Colorado is weighing a major shift in its oil and gas policy, spurring a debate that could echo nationally in the push to slash greenhouse gas emissions.
Democratic state lawmakers have proposed two sweeping pieces of legislation — including what would be the first-ever statewide ban in the U.S. on all new oil and gas wells.
The bills are case studies of a rising intolerance to oil and gas production in blue states, even in a place like Colorado known for its large fossil fuel footprint.
New York legislators are looking to ban the use of carbon dioxide for oil and gas recovery this year. In California, lawmakers passed a law in 2022 banning oil and gas drilling within 3,200 feet of structures including homes, schools and hospitals, causing the number of new well approvals to plummet. That California law has not gone into effect yet and will head to a statewide referendum election in November.
One of the proposed Colorado bills would put a ban on new oil and gas drilling permits by phasing out permitting of new oil and gas wells starting in 2028 and effectively banning new drilling permits in 2030. It also would increase liability bonds for wells that are drilled. The second proposal would require oil and gas operators to halt production for five months every year.
It’s the first time that monthslong production pauses and an outright ban on new onshore wells have been proposed in a state legislature where there is meaningful oil and gas production, much less in a state that produced in 2022 the fourth-most crude oil in the United States.
As the state has moved to the left over the past decade — and Democrats took control of the General Assembly and the governorship — more environmental groups and constituents are ramping up pressure to address oil and gas production, said Robert Duffy, a professor of political science at Colorado State University. That increased pressure to the point that some lawmakers have considered banning new well permits.
“They’re a lot more proactive in trying to regulate the oil and gas industry,” Duffy said of Democratic state lawmakers in Colorado.
As oil and gas production began to spike after the shale revolution of the early 2010s, mostly Democratic lawmakers in state legislatures across the country started to introduce new regulations aimed at regulating the industry, especially hydraulic fracturing, which is a practice where operators shoot high volumes of water deep underground to force out more oil and gas.
Oregon and Washington banned fracking outright in 2019, joining Vermont and Maryland which banned the practice in 2012 and 2017, respectively. New York banned the use of water for hydraulic fracturing through executive order in 2010 and codified that rule in the state’s 2021 budget.
More than 20 states have setback requirements, which are regulations that dictate how far oil and gas wells or certain pieces of industry infrastructure have to be from structures like homes, schools and hospitals.
It remains to be seen how far the proposals will advance in Colorado’s General Assembly this year. The office of Colorado Democratic Gov. Jared Polis didn’t respond last week to a request for comment.
When asked earlier this year about the bill that would ban new well drilling permits, a spokesperson for the governor told Colorado Public Radio that Polis was not consulted on the bill. Last week, Colorado Newsline reported that a Polis spokesperson said recently that the governor hadn’t reviewed the bill but that he was skeptical of its “overall direction.”
Duffy said its chances of becoming law are slim this year. Some other states with Democratic majorities have struggled to pass changes to oversight of oil and gas production.
Take New Mexico, which is the nation’s second-leading producer of crude oil.
The state Legislature, which has a Democratic majority, considered several oil and gas restrictions this year. That included a bill that would have limited the use of fresh water on oil and gas sites in New Mexico and one that would have studied a ban oil and gas production from occurring within one mile of a school or day care. Both bills ultimately died without being heard.
But what has happened in Colorado over the past 10 years offers a case study for how legislative attitudes toward the industry can change.
“We’re definitely seeing, in our terms, more extreme legislation than we’ve seen,” said Colorado House Minority Leader Rose Pugliese, a Republican. “I mean, banning oil and gas in 2030, I never thought I’d see a bill like that coming forward.”
‘Steady accretion’
For decades, Colorado’s legislature and the oil and gas industry worked without much friction, Duffy said.
That began to change when two things happened coincidentally, he said: Oil production in the state began to boom during the shale revolution of the early and mid-2010s, and Front Range counties stretching from Fort Collins to Colorado Springs saw an explosion of population growth.
Duffy said oil and gas production began to expand from rural areas to the more populated Front Range around that time, and some operations popped up near neighborhoods and schools. There was a deterioration of air quality, he said, and a house exploded in 2017 as a result of gas seeping from a small, abandoned pipeline nearby. Two people died.
“There was a steady accretion of those things over 10 years,” Duffy said. “Coupled then with a Democrat governor and a Democratic state Legislature, that paved the way for the dam to break.”
That dam broke during the 2019 legislative session, months after a 2018 general ballot referendum that would have banned oil and gas operations from within 2,500 feet of homes and schools — measure that 57 percent of voters went against.
In 2019, lawmakers passed S.B. 19-181 — a sweeping set of rules that gave more power to local governments to regulate oil and gas development within their jurisdictions. The law also required the state’s oil and gas regulator to collaborate with the Colorado Department of Public Health and Environment to address the “cumulative impact” of oil and gas development.
