. Don’t be afraid to be involved.”

Garfield County saw more than 2,000 applications for permits to drill last year, and that number has been increasing annually.

By way of comparison Mesa County had just 240 applications last year. But in just the first three months of this year, that number already is 189, said Randy Price, Mesa County’s local government designee to the oil and gas commission.

When Price shared those numbers with the commission Tuesday — a day before Meis’ comments regarding the county applying for party status — Meis said they were an aberration. The energy companies are filing an excessive number of permits because they are scared of the COGCC’s rulemaking process, Meis said.

Of late, Mesa County’s commissioners have been active on the energy front, working on an energy master plan and tightening up regulations regarding disposal pits for drilling water.

So, Martin asked, why wouldn’t Mesa County be at the table as rules are being drafted?

“I think all of western Colorado needs to be parties,” he said.

Neither Commissioners Steve Acquafresca nor Janet Rowland spoke out Wednesday for or against obtaining party status.

Jon Peacock, the Mesa County administrator, said he would look into the pros and cons of applying for party status and get back to the commissioners before the deadline.

The six counties that have applied — Garfield, Gunnison, Weld, La Plata, San Miguel and Saguache — expressed concerns in their respective applications about 2007 House Bills 1298 and 1341. They cited lack of protection and mitigation of adverse environmental impacts and questioned whether the rules will: preempt local land use authority; provide sufficient notice to the public and local governments for comment on applications and other proposed actions; and allow enough time to harmonize the relationship between any new COGCC rules and local government regulations.

The three energy industry applicants — American Royalty Council; the Colorado Oil and Gas Association; and the K.P. Kaufman Co. — cite stakeholder concerns, such as royalty income for landowners, and say not enough time is being spent to hear industry concerns, and existing surface-use agreements may have to be renegotiated.

http://www.gjsentinel.com/search/content/news/stories/2008/04/16/041708_1b_COGCC_Party_status.html

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Debate heats up over rules on drilling

By MIKE SACCONE
The Daily Sentinel

Saturday, April 05, 2008

The state’s energy industry probably will agree to some of the Colorado Oil and Gas Conservation Commission’s proposed drilling regulations, including requirements that companies disclose what they release into the environment, energy attorney Ken Wonstolen said Saturday.

Wonstolen, during a debate with Colorado Environmental Coalition Director Elise Jones at Saturday’s Club 20 meeting in Grand Junction, said the industry is open to regulations that change as the industry evolves.

For example, he said, one good policy provision in the state’s draft regulations, released March 31, requires companies to log what chemicals they use and release into the environment.

Wonstolen called it a “no-brainer.”

Nonetheless, he said the industry plans to fight parts of the regulations that could unduly burden energy firms.

“It sounds like there’s a healthy debate over what needs to happen,” Jones said. “And I guess what I’m heartened by is, you’re acknowledging that it’s important to deal with these issues.”

Jones, however, said she was unclear why the industry has, at various times, fought the new rules as though they will kill the energy industry.

“Industry is not a bulwark against change,” Wonstolen replied, accusing the press of “setting us against each other.”

The debate also grew heated when Jones said she would like to see the final version of the rules include provisions setting drilling activities farther back than 150 feet from occupied homes.

To bolster her point, Jones asked the nearly 200 debate onlookers to raise their hands if they would want drilling within 150 feet of their bedroom windows.

As hands shot up — including energy industry advocate Kathy Hall and Colorado Oil and Gas Association President Meg Collins — some attendees vocally objected to the question.

Jones retreated and told the crowd she is not opposed to energy development, but she does want it to safely occur.

“Even if I wanted to stop it, I couldn’t,” Jones said.

The Colorado Oil and Gas Conservation Commission has started the more than 3-month comment period on its draft rules.

For information on the rules or the commission, visit http://oil-gas.state.co.us.

COMMENT SESSION
The Colorado Oil and Gas Conservation Commission will sponsor a public comment session on its recently released drilling rules June 10 at the Two Rivers Convention Center in Grand Junction.

