Phil Castle, The Business Times

Proposed rules establishing a 2,000-foot setback for oil and natural gas development in Colorado would impose unnecessary restrictions that could hurt an important industry, according to a trade association opposed to the rules.

Moreover, the changes come only two years after a ballot measure that would have imposed similar setbacks was rejected.

“They’re flying in the face of Colorado  voters,” said Chelsie Miera, the executive director of the West Slope Colorado Oil and Gas Association.

The Colorado Oil and Gas Conservation Commission (COGCC) is writing new oil and gas development rules following the enactment of a state law last year.  The law changed the group from nine volunteer appointees to a five-member professional commission. The law also changed the mission of the commission from promoting oil and gas development while protecting public health and the environment to regulating the industry to protect health and the environment.

Miera said the Colorado Oil and Gas Association has worked with COGCC staff for a year and generally supported rules the staff recommended. But a majority of the commission voiced support for extended setbacks.

Miera said the decision was surprising. “This just shocked everyone.”

A 2,000-foot setback between homes, schools and new oil and natural gas  drilling  imposes an arbitrary limit based more on politics and emotions than science, she said. “They seem to be shooting from the hip.”

The 2,000-foot setbacks could be even longer given a change in the way setbacks are measured from property lines to the edges of well pads, she said.

Current law requires wells to be set back 500 feet from homes and 1,000 feet from schools.

Increased setbacks could limit oil and natural gas development in Colorado and in turn hurt an important industry, Miera said.

Colorado voters rejected a measure on a 2018 election ballot that would have allowed state and local governments to require setbacks greated than 2,500 feet.

According to estimates made at that time, the setbacks would have excluded 85 percent of non-federal land in Colorado from oil and natural gas development. That proportion increased to 99 percent in Garfield and Rio Blanco counties in Western Colorado.

One study evaluated the economic and fiscal effects of passage of the ballot measure on an industry that at that time contributed $32 billion annually to the Colordo economy and employed more than 100,000 people. 

The study calculated that 147,800 jobs would be lost in Colorado through 2030 — 43,000 in the first year. Gross domestic product in the state would decline $218 billion through 2030, while state and local tax revenues would decline $7 billion to $9 billion during that span.

The measure failed with more than 55 percent of voters rejecting the proposition. But two years later the longer setbacks are under consideration again, Miera said.

The proposed COGCC rules establishing a 2,000-foot setback could have similar effects, she said. “Now is not the time to be hurting such a vital industry.”

Setbacks constitute a “blunt tool” that preclude more flexible approaches if development isn’t allowed, she said. Moreover, rules promulgated for urban areas of the Front Range don’t necessarily apply to rural areas of Western Colorado. “The one-size-fits-all approach just doesn’t work.”

While a legal challenge to the 2,000-foot setbacks remain a last resort, Miera said that remains a consideration given the implications for the oil and natural gas industry and its workforce.

“There are conversations heading that way,” she said. “We have to do what’s right for our hard-working women and men.”