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Colorado's battle of the booms: Suburban growth vs. oil & gas

By: Mark Jaffe, ColoradoPolitics.com
February 25, 2018 Updated: February 26, 2018 at 9:41 am
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Birds fly over drilling rigs along Interstate 25 and Route 52 in Weld County, photographed Feb. 7, 2018. Photo by Andy Colwell for the Gazette

In October, an overflow crowd of Front Range residents, brandishing signs and wearing surgical masks, descended on the Colorado Oil & Gas Conservation Commission (COGCC) meeting to voice opposition to a plan to drill oil wells in Broomfield. "We need a say. Tell the state it's not OK," they chanted.

In January, when notice went out on social media that oil and gas attorney Matt Sura was going to offer a briefing to homeowners on oil leasing, more than 200 people turned out at Thornton's Margret A. Carpenter Recreation Center.

Feelings about oil and gas drilling continue to run high in Colorado's Front Range suburbs, and the pressure has been on local officials, who are getting little satisfaction from state regulators.

The COGCC has primacy on oil and gas regulation, but local governments are seeking ways to address the impacts of drilling in their communities while not running afoul of the state. At the same time, they are facing a housing and population boom, with the five counties north of Denver adding 187,000 new residents between 2010 and 2016.

"This 'mixed state and local concern' is an age-old issue," said Sam Mamet, executive director of the Colorado Municipal League. "This has also been going on for a long time with oil and gas. What is new is the new growth it is colliding with."

After a lull during the recession, the price of oil has nearly doubled in the last year to more than $58.71 a barrel for benchmark West Texas Intermediate crude as of Feb. 13, and drilling in the Niobrara shale beneath Colorado's Wattenberg Field has responded. The number of drill rigs, which varies from month to month, in 2017 ranged from 20 to 30 compared with 12 to 18 a year earlier.

At the same time, there were 3,660 new housing starts in 2017 in the nine municipalities stretching from Thornton to Timnath, the heart of the oil and gas field, according to data from housing market analyst Metrostudy. The oil and gas commission, however, only looks at one side of the equation, approving 1,330 drilling permits in the region in 2017.

While many oil and gas developments operate without incident, a tattoo of accidents continues to fuel homeowners' angst.

An oil well blowout near Hudson sprayed liquid, forcing the closure of Weld County roads in the area for two days in January 2017. In June, two men were killed and a woman critically injured when a Firestone home exploded as gas from a faulty flowline collected in the house. Last September, a gas leak led to the evacuation of a stadium during a high school football game in West Greeley.

"This is a dangerous industrial activity and should not be near homes," said Sara Loflin, executive director of the League of Oil and Gas Impacted Coloradans (LOGIC), which works with local grass-roots groups.

Five municipalities and Boulder County are, each in its own way, wrestling with the issue and looking for ways to stay out of the state's domain.

Call the new effort "local control 2.0" shaped by the court rulings that knocked down a drilling ban in Longmont and long-term drilling moratoriums in Fort Collins and Broomfield. The Longmont and Fort Collins cases went all the way to the state Supreme Court.

- - -

"Local governments are waking up to the authority they do have and applying them in ways they hope and believe are within the authority of their jurisdiction," said COGCC Executive Director Matt Lepore.

In July, Thornton adopted a new oil and gas ordinance. It replaced a 1993 law. "Oil and gas technology has changed since then, with bigger pads drilling multiple wells, and the city has grown," said City Council member Josh Zygielbaum.

In 1993, Thornton had 60,000 residents. Today, it is close to 140,000 with projections of reaching 240,000 in 25 years. Some of the areas targeted for growth are the same as those likely to draw drillers. "We want the city to grow responsibly, and make sure oil and gas can grow, and the residents can be safe," Zygielbaum said.

"We tried to take bits and pieces from several municipalities that hadn't been challenged," he said.

