COGA continues to monitor and engage in regulatory matters at Colorado agencies that have potential to impact oil and gas development in Colorado. This year is starting with a flurry of activity, especially at the Colorado Oil and Gas Conservation Commission (COGCC) and the Colorado Department of Health and Environment, Air Pollution Control Division (APCD).
In February 2012, the COGCC initiated a setback stakeholder group to identify potential issues associated with the existing setback rules. Nuisance impacts associated with oil and gas operations were among the issues identified and discussed and are being currently addressed in this rulemaking. On October 15, 2012, the COGCC noticed a rulemaking to consider new and amended rules for statewide oil and gas setbacks from buildings applicable to drilling and well servicing operations, high density areas and designated outside activity areas, and, aesthetic and noise control regulations.
From January 7th – 9th the Commission heard testimony from parties and began deliberations, however, they did not reach come to a final vote. Instead, the Commission took a number of "straw votes" on key issues, and directed Staff to deliver a final rule incorporating the agreed upon parameters, as well as correcting drafting errors pointed out by the parties. On January 18th, the COGCC went into Executive Session to discuss certain legal issues related to delegating authority to local governments and announced during the January 24th hearing that they had been advised that the did not have certain legal authority to do certain activities as directed in the January 9th revisions. The Commission then voted to remove all amendments from their January 9th hearing. The Commission did not move a final rule but instead waited till their next regularly scheduled meeting.
On February 11, 2013, the Colorado Oil and Gas Conservation Commission (“COGCC”) voted 8‑1 to approve and implement new setback rules modifying Rules 303, 305, 306, 604, and 805, among others, in order to limit the potential impact of drilling near occupied building units and high occupancy building units. Similar to the water sampling rules passed by the COGCC on January 7, 2013, the new setback rules and mitigation measures are, without doubt, the strongest in the nation. The new rules include substantial additions and revisions. They include:
The Exception Zone – A uniform 500 feet statewide setback applicable in rural and urban areas like. This rule provides for an increase in 350 feet from the existing setback standards of 150 feet in rural areas, and a 150 feet increase from the current 350 feet in urban areas.
The Buffer Zone – A 1,000 foot setback from high occupancy buildings, such as schools, nursing homes and hospitals, without a hearing before the Commission. The rule provides for an increase of 650 feet from the current 350 feet.
The Director of the COGCC retained the right of a discretionary grant of an exception to the setback requirements when a well or facility is added to an existing or approved location, or if there is an existing surface use agreement. This is not an absolute exception for existing locations or privately negotiated contracts. The surface use agreement must be executed on or before August 1, 2013.
Operators proposing to drill within 1,000 feet of an occupied structure are required to comply with stringent mandatory mitigation measures to minimize effects of drilling. Such mitigation measures include 50% noise reduction during drilling, closed loop drilling systems that eliminate pits, liner standards to protect against spills, capture of gases to reduce odors and emissions, and controls on the potential effect of dust, lighting and any other similar items. If the well location is located in any zone due to subsequent development, certain mitigation measures may not apply.
Operators are required to provide expanded notice and meeting efforts to adjacent building unit owners and to engage in upfront communications with local governments about proposed operations. This include a pre-application notice to the surface owner, local government, and adjacent building unit owners within the Buffer Zone or Exception Zone, the OGLA notice, and pre-construction notice.
Operators must also engage in consultation and meetings with surface owners, local governments, state agencies and building unit owners. Surface owners and Building Unit Owners may waive their right to consult with the operator.
State agencies have the right, after consultations with the operator to make written recommendations to the COGCC on conditions of approval necessary to minimize adverse impacts. Any conditions of approval for the oil and gas location must be incorporated into Form 2 or Form 2A. Click here for more information on COGCC Setabck Rulemaking in 2012.
With respect to air regulation, last year, Colorado became one of the first states in the country to adopt any part of the new EPA oil and gas emissions rule, 40 CFR Part 60, Subpart OOOO (“NSPS OOOO”). Other parts of the rule don't go into effect for months or years, and our industry is still working out technical details with EPA to ensure effective implementation. Specifically, CDPHE adopted EPA requirements for compressors (reciprocating and centrifugal), leaking components, pneumatics, and sweetening units. In addition, the CDPHE adopted requirements for storage vessels at wellsites, beginning 90 days after first production or at non-wellsites beginning upon commencement of construction.
Fortunately for Colorado, we have some of the most protective air emission regulations and controls in the country, in place even prior to the adoption. The new EPA rule looked to Colorado’s air rules as a model, especially Colorado’s Regulation Number 7 and “green completions.” Colorado’s Regulation Number 7 is designed to reduce ozone precursors, and is overseen by the Colorado Department of Public Health and Environment. In the GWA, located in Weld County, where there are over 19,000 active wells with the oil and gas industry has invested in emissions controls that significantly reduced air emissions and ozone precursors. Even with increased drilling activity, the area shows a significant decrease in emissions. The second model rule is the Colorado Oil and Gas Conservation Commission 2008 rule which mandated that reduced emissions completions (REC), or green completions, which encourages the capture of natural gas and reduce potential odors associated with well completion.
The APCD is continuing to look at further adopting the EPA rule. On January 28th, the Colorado Department of Public Health and Environment, Air Pollution Control Division (“APCD”) held the first stakeholder meeting involving possible changes. Regardless of the rhetoric and misunderstanding of how these rules operate, the new EPA rules are fully enforceable by the CDPHE and EPA. The CDPHE will have authority for affected facilities with emissions above construction permit thresholds. The EPA will have authority for affected facilities with emissions below permitting thresholds, storage vessels during the first 90 days of production, and well completions, until such time as the CDPHE adopts those regulations as well. More on the 2013 Rulemaking Effort can be found here.
Colorado has long been a leader in air emissions reductions, and our industry has continually partnered with the state to significantly reduce air emissions associated with oil and gas industry operations.