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State: Backlog of Oil, Gas Permits Could Take Three Years to Clear

February 18, 2019

A flurry of drilling permit applications late last year and a rising number of challenges to the requests have helped create a backlog that state regulators say could take up to three years to clear.

At the end of January, hearings officers at the Colorado Oil and Gas Conservation Commission had 406 pending applications on their docket. Of those, 30 percent of the applications have been protested, the COGCC staff told commissioners in a recent meeting.

The COGCC is down one hearing officer. But even if there were more hearing officers and more cases ready for the commission’s agenda, it would likely take about three years to clear the backlog of hearings, assuming none of the protests are settled, said Mimi Larsen, the COGCC hearings and regulatory affairs manager.

“Once a protest is filed, we have seen over the last year, 18 months, an increased litigation style tactic, I guess one could say, of how these cases are approached,” Larsen said.

Lawyers are filing different kinds of motions and challenging expert testimony, Larsen added.

Many of the applications are for drilling and spacing units, which map out the subsurface area a company wants to access and must be approved before drilling permits are approved.

In addition, there was a jump in the number of drilling permit applications submitted last year in the lead-up to the Nov. 6 election, when voters considered stricter buffers around new oil and gas wells. Voters soundly defeated Proposition 112, but by Dec. 18, there were 6,307 applications on the books.

By contrast, the backlog totaled 2,151 permits on Dec. 17, 2017.

The majority of the protests of the drilling and spacing unit applications are filed by oil and gas companies challenging other companies’ plans, said Jeff Robbins, acting COGCC director.

However, James Rouse, the COGCC hearings supervisor, said during a Jan. 28 meeting that challenges to permit applications by towns, cities and counties “are becoming a big issue and difficult to resolve.”

Commission member Howard Boigon suggested exploring ways to streamline the protest process to reduce what he called “lawyer games” and encouraging operators to settle their disputes with each other.

“There’s a lot of stuff that goes on and a lot of it I think is unnecessary, frankly,” said Boigon, a lawyer who has represented oil and gas companies.

The COGCC is exploring various ways to tackle the backlogs, including asking companies to prioritize their projects so staffers can address those first, Robbins said.

The state saw a similar surge in applications for drilling permits in 2008 and 2009. That’s when the COGCC wrote rules requiring that the environment, wildlife and public health and safety be given more consideration when approving oil and gas development.

Dan Haley, president and CEO of the Colorado Oil and Gas Association, a trade group, expressed frustration with the backlog. He said in an email that the increase in permit applications was a natural reaction to “the uncertain run-up to the election on a ballot measure aimed at shutting down the industry in Colorado.”

Some delays are a normal part of the regulatory process and the result of natural competition among companies, Haley added.

“However, the biggest challenge we see is the result of fear mongering by activists that has been directed at the volunteer leadership of the commission itself for the past several months,” Haley said. “The process is grinding at a much slower pace, fueled by political transition, uncertainty, and the aggressive tactics of those who want nothing more than to shutter one of Colorado’s cornerstone industries.”

Gov. Jared Polis, who took office in January, supports giving communities more input into oil and gas development. Legislative leaders are expected to consider bills on stronger protections for public health and safety.

The answer to reducing the backlog of permits is not to reduce the public’s ability to comment on plans for more drilling, said Matt Sura, an attorney who represents local governments, landowners and mineral owners in oil and gas cases.

“The COGCC is behind in its hearing schedule due to the fact that the industry is extraordinarily litigious,” Sura said in an email. “Right now the industry is fighting for every remaining square mile in the Wattenberg Field, the area the rest of us refer to as the Front Range.”

Most of the recent new drilling has taken place in areas north of Denver, sometimes in and around fast-growing cities and towns.

“The COGCC needs to hear more from impacted residents, not less,” Sura added.