January 27 Colorado Energy Cheat Sheet: COGCC rulemaking pleases no one; anti-fracking measures disastrous for Colorado economy; pushing back against Clean Power Plan

Even small changes to oil and gas regulations can have deep and damaging effects on Colorado’s economy, according to researchers at the University of Colorado:

A statewide, 2,000-foot buffer zone between drilling rigs and homes, schools and businesses would take a hammer to Colorado’s oil and gas industry, already reeling from low commodity prices, as well as the state’s wider economy, according to a new study from University of Colorado Boulder’s Leeds School of Business.

Such a setback requirement “could result in slower economic growth” for Colorado’s economy as well as state revenue, according to the study released Wednesday.

The study said its forecast on the effects of a 2,000-foot setback included:

Production of oil and gas statewide could drop between 25 percent and 50 percent;
A $6 billion to $11 billion drop in Colorado’s gross domestic product;
A loss of 33,000 and 62,000 jobs between 2015 and 2030;
Loss of $214 million to $428 million in per year in tax revenues from oil and gas companies.

Given that the Colorado Oil and Gas Conservation Commission just concluded a round of rulemaking based on the Governor’s Oil and Gas Task Force recommendations from 2015, new and more onerous regulations like the setback examined by CU researchers or the more dangerous proposed fracking bans and various setback ballot measures could have catastrophic consequences on top of the recent commodity downturns impacting the state.

Anti-energy activists have intimated that even more proposals could be in the offing for 2016:

Larimer County resident Katherine Hall, who testified in favor of local control, said she would not be surprised if a citizen-initiated measure ended up on November’s ballot.

“The final outcome of the rule making does not go far enough to ease the concerns of Colorado citizens,” Hall said.

Remember when this blog said the Oil and Gas Task Force was merely kicking the can down the road?

We’ve made our way down that road, and the can is about ready to explode.

In the near term, the COGCC rules could go into effect in as few as 6 to 8 weeks, subject to review by the legislature and the Attorney General:

Compton said the months of rulemakings were “the most difficult” that he’s been through — a string that included the 2008 wholesale overhaul of Colorado’s oil and gas regulations.

The commissioners voted 5-4 to define “large” oil and gas facilities, the threshold that triggers the communication process between energy companies and local governments, as eight new wells and storage tanks that can hold up to 4,000 barrels of oil and natural gas liquids. The commissioners restricted the rule to large facilities in “urban” areas, defined as 22 buildings within 1,000 feet of the wellsite, rejecting request from some quarters to take the rule statewide.

But the rules appear to exceed the recommendations, and create ambiguities that will only incur more procedural red tape:

The process approved by the COGCC will triple, from 90 days to 270 days, the amount of time needed to get a hearing on a large project before the oil and gas commissioners, said Tracee Bentley, the executive director of the Colorado Petroleum Council, an arm of the American Petroleum Institute.

The final rules also said facilities should be “as far as possible” from existing buildings, a phrase Bentley called “vague and confusing” that would cost energy companies time and money to comply with.

The commissioners also rejected a request that existing surface-use agreements between energy companies and landowners be grandfathered, and allowed to avoid the notification and consultation process.

“We feel the industry brought reasonable solutions to the table that were largely ignored, and the rules still go beyond the recommendations of the task force,” said Dan Haley, president and CEO of the Colorado Oil & Gas Association.

Bringing reasonable solutions and constructive dialogue should be expected of the industry, but the same can’t be said for the forces calling for the end of natural resource development altogether:

Activists addressing a state oil and gas rulemaking hearing this week levied a barrage of accusations and insults toward state officials and even renewed calls to eliminate Colorado’s state agency responsible for regulating oil and gas development.

Speaking at the Colorado Oil and Gas Conservation Commission (COGCC) hearing, Lauren Swain, representing national climate activist group 350.org, largely ignored the fact that the rulemaking was supposed to be the focus of the hearing and instead used her time to complain about the agency. From Swain’s testimony:

“With this new proposed rule, the COGCC has proven once again that it can no longer be considered a legitimate state agency because the COGCC continues to facilitate the pace of hazardous polluting oil and gas drilling and fracking operations near homes and schools subjecting communities to the risks of toxic emissions, spills and explosions.”

But Swain took her testimony even farther by lobbying for disbanding the agency in favor of creating a new agency that would “swiftly” transition the state to 100 percent renewables using the Solutions Project at Stanford as a guide. From Swain:

“The COGCC must be replaced with one or more agencies charged with one, facilitating to protect Coloradans from the harmful impact of oil and gas production and two, to aid and foster Colorado’s swift transition to one hundred percent renewable energy production and consumption using the Solutions Project developed at Stanford University as a guide.”