Colorado Department of Natural Resources Director Harris Sherman said Saturday that he wants the members of Club 20 and the public to participate in the session.

http://www.gjsentinel.com/search/content/news/stories/2008/04/05/040608_1a_Club_20_OG_rules.html

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Wildlife restrictions will sting the area’s economy, gas companies say

By Phillip Yates, Glenwood Springs Post Independent
April 11, 2008

GLENWOOD SPRINGS — The prospect of new wildlife restrictions in proposed rules for the state’s oil and gas industry has Williams Production RMT, one of the largest natural gas companies in Garfield County, warning of “serious economic impacts to communities on the Western Slope.

The “uncertain regulatory” environment from the draft rules has already caused EnCana Oil and Gas (USA), another large company in the county, to reduce its drilling plan for the Piceance Basin by about 24 percent this year and divert millions of dollars in capital expenses to other states.

Williams, in a statement released late Wednesday, said the possibility of limiting drilling in areas of the Western Slope for up to 90 days could have dramatic effects on Western Colorado’s economy and could lead industry companies to scale back their operations and capital expenditures.

That is already happening with EnCana Oil and Gas (USA), which is taking a pool of $500 million in capital expenditures for this year and spending it in Wyoming and Texas, rather than Colorado, because of the state’s current regulatory environment, said Doug Hock a spokesman for the company.

EnCana Oil and Gas (USA) is also planning to reduce its drilling in the area to 224 gas wells, compared to 295 wells in 2007 — a move also tied to the proposed rules, Hock said.

The biggest concern EnCana has in the proposed rules is the 90-day wildlife drilling

restriction. If that happens, the company would have to lay rigs down for three months, Hock said.

“Those rigs aren’t going to stay there, they are going to go elsewhere,” Hock said. “The workers are going to go elsewhere.”

Williams, however, has not yet made any cuts to its drilling schedule in the Piceance Basin.

Donna Gray, a spokeswoman for Williams, said the company plans to drill 500 wells this year and 500 wells next year. Gray said it was too early to tell what effect the draft rules could have on the company’s drilling plans.

“Today, we are on target to drill those 500 wells,” Gray said.

The proposed drilling restriction was in draft rules the Colorado Oil and Gas Conservation Commission released in late March. Bills the state Legislature passed last year required the COGCC to expand its focus to consider public health and wildlife impacts, and require the use of best management practices to minimize harm from oil and gas development.

The oil and gas industry seems to be coalescing, at least in the Piceance Basin, against the proposed 90-day drilling restriction in draft rules proposed by the COGCC. However, the agency has said new rules do allow companies to avoid the 90-day drilling restriction — which it says is for critical wildlife areas especially on the Western Slope — if a company limits the density of its development in an area or consults with the COGCC and Colorado Division of Wildlife.

In its statement, Williams said it has worked the Colorado Division of Wildlife to effectively increase winter habitat for mule dear and that “sound alternatives to seasonal drilling restrictions are clearly possible.”

“Williams is committed to working with the COGCC and other agencies to develop efficient and effective regulations,” the company said. “However, we are seriously concerned about the practical results of some of the rules as drafted. In general, several of the draft rules generate additional bureaucracy and inefficiencies that will have negative consequences for Colorado and its citizens.”

Another argument

Drilling restrictions in the draft rules won’t cause serious impacts if companies effectively plan their operations, said Duke Cox, interim director of the Western Colorado Congress.

“If they plan ahead of time and adequately plan, there is absolutely no reason that these seasonal restrictions are going to ‘shut down the industry,’” Cox said.

Cox said the COGCC is trying to address the need that “was mandated by the voters of Colorado and by the legislature” to do something to protect wildlife.

“In my mind, if the industry isn’t happy, let’s see them suggest some alternatives that will work,” Cox said. “As it stands, the way it’s been going in the past and the way the industry been doing it in the past is not working.”

