Oil, gas firms tout opportunities, call for regulatory certainty, faster permitting | Western Colorado

Chevron, the largest oil and gas producer in the state, has wells in the Piceance Basin but in Colorado primarily operates in the DJ (Denver-Julesburg) Basin. Flywheel, based in Oklahoma City, a year ago acquired a major Piceance Basin natural gas producer, which it operates as TEP Rocky Mountain.

“We’re very excited to be in the state and plan to operate this asset for multiple decades,” Jacob Stockton, Flywheel’s director of operations for TEP, said at the event.

He said business in Colorado for Flywheel is good but one of the operational challenges for the industry in the state is the regulatory uncertainty. He said it’s not the fact that Colorado has regulations, but the pace of regulations being adopted and their volume that have been the issue.

A lot of the regulatory rulemaking in recent years was a result of a 2019 Colorado measure, Senate Bill 181, which prioritized protection of public safety, health and welfare and the environment in regulating the oil and gas industry. Stockton credited the state Energy and Carbon Management Commission for the job it has done handling the rulemaking workload that has occurred to implement that law.

“But we’ve also seen through the (oil and gas) production data that it has had an impact in the state,” he said.

He called for now maintaining the regulatory status quo by not layering on additional regulations.

“I think if we can stick with the current framework, it’s very clear that we’ve made some really great advancements of that framework and to not add additional regulatory uncertainty, that will be a huge win for industry, it will be a huge win for the state,” Stockton said.

Even with the new regulations, Bobby Hulett, Colorado region director for Chevron, said his company has been busy investing in the state. But he and the other officials speaking at the event also pointed to the protracted permitting times that have come along with the increased regulations in the state. He said that on average in Colorado it now takes Chevron about 16 months to get a permit, with it taking about half that time for Chevron to prepare a permit application and another eight months for it to cycle through the state approval process.

He said permitting times had been even higher but have more recently been reduced somewhat, which is making a difference. But Stockton said permitting times are just a few weeks in Oklahoma and can be even shorter in Arkansas and Texas, all states in which Flywheel also operates.

For Flywheel, returns on its investments might take two years in Colorado, versus a lot faster in those other states, he said.

“It absolutely affects the economics of those (investment) decisions,” he said.

But like Hulett, Stockton also credited regulators in Colorado for recently making progress in speeding up permitting times. He encouraged them to continue with those efforts.

Doing so would help companies do innovative things such as exploring new oil and gas reservoirs, he said.

“When you’re already talking about a risky proposition, something you’re not sure is going to work, delaying that for two years, three years adds a significant more amount of risk on top of that from an economic standpoint,” he said.

While agreeing with the need for rules that do things such as protecting the environment, Stockton and Hulett said regulatory stability would help provide certainty for companies trying to plan for the future and invest in projects for the long term. Hulett said the methodologies and technologies being applied to produce oil and gas in basins such as the DJ and Piceance are expected to get less than 10% of the resources in place. But industry figured out ways to increase that percentage multifold in other areas with other oil and gas reservoir types, he said, and he sees a lot of opportunity for continued production growth in Colorado as companies spend more time refining their approaches to oil and gas development in the state’s basins.

“If you just look at the upside, the upside here in Colorado is just tremendous,” he said.

He sees the potential though industry innovation for perhaps doubling the amount of in-place resources that could be developed in basins such as the Piceance and DJ.

“Basically everything that you think could ever be produced out of the Piceance and DJ could be doubled, and that’s employment, that’s tax revenue, that’s economic impact, that’s a benefit to local communities, all of that. That’s a tremendous upside to chase,” he said.

He said that from a regulatory perspective, it’s important to meet the needs of local communities, keep people safe and protect the environment.

“But we do need a fairway to be able to try, fail, learn, improve, to reap that upside that’s out there,” he said.

Leslie Robinson is chair of Garfield County’s Grand Valley Citizens Alliance, which she said was instrumental in helping pass Senate Bill 181 because of the group’s experiences when there was a natural gas boom in the Battlement Mesa residential area. Among the things that came out of the regulatory reforms was a 2,000-foot minimum setback requirement between oil and gas facilities and homes, with some exceptions allowed. Robinson said her group had argued that the previous setbacks in places were too small.

She said that having extended permitting times “means all the i’s will be dotted and the t’s will be crossed” when it comes to the industry doing things such as describing what kind of production it is going to do and how much water it plans to use.

“I’m glad that Colorado has an extended permit process. It involves air quality, it involves water, production water waste, (wastewater) injection wells, and all of that does help preserve our clean air and clean water, but we still have a long ways to go,” Robinson said.

She said the Grand Valley Citizens Alliance and the Western Colorado Alliance, of which it is an affiliate, will continue to be involved in legislation and rulemaking involving the oil and gas industry and other newer industries that come along.