Up next was testimony from an activist who has previously accused the oil and gas industry of having a “personality disorder” and of being “socially deviant.” This time, Amanda Harper called oil and gas producers a “short sighted, selfish and sociopathic industry.”

Not a lot of balance or reasonable tone, it seems.

Colorado Governor John Hickenlooper offered his comments at an event that saw journalists kicked out and required an open records request to seek audio of the Democrat’s comments–and while he questioned the leverage of the anti-energy groups to get the proposed measures on the 2016 ballot, he surreptitiously argued that the COGCC rules discussed above had, in his opinion as well, gone further than his own Oil and Gas Task Force had recommended:

“I haven’t heard of any funding source for any of them,” Hickenlooper began. “Like the normal, large funders of those initiatives, you know, I haven’t heard of. So, maybe they’ll get on the ballot, but without a lot of money, I don’t think they’re going to do well. I can guarantee you there’ll be money spent showing that, the, the problems associated with any of those initiatives.” (Forum Q & A – 17:05)

Moments later, he added, “Again, we’re going further even than the commission recommended, and in certain cases, to try and give local, local municipal elected officials more, a greater role.”

Further.

We’ll see how that plays out.

***

The Environmental Protection Agency’s Clean Power Plan received a stay of its own last week when the DC circuit refused to grant a stay of the rule, forcing 26 states to appeal the case to the US Supreme Court.

Meanwhile at the Colorado legislature, Sen. John Cooke (R-Greeley) has championed measures designed to keep the implementation of the Clean Power Plan at arms’ length, allowing lawsuits to be completed before the state moves forward, something Coloradans clearly support:

Two weeks into the 2016 legislative session, Sen. John Cooke, a Republican from the heart of the Front Range oil and gas patch in Greeley, has introduced two bills that take aim at the plan, which requires power plants to cut carbon emissions by 32 percent from 2005 levels by 2030, largely by shutting down or converting coal-fired plants to alternative fuel sources.

One of Cooke’s bills couldn’t be more timely. After several state attorneys general, including Colorado’s Cynthia Coffman, failed to win a stay of the plan from a federal court Thursday, Cooke’s Senate Bill 46 jumps into the ring like a tag-team wrestler, working from another angle to stall implementation of the Obama administration plan.

“Well, it wasn’t really a surprise that the court in D.C. struck down the stay request,” Cooke told The Colorado Statesman. “Unfortunately, the bill is more relevant now.”

The “Preserve State Clean Power Plan Options Act” aims to “slow down the implementation process” in part by suspending it “until all [related] lawsuits are done,” Cooke told members of three rural Colorado advocacy groups, including some representing coal mining areas, who were visiting the Capitol Friday.

In effect, Colorado wouldn’t need a stay from a court because it would have passed a stay for itself, written by Cooke.

Cooke’s other bill, SB 61 or “Ratepayer Protection Act,” would require the Colorado Department of Public Health and Environment to pay for costs generated as a result of Clean Power Plan implementation.

***

NEWS ROUNDUP:
Silverton punts on Superfund designation

How the EPA handled Flint, MI water contamination, vs. Animas River spill

Plunging oil prices means lower severance tax revenue in Colorado

Lower gas prices? Let’s raise taxes!

Anti-energy activists oppose coal development on the Western Slope. News at 11.

Trading: Coal extraction for sage grouse habitat

December 3 Colorado Energy Cheat Sheet: US House resolutions push back on Clean Power Plan, rail vs. pipelines in Denver, Gold King Mine owner has strong words for EPA

December 3, 2015 by michael · Comments Off
Filed under: CDPHE, Environmental Protection Agency, Hydraulic Fracturing, New Energy Economy 

The U.S. House passed two resolutions on the Clean Power Plan and carbon emissions this week:

The House sent a resounding message to the nations gathering in Paris for international talks on climate change by approving two Senate resolutions to block President Obama’s restrictions on power plants.

The resolutions now go to Obama. When the resolutions passed the Senate last month, the White House said Obama would veto the resolutions.

The House on Tuesday voted 242-180 to block the Clean Power Plan, a mostly symbolic measure by Congress to stop President Obama’s signature environmental regulation. The chamber also passed a second resolution to block carbon emissions limits on new power plants, 235-188.

The Clean Power Plan, seen as Obama’s signature environmental regulation, is the centerpiece of the administration’s commitments to the 21st Conference of Parties, or COP21, being held in Paris during the next two weeks.