Cox admitted that while some small operators could be affected by the 90-day drilling restriction at certain times, it is not a blanket restriction and “that will not shut the industry, as a whole, down.”

http://www.postindependent.com/article/20080411/VALLEYNEWS/461950033

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Oil & wildlife: Crossing the line

Many species roam on lands used for oil and gas drilling. But proposed state rules protecting these animals have the energy industry crying foul.
By Mark Jaffe, The Denver Post
May 05, 2008

Winter has loosed its grip on Colorado's Western Slope, and the elk and mule deer are climbing out of their canyon winter grounds and heading to the high country.

On their trek, the herds will cross pipelines, drilling rigs, waste ponds and freshly cut roads — all part of the state's booming, $23 billion-a-year oil- and-gas industry.

In an effort to balance the wells and wildlife, the Colorado Oil and Gas Conservation Commission is considering regulations to protect wildlife in the oil and gas fields.

The proposed rules, however, are already drawing fire from the energy industry, which says they are too strict, and conservation groups, which charge they are too weak.

The Colorado Wildlife Commission — which can offer comment only on the drilling regulations — on Thursday adopted a statement saying that some of the rules are "not adequate to protect wildlife."

"We think they are going to have to do a little more," said Tom Burke, the commission's chairman.

The basic concern is that energy development will damage habitat and impair breeding and survival rates for species, such as the Gunnison Sage-grouse, which is a candidate for the federal endangered-species list.

A study of mule deer in the oil fields of Sublette County, Wyo. — funded by industry and government agencies — found a 46 percent decline in the herd to 2,818 in four years.

"We aren't trying to force out the industry," said Bob Elderkin, a member of the board of the Colorado Mule Deer Association. "But this is one of the most intensively drilled patches in the U.S. — we need some regulation."

In 2007, 50 percent of the 6,368 oil and gas drilling permits issued in the state were in the six Colorado counties — Moffat, Routt, Jackson, Rio Blanco, Garfield and Mesa — that hold critical habitat for elk, mule deer and Sage-grouse.

Since 2001, drilling in the area has increased eightfold.

"It just happens that the epicenter of energy development is the epicenter for the largest deer, elk and Sage-grouse populations in the state," said Ron Vilarde, a regional manager for the state Division of Wildlife.

The proposed rules — the result of a legislative mandate to balance energy development and wildlife protection — would require companies to survey for wildlife and limit surface disturbance. Violations would carry a $10,000 fine.

90-day drilling ban

The proposal that has drawn the most fire is a 90-day drilling ban during key wintering or breeding periods for about 12 species, including mule deer, elk, pronghorn antelope and Sage-grouse.

"We'd potentially have to shut every rig we have working," said Doug Hock, a spokesman for EnCana Corp., one of the state's largest operators.

About 1 million acres of EnCana land would fall under the closure rule, Hock said.

The Colorado Oil and Gas Association, an industry trade group, says the timing rule would cut drilling in northwestern Colorado by 20 percent.

After the industry protested that some land could be closed for up to six months between wintering and breeding protections, the oil-and-gas commission staff agreed to limit closures to a single 90-day period each year.

That means wildlife officials will have to choose which animal benefits from the three-month drilling halt.

If it were a choice between mule-deer winter range and the Sage-grouse spring breeding, the bird would likely get the protection, said Tom Remington, director of the state Division of Wildlife.

It was this limitation that prompted the wildlife commission to say that a single 90-day period "does not reflect an appropriate balance of oil and gas development and wildlife interests."

When energy companies work on federal land, they already face drilling limits to protect wildlife.

For example, in the Bureau of Land Management's May lease sale, more than half the 7,500 acres being offered in Jackson County had closures for winter habitat and elk calving.

Federal lands, however, account for less than 15 percent of the well permits in Colorado. The state rules would apply to all state and private lands.

Energy companies can avoid the 90-day closure by limiting their activity to one or two drilling pads per square mile or negotiating other remedial measures with state wildlife officials.

"Industry has tended to portray this as an all-or-nothing rule," said Dave Neslin, acting director of the oil-and- gas commission, "but we've really tried to provide options and balance."

In Las Animas County, which is exempt from the closure rules, energy companies are already working to limit drilling activity during periods requested by landowners, such as hunting season, said Jay P. Still, a vice president with Pioneer Natural Resources USA.