The new rules call for a 750-foot buffer between drilling operations and homes instead of the state's 500-foot standard. They also require inspection of flowlines, removal of the lines when a well is abandoned and $5 million in general liability insurance for each project.

The ordinance has a waiver process if an operator can show a rule makes it impossible to drill. It offers the option of a negotiated agreement between the city and a driller, a so-called memorandum of understanding or MOU.

Lepore said the COGCC told Thornton it exceeded its authority in calling for a 750-foot setback and on a few other items, but that in general it did not oppose the ordinance. "How the ordinance is applied may determine our response," Lepore said.

The industry had no such attitude. The Colorado Oil & Gas Association (COGA), the state's largest trade group, sued Thornton.

"Thornton's City Council passed illegal energy regulation," Dan Haley, COGA president, said in a statement when the suit was filed in October.

- - -

While Thornton is readying itself for oil and gas development, 17 miles to the north, Erie is already the site of intense drilling with five companies operating in town. Erie pioneered the use of MOUs in Colorado and has one with Crestone Peak Resources.

Still, it didn't stop odor and noise problems linked by residents to Crestone sites, prompting more than 1,000 complaints to the COGCC in 2017.

"The feedback from residents was hot and heavy," said Mark Gruber, a town trustee. "It seemed to us the relevant issues were health and safety, and we tried to address that." The town passed an amendment to the existing odor-nuisance code, extending it to oil and gas operations.

"As a result, Crestone is litigating us on constitutional grounds," Gruber said. "We have reached the point in Colorado where towns and municipalities can no longer pass their own laws."

Crestone had sent a letter saying it believed the local ordinance conflicted with state law. "We felt we didn't have alternative," said Jason Oates, Crestone's director of external affairs. "We have to protect our legal rights."

The irony is that both sides say that, in general, the MOU has worked well. The MOU provided for enhanced leak detection, the use of quieter electric drill rigs and 1,000-foot setbacks, Gruber said.

"It is a balance," said Oates. "I think the reason the model works (is) because operators can take certain actions that respond well to community concerns that aren't in the rules, to codify something, but without going too far."

Local government have land-use authority, which they can use in dealing with oil and gas development. The problem, Oates said, comes when local government wants to have a say in issues such as air quality, which is regulated by the state. Erie has done its own air testing.

In March, Boulder County adopted drilling rules for the unincorporated parts of the county it calls "the most stringent in the state," with air monitoring, water-well testing for as long as six years, disruption payments to residents affected by drilling, local inspections and restrictions beyond state requirements in flood plains.

Many Boulder residents wanted an outright ban. "Regardless of where you come down on oil and gas, whether you think it can happen safely in certain areas or whether you don't want it to happen anywhere in the county, it is very important we have regulations," Commissioner Elise Jones said in voting for the rules. "They are backstop protections."

Crestone is the one operator in the county, and it is already going through comprehensive development planning at the state level. It is the first company in the state to use the process. As for the Boulder rules, Oates said, "Nobody has gone through the Boulder process yet. We'll see."

The Boulder County city of Lafayette approved a six-month moratorium in November while it revised its own drilling ordinance.

- - -

Broomfield went through a yearlong negotiation over an MOU with Denver-based Extraction Oil & Gas, which reduced the number of wells to be drilled to 84 from 139, moved them farther from homes, established setbacks of 750 feet to 1,000 feet depending on the number of wells on a pad, included noise controls and air monitoring.

Still, there was much opposition. It passed in October on a 6-4 vote, after a seven-and-a-half-hour public hearing with an overflow crowd.

Mayor Randy Ahrens said an MOU was the city's best option. "We knew we couldn't have a ban," he said. "We had to be reasonable."

The industry supports the approach. "We believe that by listening to the concerns of Colorado's growing communities, we can find ways to work together," COGA's Haley said in a statement. "Lawsuits are always a last resort."