Rep. Ed Whitfield, R-Ky., said the vote is meant to show the 195 other countries gathering in Paris that there are serious objections to the Obama’s plans in the United States.

“We want to send a message to the climate change conference in Paris that in America there’s serious disagreement with the extreme policies of this president,” Whitfield said.

***

There are at least two ways to ship crude oil and related fuels–by rail or via pipeline–and the recent surge in tank cars on the nation’s rail lines have mashed up against the rapid urbanization of former industrial and commercial areas of Denver, such as the neighborhoods between Union Station and the Platte River:

Peering through four panes of insulating glass, it’s not the noise that bothers Don Cohen as a daily parade of freight trains passes 50 feet outside his condo. He and some Riverfront Park neighbors are troubled by what they’re seeing on the tracks more frequently. Tanker trains carrying crude oil and other flammable liquids — reflecting a shift in energy trends — rumble past the gleaming high-rise condo and apartment buildings several times a week, he says.

Those tankers pass near other Denver neighborhoods, too, old and new, upscale and hardscrabble. Highways and railroads box in some areas, with only one way out if disaster were to strike.

The trains also travel near the city’s major sports venues and Elitch Gardens Theme and Water Park, raising fears among some about what might happen in a fiery derailment or other accident — however small the chances might be.

Appeals by Cohen and others to city officials for increased emergency planning have met with mixed success.

It’s difficult to ignore that the rail lines in the region have

The numbers of rail shipments have increased over the past 7 years:

Nationally, crude oil volume on the rails has skyrocketed from just shy of 10,000 tank cars in 2008 to about 500,000 last year, The Associated Press recently reported. In Denver, according to city officials’ summary of reports by the two major railroads, trains carried well over 15,000 tank cars of flammable liquids in a recent one-year period, including 8,000 filled with crude oil.

***

The owner of the Gold King Mine shares more insights into the August Environmental Protection Agency-triggered spill in southwest Colorado:

Todd Hennis, owner of the Gold King Mine, was vacationing at a remote lake in upstate New York when a friend sent him images of the Environmental Protection Agency-contracted crew’s triggered blowout on his property, effectively turning the Animas River into an orange spectacle. He was speechless and horrified, but not surprised.

“I’ve been trying to make everybody aware of the dangers posed by the Sunnyside Mine pool for 14 years,” he told The Durango Herald last week. “But when I saw the pictures, I just felt my life was over. I just thought, ‘Oh God, what did they do?’”

The EPA, investigating the Gold King Mine’s partially collapsed tunnel, accidently released an estimated 3 million gallons of acid mine drainage Aug. 5 into Cement Creek, down the Animas River and into the San Juan River in New Mexico.

Hennis, for his part, has long maintained increased flows from the Gold King Mine are a result of groundwater seeping from the vast, adjacent Sunnyside Mine network after it was plugged, first in 1996.

“I went up to the Sunnyside offices that were in Gladstone at that point and said, ‘I’d like to talk about the discharge,’” he said. “They denied everything, and have been denying it ever since.”

Hennis minced no words about how he felt since the EPA took over four months ago:

In the aftermath of the Aug. 5 blowout, Hennis said he gave the EPA the keys to his land for an immediate cleanup response. But since, he claims the federal agency has enforced a complete takeover of his property.

“They’ve been so thoroughly arrogant, incompetent, and frankly criminal in their outlook, that it’s kind of like dealing with the mafia,” he said. “It is very much an act of rape. I don’t mean to denigrate women who’ve gone through it, and for that matter, some men, but it’s been such an ugly penetrative act on an unwilling victim.”

An unrelated uranium mine spill near Cañon City has activists comparing it to the EPA Gold King Mine spill, though the volume is nowhere near as large as the August spill, and was located at a 30-year-old Superfund site (a designation many desired for area around the Gold King Mine):

Colorado health officials were reviewing an explanation from Cotter Corp. on Monday after a spill at Cotter’s defunct uranium mill in central Colorado — one of the nation’s slowest Superfund cleanups.

A pipeline leaked about 1,800 gallons last week on Cotter’s 2,538-acre property uphill from Cañon City and the Arkansas River.

Well tests in July found water in the waste pipeline area contained elevated uranium (577 parts per billion, above a 30 ppb health standard) and molybdenum (1840 ppb, above a 100 ppb standard).

This spill was the latest of at least five since 2010. Federal authorities in 1984 declared an environmental disaster and launched a Superfund cleanup.

This spill prompted comparisons to the EPA’s toxic spill near Durango:

“They need to eliminate the contamination at its source,” said attorney Travis Stills, who represents the community group Colorado Citizens Against Toxic Waste.

