It wasn’t exactly surprise news for Garfield County commissioners on Tuesday, but an economic impact study assessing the impacts of new oil and gas regulations in Colorado finds the county is taking a significant financial hit.
Commissioners heard findings from Wyoming consultant Timothy Considine during a working session on Tuesday.
In 2021 alone, taking into account rising costs for energy companies to comply with new state regulations, that cost was $2.8 million, including a 7% increase capital cost to drill new wells, Considine found.
For the county economy, this meant a drop in investment of $13.4 million, a drop in labor income of $6.3 million, 180 fewer jobs, and a drop in county taxes of 1.6 million, Considine said based on his modeling and calculations.
Considine owns and operates Natural Resource Economics Inc. He was hired by the county last year for $65,000 to quantify the impacts the county has seen from slowing new natural gas development in recent years.
Although part of this decline is related to global markets and lower natural gas prices, Considine said there is evidence that renewed interest in new developments as markets improve was moving away from Colorado and into neighboring states such as Utah and Wyoming.
This is likely related to the increased costs of doing business in Colorado due to new regulations resulting from Senate Bill 19-181, he said.
The landmark legislation shifted the focus of the Colorado Oil and Gas Conservation Commission from “promoting” oil and gas development in the state to environmental regulation and protection.
Several new regulations related to oil and gas operations, ranging from new air quality standards to a 2,000 foot setback for well pads and other facilities in occupied buildings, have been put in place through a long rule-making process. This process continues.
Considine said the county can expect cumulative declines in the coming years.
“It’s not surprising, but it’s nice to see what the numbers are,” said commissioner Tom Jankovsky. “The result of these regulations is that Colorado is not as attractive an investment as, say, Utah.”
Because the new 2,000-foot setback has yet to be widely implemented, there are future implications for Garfield County, Jankovsky added.
The county estimates that 40% of its existing wells are within this setback distance, meaning those same well pads could not be used to drill into the deeper Niobrara formation, where the ‘we know that there are vast reserves of natural gas, he said.
The findings were also not surprising to Leslie Robinson, who chairs the Grand Valley Citizens Alliance, one of several groups that have lobbied for stricter regulation of the industry.
“Garfield County will not accept any outcome contrary to its own oil and gas policy,” she said. “We know from the outset with these studies that they will be biased to support oil and gas.”
In reviewing Considine’s economic impact study, Robinson also said it failed to take into account that many wells in Garfield County are low-production “stripping wells.”
“For a good faith economic study to be complete and accurate, stripping well information should have been included, as it accounts for a large portion of Garfield County’s lost tax revenue from oil and gas in the past. recent,” she said.
Many state regulations are also still being adjusted and refined, “so the elements of this study are a rough estimate,” she said.
Either way, the new regulatory structure is simply the cost of doing business in Colorado.
“It’s a problem for businesses to figure out, not for Garfield County to try to figure out at taxpayers’ expense,” Robinson said.
Commissioner Mike Samson said in response to the findings that he encrypts the message that Garfield County and other energy-producing counties have tried to send.
“Our energy independence isn’t just important to Garfield County, the state, and the United States…it’s important to all nations,” Samson said. “It gives us more ammunition to espouse that view.”
Considine plans to attend and present his findings at the Garfield County Energy and Environment Symposium, which will take place April 13-14 and will be co-presented by the Colorado Mesa University Unconventional Energy Center. The event takes place in the assembly hall of the New Creation Church in New Castle.