Still, Ahrens said that in these negotiations, local government is always at a disadvantage. "If you don't reach an agreement, operators can just get their state permits and drill," he said.

And if an operator runs afoul of the agreement, as Erie discovered, there are limited means of recourse, Gruber said.

As part of Broomfield's efforts to address oil and gas issues, it created a 14-member task force to come up with recommendations, some of which were added to the Extraction MOU and some of which may be used in future operating agreements or find their way into ordinances, Ahrens said.

But in a sign that residents want more, in November they passed a ballot measure, Question 301, requiring oil and gas development to occur in "a manner that does not adversely impact the health, safety and welfare of Broomfield's residents" and gave city officials the power to enforce it.

"I'm not sure anyone knows what it means yet or how to apply it," Ahrens said. What Broomfield does may depend on a final ruling in the Martinez v. COGCC lawsuit, he said.

The state Court of Appeals ruled in that case that the commission must regulate oil and gas development subject to public health and environment considerations. The COGCC appealed. In January, the state Supreme Court agreed to hear the case.

- - -

Any greater resolution of the tensions between state and local government will have to come either through the legislature or the ballot, said Mamet.

The environmental group Colorado Rising is trying to place a question on the November ballot that would require a 2,500-foot setback of oil and gas drilling from homes. Both the drillers and homebuilders see that measure as crippling.

"The discussion around much of the Oil and Gas regulations and initiatives revolves around setbacks," the Colorado Association of Homebuilders said in a position statement. "Unreasonable and excessive setback requirements eliminate significant land that is currently or prospectively planned for new communities. Investment in land, planning and existing infrastructure are at risk."

State Sen. Matt Jones, D-Louisville, three times has introduced legislation to give local governments more control over oil and gas development without success. Most recently his "Protect Act" failed to get out of committee Feb.1 on a 7-6 party-line vote.

"You can't put something that can explode or emit toxic chemicals in a neighborhood where people live," Jones said. "We'll keep trying."

Lepore said that local governments have expanded their role at the state level. In the wake of the Firestone explosion, the COGCC is revising its flowline rules, and "local government is now very engaged."

But the issue also underscores the split between local governments and the state. On Feb. 13, the COGCC adopted new flowline rules and at the industry's behest kept maps of the lines confidential. The industry has also opposed requirements to dig them up when a well is abandoned.

But the issue also underscores the split between local governments and the state. Two areas the industry has voiced concerns about state rulemaking are over making public maps of the lines and requirements to dig them up when a well is abandoned.

Erie asked for and received flowline maps from its major operators and has publicly posted them. Broomfield has had a rule on the books since 2002 requiring lines to be removed when a well is shut. "What happened in Firestone wouldn't happen in Broomfield," Ahrens said.

In part prodded by local concerns, the COGCC voted Feb. 12 to increase taxes on oil and gas production to raise $4.8 million to fill a budget gap and deal with issues such as abandoned wells. Local officials and environmental groups, however, had lobbied for at least $7 million to address problems.

As long as there is drilling in the Front Range suburbs there will be pressure. "You are going to get pushback, (and) sooner or later the legislature has to realize, 60 percent of the votes come from metro Denver, and the majority of voters aren't going to stand for it," said Longmont Mayor Brian Bagley.

Longmont, where the state-local battle began in 2012, is the only municipality with an ordinance banning oil and gas from residential areas, thanks to a 2014 compromise under which initiatives to limit drilling in the state were removed from the ballot and a state lawsuit against Longmont was dropped.

"Longmont is in a very fortunate position," said Bagley. Other municipalities want the same. "Nobody likes a gas station next to their house," he said.

"Ideology is driving the debate on the state level," Bagley said. "One side embraces fossil fuels, and they will put it any anywhere. And then there are people who don't want it anywhere. People are scared to compromise."

Erie's Gruber said, "The best way forward is negotiate and try to lobby at the State House to get the rules changed in the urban environment. Municipalities have to join forces to lobby."

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