Buried mill tailings and impoundment ponds “continue to be sources of contamination. It’s some of the most toxic mining residue you could have — all of what you’d expect to find at a Gold King disaster, plus an overlay of uranium and radioactive isotopes, flowing into groundwater with a very direct route to people and the Arkansas River, ” Stills said. “What’s it going to take to get real action?”

***

Approximately 89 percent of the state’s oil production, or nearly 100 million barrels by year’s end, will come from Weld County in 2015, despite declining energy prices:

Despite a general slowdown in oil drilling across the Denver-Julesburg Basin and elsewhere, production growth in Weld County this year is on track to top 100 million barrels of oil.

Oil production growth in the county continues to cast a long shadow over the rest of the state, with more than 89 percent of the state’s production this year coming from Weld, up from 85 percent in 2014.

Industry analysts say operators are getting more oil from every well by drilling the best parts of the basin, employing improved well fracturing techniques and optimizing operations.

“We are seeing a relentless drive to push down costs across the basin,” said Reed Olmstead, manager of North America supply analytics, upstream strategy and competition at IHS Energy in Englewood. “Improved productivity is an important part of well economics, and in this price environment, only the best wells are getting drilled.”

Here are some of the staggering numbers from Weld County:

For the first half of 2015, Weld oil production averaged 8.7 million barrels per month, up from a monthly average of 6.7 million barrels in 2014.

Statewide oil production for 2015 so far is at 79.46 million barrels. Of that, 70.85 million barrels, or 89 percent, were produced in Weld. Rio Blanco is the second-largest oil county in Colorado with 2015 production of 2.6 million barrels produced to date.

Barring an unexpected drop-off in production, Weld is on pace to produce more than 100 million barrels of oil this year, a remarkable milestone considering the county produced just 26.8 million barrels in 2011.

In 2014, Weld produced 81.4 million barrels, or 85 percent, of the statewide total of 95.2 million barrels. For Weld, that was an increase of 13.8 million barrels, or 19 percent, from 2013 production.

***

Meanwhile, Sen. Michael Bennet (D) has introduced a bill designed to spur carbon capture technology:

A bipartisan measure being carried by U.S. Sen. Michael Bennet and a Republican senator from Ohio aims to boost capture and storage of carbon dioxide, which would not only keep it out of the atmosphere but make it available for use in boosting oil production.

Bennet, D-Colo., and Sen. Rob Portman introduced the Carbon Capture Improvement Act last month. It would help power plants and industrial facilities finance the purchase and installation of carbon capture and storage equipment. Businesses would be able to make use of private activity bonds, which typically are used by local or state governments, are tax-exempt, and can be paid back over a longer period of time.

The captured carbon dioxide could be stored underground or used by energy companies in a process known as enhanced oil recovery.

“This bill would reduce upfront costs, one of the largest impediments to carbon capture technology. It is good for the economy and good for the environment,” Bennet said in a recent news release. “In Colorado it would enhance our diverse energy portfolio. The captured carbon dioxide can be used by oil producers to extract more oil out of current wells — improving our energy security and boosting domestic energy production. It also reduces emissions from power plants and industrial facilities to help keep our air clean — which is something that Coloradans value and makes our state an attractive place to live.

“This bipartisan bill is a market-based, technology-neutral approach to attacking the problem that carbon dioxide creates.”

***

Finally, State Sen. Jerry Sonnenberg (R-SD1) says no to a carbon tax:

A tax on CO2 would also negatively impact those not directly tied to Colorado’s coal industry. From home heating to electricity to transportation, Coloradans depend heavily on energy to power their lives. The NAM study estimates that, under a carbon tax, prices for natural gas used for heating and electricity would rise more than 40 percent. Meanwhile, gasoline prices at the pump could jump by more than 20 cents a gallon. These price hikes will affect every family and business in the state and, by 2023, as many as 52,000 people could be put out of work.

This would hit rural Colorado especially hard, as the state’s agricultural sector would face higher prices at every level of production. These costs will ripple throughout the economy, affecting everyone from the ranchers and farmers who drive Colorado’s $40 billion agriculture industry, to families buying local produce.

This regressive, job-killing tax is often advertised as a market solution to cutting emissions. In reality, it’s simply another means of artificially raising the prices of affordable, reliable electricity and pressuring investment in expensive, unreliable energy sources like wind or solar. Rather than imposing additional costs on Colorado families, policymakers should adopt a real market solution that relies on technological innovation and consumer choice while retaining economic growth and low energy prices. If Colorado’s leaders are committed to protecting hard-working Coloradans and growing the state’s diverse economy, they should reject a carbon tax.