Colorado’s vaunted oil and gas rules are flawed and inadequately enforced

Air quality continues to decline on our watchdog agencies’ watch. Will new laws and the Polis administration improve the situation?

Photo of smoggy downtown Denver skyline via the Colorado Department of Public Health and Environment, Air Pollution Control Division, Technical Services Program, Wednesday, March 6, 2019.
Photo of smoggy downtown Denver skyline via the Colorado Department of Public Health and Environment, Air Pollution Control Division, Technical Services Program, Wednesday, March 6, 2019.

Colorado’s much-touted regulations on emissions from oil and gas operations have not kept pace with explosive growth in oil and gas activity, resulting in underreported methane leaks, unmonitored releases of toxic chemicals, and substantial contributions to the Denver area’s persistently unhealthy air quality.

Former and current state employees, scientists, environmental watchdogs, oil and gas patch residents and the state’s own records point to a flawed monitoring, inspection, and enforcement framework that has allowed the rapid increase of oil and gas development over the past two decades to continue fouling Colorado’s air. A months-long investigation by The Story Group found that the state does not comprehensively monitor or regulate the industry’s air pollution emissions. In fact, records show that oil and gas companies are still releasing unknown levels of smog-generating and climate-altering pollutants that are not being measured or reported.

One measurable impact of the flawed system: the Denver metro area, with its infamous “brown cloud,” has been in “non-attainment” with federal ozone standards since 2007 – and its smog problem keeps getting worse. Population growth, traffic, and other industrial activity have added more pollution sources into the mix, and last year, the Environmental Protection Agency ruled that parts of Colorado’s most populous region have gone from “marginal” to “serious” non-attainment of federal air quality standards. That new designation would force the state to, among other mandates, more tightly control emissions.

“How much worse does it have to get before we do something about it?” said Matt Sura, an attorney who represents residents and local governments against oil and gas companies and served on former Gov. John Hickenlooper’s 2014 task force to rewrite industry regulations.

The politically powerful industry repeatedly stymied attempts to tighten regulations during Hickenlooper’s tenure, which coincided with Republican control of the state Senate and industry’s concerted political opposition to legislative reforms. State campaign reports show that the oil and gas industry donated more than $125 million over the past four election cycles to political action committees that have aggressively opposed new regulations.

Hickenlooper, who is now running for president, has boasted that his administration implemented Colorado’s “toughest-in-the-nation” regulations on oil and gas. He takes credit for bringing a national environmental group and the state’s biggest oil and gas producers together to craft them.

But air quality kept getting worse under Hickenlooper’s watch. His administration argued that the state was making progress despite ongoing violations of federal standards, attributing some of the increased ozone to “exceptional events” such as wildfires.

Jared Polis, who replaced Hickenlooper as governor in January, is taking a different tack. He recently announced that his administration will not seek a reprieve from enacting tougher EPA standards, and instead will more aggressively address the brown cloud that often hovers over the region. Polis noted that ground-level ozone levels are so high that the state had issued warnings against exercising outdoors an average of more than once a week during the previous year: 55 days total.

“There’s too much smog in our air, and instead of hiding behind bureaucracy and paperwork that delay action, we are moving forward to make our air cleaner now,” Polis said.

The governor today signed into law a bill that promises to dramatically tighten oil and gas regulation, changing the mandate of the Colorado Oil and Gas Conservation Commission (COGCC) — the regulatory agency that issues permits to oil and gas operations — to prioritize public health, safety and welfare over the “fostering” of the industry. Senate Bill 181 allows greater local control of oil and gas activity, something that Hickenlooper and the industry wanted to preserve as an exclusive state power. And the new law calls upon state regulators to review leak detection and repair rules and adopt new rules to reduce emissions of methane and pollutants.

In addition, the state House today passed a measure that also seeks to curb emissions that contribute to pollution and climate change. While environmentalists and residents living near oil and gas operations welcome the state’s apparent new resolve for tougher emissions rules, the challenges ahead run deep.

