Posted 8 months, 27 days ago in 
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Several articles have been published over the past week on the health of the oil and gas industry in Colorado, especially here in western Colorado. Now that industry is reducing its operations what will be the consequences to our communities?
A major factor in this discussion is the new, as-yet-to-be-approved regulations drawn up by the Colorado Oil and Gas Conservation Commission. To some these are responsible, in part, for this reduced activity.
The Grand Junction Chamber of Commerce, state Sen. Josh Penry and County Commissioner Craig Meis are trying to convince the public of this scenario. This is interesting given there is also a reduction in the gas industry activity in all surrounding states.
Utah has seen a 51 percent decline in the number of gas rigs, compared to Colorado’s reduction of 59 percent. Wyoming and New Mexico are also seeing declines on the same level as Colorado and, as far as I know, there are no new oil and gas regulations being proposed in these states. Can the new COGCC regulations really be responsible for this decrease in activity by the gas industry activity?
The COGCC spent months coming up with these new regulations and didn’t do it in a political vacuum. There were many hours of public testimony, the committee spent hours meeting with the oil and gas industry, with numerous meetings spent addressing onerous items. Even though several members of the committee have direct ties to the industry, the committee voted unanimously for approval of the new regulations. Why would the oil and gas industry be trying to discredit what they had direct input into creating?
ERIC RECHEL
Grand Junction
5 Responses to “COGCC committee had plenty of outside input on new regulations”
Posted February 26th, 2009 at 10:23 pm Login to Send PM Report this comment
The slowdown of the Gas and Oil industry in Co is at least in great part a direct result of the new regs, and in the other states a result of the new Interior Sec. Ken Salazar (former Co. State Sen) cancelling the leases; and is therefore essentially one in the same, a fact which you are well aware of Mr. Rechel because of your leadership role with the Sierra Club, which is a relationship I noted you neglected to mention in your letter.
Posted February 26th, 2009 at 11:20 pm Login to Send PM Report this comment
There are new regs in New Mexico also, but their governor showed some common sense and put them on hold.He at least recognizes what Rechel and Ritter fail to see. By the way, COGCC has approved the regs.
Posted February 27th, 2009 at 12:05 am Login to Send PM Report this comment
The recent new pit rules in New Mexico were much stiffer than anything in the new Colorado rules. Even with being scaled back by Gov. Richardson, the New Mexico pit rules remain more stringent than Colorado’s new rules. If this is common sense by Gov. Richardson, then this means the less stringent rules in Colorado show extreme common sense by the COGCC and Gov. Ritter.
As for active rig counts, Colorado has seen a decline of 45% from the peak number in 2008 according to the Baker-Hughes Rig reports. Texas and Okalahoma have both seen declines of 41%. Nearly 400 rigs have been idled in Texas!
How have the new Colorado rules for increasing protections for public health and safety and the environment been responsible for the slowdown in Texas and Oklahoma (and Wyoming and Utah and Pennsylvania and Alaska and …)?
Posted February 27th, 2009 at 12:31 am Login to Send PM Report this comment
Bruce86,
I have spent quite a bit of time lately citing, in one blog and newspaper after another, the truth about the slowdown of drilling in Colorado.
Two things are important to note:
1. The “Ritters’ Job-Killing Rules” tune is being sung by the oil and gas lobby and its’ minions and toads, the Republican Caucus, and quite a few mis-informed industry dependants. By contrast, you do not hear it from highly placed, company representatives.
Brad Robinson, Gunnison Energy Corp. president said, ” In general, we’re very supportive of the intent of the regulations…to have some sort of balance and try to consider the environment in the area in which you are drilling. We already comply with most of the new, more stringent rules, so it really doesn’t have a big impact on us.”
Roger Parker, Chairman and CEO of Delta Petroleum, admitted, ” The downward revision of our 2009 drilling (capitol expense) budget was driven EXCLUSIVELY (emphasis, mine) by the continued deterioration of commodity prices.”
The reason for this discrepancy is, corporate executives have a fiduciary responsibility to their shareholders, keeping them pretty closely shackled to the truth.
Unlike some local politicians and industry spokespersons I could, but won’t, name.
Posted February 27th, 2009 at 1:43 am Login to Send PM Report this comment
sorry, had to leave for a bit.
2. The Rocky Mountain Gas price is discounted (the price is lower) when compared to the NYMEX price (the one you see on TV and in the paper). The NYMEX price is placed at the Henry Hub in Louisiana, which is as close as we have to a central national hub. That discount varies, and it can be substantial.
When pipeline capacity into larger markets increases, it will add price support to Rocky Mountain gas, coupled with an increase in demand (which has plummeted) that should make Rocky Mtn. gas more profitable and activity will pick up. The REX (Rocky Mtn.Express) pipeline should be finished into Pennsylvania (or W.Virginia) in November of this year. The Ruby pipeline to Oregon , the one Gov. Ritter is working to expedite, should be done in 2011, and the Kerns extension in to So.Cal. should pretty much eliminate the discount.
The storage capacity of the U.S. for natural gas is 4.191 trillion cf. We currently are storing 4.191. The corn crib is full. Until demand picks up and supplies dwindle, the prices will remain low.
The COGCC rules are not to blame for this downturn in oil and gas activity.
Regardless of what hyperbolic nonsense you hear from a dwindling number of industry apologists.
( the above info is from either the Colorado Department of Natural Resources or Encana Corporation.)
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