CO considers new setback rules

Nov 9, 2012

An increase in oil and gas development is bringing jobs and revenue to some areas of Colorado, but drilling and completing the oil and gas wells is creating some conflict between landowners, mineral owners and state regulators.

Colorado officials are in the process of revising state regulations governing oil and gas drilling, and some industry groups are concerned that new regulations could create more conflicts.

The mission of the Colorado Oil and Gas Conservation Commission (COGCC) is to foster the responsible development of Colorado’s oil and gas natural resources.

This includes the efficient exploration and production of oil and gas resources in a manner consistent with the protection of public health, safety and welfare.

In 2007, the commission’s purpose was revised to include commissioners with education, training, and experience in environmental or wildlife protection, soil conservation and agricultural production.

Today, COGCC continues to serve, solicit participation from, and maintain working relationships with all those having an interest in Colorado’s oil and gas natural resources, according to the Colorado Cattlemen’s Association (CCA).

COGCC is currently engaged Setbacks (from page 1) in a setback rulemaking. With various stakeholders involved, including the surface owner, the mineral owner, adjacent landowners, the local government, and the oil and gas operator, it is a daunting task.

Property lines, the mineral property boundaries, surface and lease agreements, development plans, encroachment on existing facilities, lease lines, drilling spacing orders, access, centralization of facilities, technical limitations, and location of the resources all have to be considered in the process.

According to Matthew Lepore, director of COGCC, on Oct. 1, the commission started to put together a proposed plan, but this plan has some groups concerned.

“Over the next three months the commission will consider new rules to require greater monitoring of groundwater quality statewide; and the commission will weigh proposed rules governing setback distances between wells and buildings. The setback rules would mandate operators to take additional steps to minimize disturbances when extracting resources in close proximity to communities,” Lepore wrote in an article for the Northern Colorado Business Journal.

The proposed setback rules, that have some property owners watching their fence lines a little closer, would create a minimum setback distance of 350 feet to apply statewide. Additionally, a 750-foot setback from buildings that regularly house more than 50 people, such as schools and hospitals, would be required. And, the proposed rules would require operators to take steps to eliminate or minimize noise, lighting, odors and dust in a buffer zone out to 1,000 feet from a proposed well or other production facility.

Lepore said the proposed rules also require more communication to nearby residents before wells are drilled. “We’ve learned that often disputes between residents and operators could have been eliminated or at least alleviated with greater outreach before drilling activities begin,” Lepore wrote in a column.

A diverse group of stakeholders has released a fact sheet regarding the impacts of the increased setbacks. The current group includes CLUB 20, Colorado Association of Commerce and Industry (CACI), CCA, Colorado Farm Bureau (CFB), Colorado Oil & Gas Association (COGA), La Plata Energy Council, National Association of Royalty Owners Rockies Chapter, and Weld County.

“We all use and depend upon oil and natural gas every day, in a multitude of ways,” CCA points out. CCA agrees that COGCC recognizes production of these natural resources must be done responsibly, in a manner that protects Colorado’s singular environment and preserves the exceptional quality of life Coloradoan’s enjoy.

“We acknowledge that public interest is driving the call for increased setbacks, and we are interested in discussing the practices that can address these concerns in urban drilling,” says Tisha Schuller, president and CEO, COGA. “At the same time, we cannot forget the stakeholders most affected by drilling. Any setback solution must acknowledge the legal, regulatory, and technical complexity of wellsiting.”

“Any proposal of a 1,000-foot setback ignores the complex technical, logistical, and legal challenges inherent in siting a well,” CCA wrote in a press release. “This approach also disregards the numerous stakeholders with an interest in this distance, most importantly, the surface owner. Arbitrary setbacks will result in disturbing additional surface area, will cause greater impacts to natural resources, and will impact property values and future land uses.”

Members from other organizations agreed that placement of an oil or gas well should be a decision made between the landowner and the gas/oil company.

“Arbitrary setbacks result in the taking of private property—both that of the agriculture producer on the surface and the mineral owner below the surface. Setbacks reduce the ability of the farmer and rancher to negotiate the proper placement of the oil and gas well so as to not disturb agricultural activities,” says Don Shawcroft, CFB president.

“Arbitrarily mandating a policy such as setbacks by statute does not serve the public interest,” says Neil Ray, president, National Association of Royalty Owners Rockies Chapter.

“Arbitrary setbacks will actually harm the environment, resulting in an ecological-takings by further fragmenting open space,” says T. Wright Dickinson, CCCA president. “Limiting landowners’ ability to strike the necessary balance of well placement with the protection of agriculture viability and environmental conservation threatens society’s access to affordable food, open space and energy. Not to mention taking a step backward from Colorado’s stance on responsible development of our oil and gas resources.”

According to CCA, the current setback criteria and the current process for well location adequately addresses the perceived health and safety risks while allowing the surface owner, mineral owner, operator and regulators the ability to determine the best location of the well so as to maximize the resource and protect private property rights.

“Communities, like Weld County, with oil and gas production have been successfully addressing our constituent concerns for decades. We do not require a draconian mandate from the state which interferes with private property rights and local authority to plan and manage our land use decisions,” says Commissioner Barbara Kirkmeyer, Weld County Board of County Commissioners.

“In La Plata County, we have been working with neighbors, schools and industry for decades to ensure thoughtful development of natural resources,” says Christi Zeller, executive director of the La Plata Energy Council. “We have learned to work together to ensure industry acts as a good neighbor and provides comprehensive safety measures to people near oil and gas operations.”

“If Colorado were to transition from its nuanced and thoughtfully created setbacks requirement to a ‘one size fits all’ 1,000-foot limit, the negative economic impact to our state would be substantial. From increasing the costs of current practices, to devaluing property, to hindering projects that are already under way, such a proposal would hurt a variety of businesses and employers, and without cause,” says Carly Dollar, CACI.

“Establishing a ‘one-sizefits-all’ rule regarding setbacks may negatively impact the rights of private landowners and local government planning efforts,” says CLUB 20 chairman, Steve Reynolds. “CLUB 20 supports a process that recognizes and respects the needs of the stakeholders involved in the oil and gas drilling process and believes that the COGCC manages that process appropriately under the existing rules.” — Traci Eatherton, WLJ Editor