‘Smoke and mirrors’

The now operating wells at Crestone's Pratt site flank neighborhoods and the CO national Golf Course. (Photo by Ted Wood/The Story Group)
Crestone’s Pratt well site flank neighborhoods and the Colorado National Golf Course. (Photo by Ted Wood/The Story Group)

Colorado’s oil and gas industry has grown rapidly over the past two decades, largely due to the combination of new hydraulic fracturing (fracking) and horizontal drilling techniques that allow companies to drill more than a mile deep and miles in every direction to break up deep shale formations that contain reservoirs of oil and natural gas. The technology has led to a transformation of the U.S. energy portfolio and enormous profits for many energy companies and governments that have reaped the benefits of this “shale revolution.” According to the state, Colorado’s “active well count” more than doubled from about 22,500 in 2002 to 53,102 currently.

Many laws governing oil and gas development were written before the new technologies prompted a proliferation of drilling along the Front Range, where atmospheric conditions contributed to poor air quality even before the current hydrocarbon boom.

Federal and state regulations generally were also written before scientists fully grasped the consequences on the climate from burning so many fossil fuels. A recent international report by the Intergovernmental Panel on Climate Change warned that if humans do not significantly reduce greenhouse gas emissions within about 12 years, Earth will warm enough to disrupt human societies and severely damage the planet’s ecological systems. 

As drilling expanded and pollution worsened, pressure mounted for more stringent oversight. Four Colorado communities — Boulder, Broomfield, Lafayette and Fort Collins – passed bans on fracking in 2012 and 2013. Hickenlooper, a former oil and gas geologist whose promotion of the industry once took the form of publicly drinking fracking fluid to attest to its safety, opposed those local bans. A 2016 state Supreme Court ruling struck them down.

Facing criticism for being too lenient on the industry as he sought reelection in 2014, Hickenlooper proposed a set of regulations requiring oil and gas companies to install vapor-recovery tanks and other devices to capture emissions, to detect and repair leaks, and to report them to the state. The new rules aimed to reduce emissions of volatile organic compounds, or VOCs – such as the cancer-causing chemical benzene – which have a number of health impacts from direct exposures. VOC emissions also combine with other chemicals and sunlight to create ozone, the main ingredient in smog. (See video: A scientist’s view)

The rules received much fanfare for also regulating emissions of methane, the main component of natural gas and a powerful heat-trapping gas that is contributing to global warming. No other state had such methane restrictions, which went far beyond what the EPA required.

At the time the state passed its oil and gas regulations in February 2014, health officials attributed 30% of methane and non-methane hydrocarbon pollution in the Denver area to the oil and gas industry. Some studies have attributed up to 55% of “ozone production potential” – the combination of the right chemical ingredients and the right atmospheric conditions needed to create smog  – to oil and gas emissions along the northern Front Range. In Weld County, according to another study that surveys existing research, oil and gas contributes to 80% of “total point source VOC emissions,” key building blocks of the region’s smog problem. High ozone levels can lead to asthma and heart disease as well as other medical problems.

Colorado’s regulations are tougher than those in many other parts of the country, but, as in other states, these rules rely primarily upon industry self-reporting. In 2017, more than 17,000 methane leaks were identified by oil and gas companies, which is half as many as they reported in 2015. Industry officials say these numbers show an increased vigilance on the part of companies, which have an economic interest in capturing and selling the methane they produce.

But environmentalists and residents of Colorado’s increasingly active oil and gas patch say the fact that we have stronger rules than other states doesn’t necessarily mean those rules are effective, and evidence of various health impacts from fracking is growing.

At a recent presentation at the state’s Air Quality Control Commission meeting, members of an air quality task force heard from residents from around the state asking for tighter controls on oil and gas operations. Commissioners asked whether the industry was willing to embrace stricter rules right now. Attorney Sura responded in frustration that Colorado’s air quality has been so persistently bad precisely because policy makers have “only been willing to regulate if the industry approves it.”

“That’s not regulation,” he said.

Jeremy Nichols, the climate and energy program director for the environmental group WildEarth Guardians and an expert on oil and gas emissions regulations, said that Colorado’s frequently cited tough rules are “smoke and mirrors to cover up the extent of the ozone problem.”

“The state will say that they’re working cooperatively with industry to reduce emissions and that these violations are minor,” Nichols said. “The problem is, they say that for every violation, for every company, and every facility.” He echoes what others who have studied the regulations have concluded: Any system that relies so much on industry self-monitoring and reporting is rife for abuse.