And it reshaped the Colorado Oil and Gas Conservation Commission, adding new members, changing its mission and requiring it to undergo numerous rulemakings.
“It changed the Oil and Gas Conservation Commission and elevated environmental protection as a chief priority along with permitting,” Duffy said. “The commission used to be oil and gas friendly, but it’s different now.”
Environmental groups and some Democratic lawmakers championed the changes as the end of the “oil and gas wars” in Colorado.
Dan Haley, CEO of the Colorado Oil & Gas Association, said the impacts are still being felt.
“Since 181 went into effect, we’ve seen the industry get smaller in Colorado,” he said. “And while production levels are up since [Covid-19], they’re not back to where they were in 2019 prior to 181 being approved. It’s been slower to recover because of the law.”
Health and safety
But the oil and gas wars are heating up again, thanks to the two contentious bills filed this session: S.B. 24-159, which would ban new well drilling permits after 2030, and S.B. 24-165, which would introduce an annual five-month moratorium on oil and gas production, among other things.
Democratic state Sen. Kevin Priola, who co-authored both bills, did not reply to a request for comment, nor did several representatives that introduced a house version of S.B. 24-165.
Colorado environmental groups and authors of the bill that would ban new drilling permits — who held a news conference Friday — have said the legislation is not a ban on the industry and that operators will be able to keep producing oil and gas from the state’s existing wells until they run dry.
But they argue that the industry needs to be phased out to improve air quality across the state, especially in some of the state’s most populous counties that in 2022 were labeled as being in “severe” nonattainment by EPA for dangerously high ozone levels.
A report by the nonprofit Colorado Fiscal Institute, prepared for the Polis administration, found that volatile organic compounds and nitrogen oxides from drilling and fracking accounted for 17 percent of locally produced ozone in Colorado’s Front Range — an area that includes the Denver metro area and has become among the state’s most prolific oil production regions after the shale revolution.
State Sen. Sonya Jaquez Lewis, a Democrat and co-author of the ban bill, said in an interview that the state is doing a disservice to future generations if it doesn’t responsibly manage its resources in a way that prioritizes public health and safety. EPA says ground-level ozone can cause breathing problems, including inflaming airways and increasing the frequency of asthma attacks.
“There are cases in our society and in our state where we must put public health and safety above other issues, and this is one of those cases,” Lewis said.
Some Republicans and industry groups, however, say it would effectively ban an industry that employs tens of thousands of Coloradans and provides hundreds of millions in tax revenue for the state annually.
The Colorado Oil & Gas Association points to ozone data from the National Renewable Energy Laboratory monitoring site in Golden, Colorado. The association says the data showed that human-made ozone was lower than reported to the state and that oil and gas production accounted for 3.6 percent of the ozone measured at the site.
Haley, the oil and gas association’s CEO, said the message sent by the proposed bills would be clear if they pass: The oil and gas industry is no longer welcome.
He also raised potential legal risks for Colorado, especially among parties that own mineral rights to underground oil and gas deposits – deposits they would no longer be able to access if the drilling permit ban goes into effect .
“It is a ban on industry that would put hundreds of thousands of Coloradoans out of work, cost the state hundreds of millions in taxes, billions in economic output, and would potentially risk billions of dollars in lawsuits from mineral owners that would not be able to go drilling for their mineral rights,” he said.
The potential ban on new permits has made headlines already in the state, even if its outlook is uncertain.
“The calculation among some is that it would be bad politics. It would open them up to charges of being bad for the economy, passing laws that would create job loss,” said Colorado State’s Duffy. “Then there’s the revenue aspect to this. The oil and gas industry does provide some revenue to the state. You don’t want to close the door on a significant revenue source.”
The bill covering a slew of ozone issues, including the five-month ban on production activity, has been assigned to the state Senate Transportation and Energy Committee, but a hearing for it has not yet been set. The bill banning new oil and gas well permits has been assigned to the state Agriculture and Natural Resources Committee and is scheduled for a hearing March 14.
But the bills are not all that’s happening in Colorado.
Safe & Healthy Colorado, a coalition of environmental groups, aims to put a statewide ballot initiative on the ballot in 2024 that would phase out new fracking projects by 2031. The coalition also supports S.B. 24-159.
Heidi Leathwood, a climate policy analyst with environmental group 350, said most of the new regulations from S.B. 19-181 have already taken effect and large portions of the state still have not seen ozone levels go down. She said emissions remain too high for Colorado to meet its climate objectives.
“This is not about ramping down production,” Leathwood said. “This is about acknowledging what is globally recognized — that bringing on new production online won’t let us reach our global climate goals.”