"The industry is willing to work with landowners and the commission," Still said, "but this mandatory closure is a problem."

http://www.denverpost.com/ci_9153863

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Working and Sleeping and not much else
Life in the energy industry is as unique as the work itself

What’s it like?
Life on the rig and the demands of the job are tough. Kevin Eastman talks about what it’s like being on a gas rig.
 
By Pete Fowler, Glenwood Springs Post Independent
April 27, 2008
 
Drill rig worker describes the drilling lifestyle

PARACHUTE, Colorado — Kevin Eastman loves the intensity, the adrenaline rush and the danger of imminent death in drilling rig work.

Connecting or disconnecting heavy pieces of pipe as they come into or out of the ground could snap off a finger, or worse. He takes some pride in doing a physically demanding job not everyone can do.

“Close your eyes for a second and boom — you’re gone,” he said.

Then there’s making more than $75,000 a year to start on a rig. The hours are long, but many drillers only work during about half the days in a year.

A former welder, Eastman’s been working on the drill rig for about six years. After past substance abuse led him to jail, he said, drilling work was the only well-paying profession left for someone with a felony conviction. But he’s clean now.

He said his five-man crew is closer-knit than the family he grew up in.

His crew works at a rig between Parachute and Rifle. They generally work 12-hour shifts for seven days then get seven days off. When they’re on, the five guys stay at a three-bedroom, two-bathroom River Manor apartment in Parachute that a drilling contractor has rented for its workers.

“It’s no problem having two guys sleeping in the same room on twin beds because we work together,” he said. “We’re very fond of each other. We help each other out with domestic problems — financial needs.”

Some roughnecks spend more time with coworkers than people do with spouses. They go to bed together, eat together, ride to work together and even spend time off together. With a good crew it creates strong bonds. A bad crew can be a living hell.

“That’s what keeps me in this field. I love it,” Eastman said. “We get back to the apartment and we talk about the day, what’s going to happen tomorrow. For us and our crew it’s a real good bonding time. We all get on the same page. It creates a real congruency.”

Eastman hopes to buy a house near Parachute. Driving home to Phoenix on days off, experiencing “road lag” then driving back to the rig five days later created a lot of stress, Eastman said. He and his wife recently decided to separate.

She said, “I didn’t marry you so you can be gone.” Eastman said, “I can’t give this up. This is what I love. It’s a part of me.”

Working on a drill rig tests one’s mettle every day. It’s the ups and the downs that create the bonds.

“You meet these tests with your fellow human beings and you overcome them and that creates a bond,” he said. “And then the failures, sometimes no matter how hard everyone is pulling things go wrong. You stay beside each other in the trenches. You can’t stop. You can’t walk away. Through the ups and the downs, that’s what creates such a tight crew.”

Eastman knows others aren’t as lucky. He’s worked for different companies and on different crews and he knows many drill rig workers aren’t strangers to substance abuse.

“A lot of the guys they work so hard so they party too hard,” he said.

He’s seen people lose jobs over it and he’s picked up shifts from people who got arrested. He said it’s rare that two people will be on the same crew for more than a year.

But his crew has been together for about six years, starting in Wyoming. They followed the rig to Colorado in August 2006. Eastman said they have two more years of work planned on the valley floor, five more years “up top” on the Roan Plateau and then he’ll probably follow the rig to North Dakota.

http://www.postindependent.com/article/20080427/VALLEYNEWS/962009638

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Industry reacts to gas drilling rules
Legislators positive, but oil and gas group voices some initial complaints

By Phillip Yates, Glenwood Springs Post Independent

April 3, 2008

GLENWOOD SPRINGS, COLORADO — Some rules were tweaked. New ones were included. Others were abandoned.

After almost four months of controversy over new regulations for the state’s oil and gas industry, the Colorado Oil and Gas Conservation Commission released its set of draft rules for the industry on Monday.

Dave Neslin, acting director of the COGCC, described the immediate feedback from the legislature, the agency’s commissioners and others about the proposed rules as “positive.” However, he said he has yet to speak in-depth with energy companies operating in the state.

