Task Force on Oil and Gas Regs Leave Unanswered Questions for Some

Last week the task force appointed by Governor Hickenlooper to examine oil and gas regulation in Colorado issued its final report. The draft document comes as state leaders and the energy industry have been debating what role local governments should have in regulating the industry.

In issuing its conclusions, the report did not break any new ground. Instead, it focused on the need for improving collaboration and coordination between the state, industry and communities, as energy development expands, particularly near urban and residential areas.

While members of the task force discussed jurisdictional issues regarding substantive regulations, they determined that drawing bright lines between state and local jurisdictional authority was neither realistic nor productive. The authority to regulate what happens at or under well sites, including hydraulic fracturing operations, will remain the domain of the Colorado Oil and Gas Conservation Commission (COGCC).

This is the right tone, according to Mike King, Executive Director of the Colorado Department of Natural Resources, under which the COGCC functions.

The Task Force does not make recommendations for new laws, but instead recommends a collaborative process through which issues can be resolved
without litigation or new legislation, King wrote
in a letter to the governor.

One of the COGCC initiatives that task force members welcomed is the local government designee (LGD). While they wont have any enforcement responsibility, the local designees can bring issues of concern directly to the COGCC.

The LGD is the person who takes the requests, concerns and comments of local citizens to the attention of the COGCC. They answer to their local government board or commission, so the position is not merely a figurehead, says King. The LGD is the key to a robust process for us.

The task force wants to see the local government designees receive training and oversight from the COGCC. The hope is that by bringing the latest information to local governments regarding drilling practices, the designees will then have the ability to identify issues and bring resolve and accountability.

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Faith Winter, Program Director of the Colorado Conservation and an organization that had a seat on the task force, said Enhancing the local government designee process is really going to increase accountability, which will ultimately help protect public health and the environment.

Editors Note: With the final task force report now a matter of public record, Colorado Energy News thought it would be a good time to check in with Mike King of the Colorado Department of Natural Resources on how his organization is balancing energy development with community concerns. You can read the full post in the premiere edition of Niobrara Report, the new digital magazine that tracks energy news and policy developments in the region.

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British Energy Company Buys Stake in Niobrara

In another indication that Colorados Niobrara is attracting global interest, London-based Nighthawk is increasing its focus in U.S. shale plays with the announcement that it has entered an agreement with Running Foxes Petroleum (RFP) to acquire an additional 25% interest in the Jolly Ranch project in the Denver-Julesburg Basin.

The energy company will pay RFP more than $12 million in cash and stock in exchange for the 25% stake and operatorship of the project.

“This acquisition will propel Nighthawk to a position of majority partner and operator of a potentially major early stage US shale oil play, with funding available to press ahead with further development,” Nighthawk chairman Stephen Gutteridge said.

Nighthawk’s first phase of development as operator will target the Cherokee formation as well as test the Niobrara formation in the north of the acreage.

Its proposed work program will involve workovers on a selection of existing wells, seismic check shots and reinterpretation of existing 3D seismic surveys and the drilling of five new wells.

Following the completion of the acquisition Nighthawk will own a 75% interest in the Jolly Ranch project and said RFP had signed a separate letter of intent and was in exclusive discussions with an unnamed third party to sell its remaining 25% interest by 30 April next year.

Nighthawk also announced on Wednesday it was planning to raise up to $6.6 million through an open stock offering.…

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Longmonts Oil and Gas Regs Too Strict Say State and Industry

Longmonts proposed oil and gas rules are not needed and not enforceable, according to the Colorado Oil and Gas Association and the Colorado Attorney Generals Office. The industry group is asking the city to reject the proposed regulations and work within the states robust regulatory framework, wrote Andrew Casper,
a COGA attorney.

In the meantime, the Colorado Department of Public Health and Environment and the Colorado Oil and Gas Conservation Commission have invited Longmont-area residents to bring their questions about state regulation of oil and gas development to a public outreach meeting Monday evening  between 5:30 to 8 p.m. at the City of Longmonts Civic Center Complex on Kimbark St. State officials said the meeting will provide information about their agencies roles in regulating oil and gas development.

Information will be provided about existing regulations, and state staffers will be available to answer written questions about the regulatory aspects of oil and gas information, as well as to speak individually with interested residents.

Longmont has had a moratorium on oil and gas permits since December, and for the last several months has worked on developing the citys first new rules on drilling and operating wells in more than a decade. As drafted, the regulations set up a two-level system: a set of minimum standards that essentially reflect state guidelines and a more stringent set of recommended standards that companies can agree to in order to get a permit approved more quickly.

This is where it gets sticky. One of the bans in the new regulations drew a negative response from the state. Assistant attorney general Jake Matter wrote in a letter to city officials that if an operator already had a state permit allowing drilling in the area, the city would have no authority to block it.

The city should refrain from passing a residential development ban, Matter wrote, saying the city should instead work with the Colorado Oil and Gas Conservation Commission through its local government designee, city planner Brien Schumacher, to talk out local issues.

But Longmonts Mayor Dennis Coombs believes the city has taken a secure position, and said he is not ready to back up further.

My understanding is we pushed these yellow light issues because they have not been proven absolutely in court, Coombs was quoted in the Denver Post, referring to issues that have neither been denied to cities by a court (red light) nor expressly permitted (green light). Were drawing our line in the sand and saying This is our line.…

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