Despite the heated rhetoric that surrounded the drafting of the new rules for energy development in Colorado, Neslin called it a good process.

“I think it has accomplished what we intended,” Neslin said.

The state is drafting new rules for the state’s oil and gas industry because of legislation passed by the state Legislature, which required that the COGCC expand its focus to consider public health and wildlife impacts, and require the use of best management practices to minimize harm from oil and gas development. The agency’s commissioners, which include Garfield County Commissioner Trési Houpt, will make the final call on what the rules will look like.

The Colorado Oil & Gas Association, which represents about 80 percent of the oil and natural gas production in the state, said the industry was optimistic on Monday that state agencies “heard the industry’s concerns and adequately addressed those concerns in the draft rules.”

“However, after an initial review of the draft rules, COGA maintains many of its long-stated concerns,” the industry group said in a document outlining its initial problems with the draft rules.

<<Click here for more>>
http://www.postindependent.com/article/20080403/VALLEYNEWS/826415244

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Colorado debate about to heat up with draft rules for oil, gas

By JUDITH KOHLER

March 29, 2008 - 2:38PM

DENVER - Energy executives, environmentalists, landowners and government officials have been battling for months over proposed new rules for Colorado's oil and gas industry - and they won't be released until Monday.

When the draft regulations are made public, they're sure to touch off a new round of protests and counter-protests.

The proposals will implement new laws requiring that decisions about oil and gas development give additional weight to public health, wildlife and the environment.

Industry officials warn that will drive up costs and dampen companies' interest in Colorado. Others dismiss that as fear-mongering and say the industry won't walk away from the state's vast natural gas reserves.

A debate over the preliminary proposals has been raging since January.

Hundreds of oil and gas workers and supporters rallied in four cities across the state this month, saying the new rules could cripple an industry that pumps billions of dollars into Colorado's economy and employs tens of thousands of people.

"We cannot afford to kick the state's economic leader out of the state," Rep. Cory Gardner, R-Yuma, told the crowd at a March 20 rally on the Capitol steps in Denver.

Action 22, a coalition of governments, businesses, groups and residents in 22 southern Colorado counties, passed a resolution opposing any rules that "would add materially to the cost of oil and gas operations" without sound science to back them up.

Southern Colorado includes the Raton Basin, one of the focal points of Colorado's natural gas boom.

La Plata County Commissioner Wally White called the notion that the industry will leave Colorado if regulations are strengthened a "fear-and-loathing tactic."

"Some legislators are saying the industry is packing its bags and already heading to the state line," White said. "This is a $23 billion-a-year industry. I don't think the gas companies are going to walk away from that."

Colorado issued a record 6,368 drilling permits last year, six times the 1999 number. Currently, 34,000 wells are active statewide. Tens of thousands of new gas wells are expected on federal land alone over the next 20 years.

White said La Plata County, which produces 40 percent of the state's natural gas, heard similar arguments from the industry when it adopted oil and gas regulations in the 1990s. The rules included mandatory minimum distances between drilling rigs and homes and other protections for landowners.

La Plata County won its battle in the courts for the right to regulate the industry's activities on the surface. The state issues drilling permits and governs what happens underground.

White said counties started drawing up their own regulations because of a regulatory void at the state level.

"During those years, in the '90s, the state oil and gas commission was dominated by the industry," White said.

A law approved last year revamped the commission by increasing the number of members to nine from seven, adding the state health and natural resources directors and decreasing the number of representatives who must be from the industry.

White said La Plata County and the industry have a good working relationship even though they have their differences. He said oil and gas production is important to the county; it accounts for 60 percent of the property tax revenue.

"People have been reaping the benefits," White said. "We've put lots of money into capital improvements and have done a lot for community" thanks to the revenue.

But the county needs to look ahead to when natural gas production declines. He is concerned about the impacts on the landscape, which includes some of Colorado's most rugged and scenic mountains.

"How do we maintain that beauty that draws people here?" he asked.

http://www.gazette.com/articles/gas_34751___article.html/industry_colorado.html

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