Ben Marter, Colorado Petroleum Council spokesman, did not respond directly to a question about criticisms that Colorado’s self-reporting system may be flawed. Marter said in an email that the industry has a “legacy of environmental stewardship” that is “based on a transparent, collaborative process in which operators, state regulators and local officials work together” to develop regulations that are specific to Colorado.

 The state’s efforts to independently confirm the emission levels reported by the industry and enforce regulations are severely hampered by chronic underfunding of both the Colorado Oil and Gas Conservation Commission and the Colorado Department of Public Health and Environment (CDPHE), which issues permits for companies to pollute. Jill Ryan, the department’s newly appointed director, told The Story Group that the CDPHE’s Air Pollution Inspection Division, in particular, “has been under-resourced for years, and maybe even decades.”

As oil and gas production has skyrocketed, CDPHE’s budget has failed to keep pace, averaging around $500 million a year over the last seven years, roughly $25 million of which goes to its Air Quality Control Division. That division’s oil and gas office has only nine inspectors who together make an average of 320 “full compliance evaluations” per year on the state’s more than 50,000 wells. Many of those inspections are scheduled, as opposed to unannounced. 

For its part, the COGCC, which has seen its budget gradually increase over the last decade, has five field supervisors and 18 field staff who, as a team, inspect each active well in the state. Department of Natural Resources spokesman Chris Arend said the team conducts inspections of active well sites about once every two years.

The COGCC has made headlines over the past few years for its record of never having denied an oil and gas company a permit to drill. But the state public health agency is likely to come under increased scrutiny as well. State Sen. Mike Foote, an East Boulder County Democrat who long has championed oil and gas reform, said that lawmakers have “never paid much attention to CDPHE.”

“That will need to change,” Foote said.

Jeremy Murtaugh, a former air quality inspector for the CDPHE who recently resigned out of frustration. (Photo by Ted Wood/The Story Group)

Jeremy Murtaugh worked for 12 years as an inspector at CDPHE’s Air Pollution Control Division before resigning earlier this year out of frustration with the state’s lax approach to oil and gas companies. (See sidebar: A former Colorado air quality inspector speaks out.) He said that during “full compliance evaluations” of oil and gas operations, he and fellow state inspectors found violations about 25% to 30% of the time. In contrast, he notes, oil and gas companies’ comparable testing reports about their own operations find violations only about 5% of the time.

Murtaugh, in addition to a private contractor who monitors oil and gas facilities on behalf of companies and who did not want his name used out of concern that he would lose business, independently told The Story Group that they have observed occasions when oil and gas employees have adjusted their equipment to change the test results or contractors have been asked by companies to do so.

“It’s cheating, plain and simple,” said Murtaugh, who resigned after his bosses discovered he had taken documents he said he believed would protect him in a whistleblower action. He said he returned the documents, and none were used in this reporting. The Story Group spoke with several of Murtaugh’s former co-workers, all of whom described him as a committed and  “professional” inspector.

Dan Haley, president of the Colorado Oil and Gas Association, did not respond to allegations that some companies cover up their pollution violations by tinkering with their equipment and said in an email that the trade group could not “speculate about comments made by a former state employee.”

Garry Kaufman, director of the state’s Air Pollution Control Division at the Colorado Department of Public Health and Environment, would not comment on personnel matters relating to Murtaugh. He said he has not seen an analysis of how often the industry self-reports violations compared to how often state inspectors do, but that Murtaugh’s numbers “sound a little surprising to me.” He added: “By and large, most of the operators try to get it right.”

Kaufman acknowledged that oil and gas companies have “operational staff” who generally are not as knowledgeable about regulatory issues as companies’ environmental compliance officers. “Sometimes, they’re not reporting things that should be reported.” If there are discrepancies between industry self-reports and inspectors’ reports, Kaufman said, “the division may address these inaccuracies through enforcement as well if deemed appropriate.” Kaufman also noted that there are many different kinds of operators and operations, from older, unmanned facilities to state-of-the-art multi-well pads, and each of them has multiple emissions sources for the division to track. “It’s a big challenge to find the right level of enforcement,” he said.

“The emissions are still too high, and it’s not a theoretical problem,” he said. “We need to do better and there’s a lot of political will to make that happen now.”

 

Extraction Oil and Gas company flaring gas at its Triple Creek multi-well site in Greeley on Nov. 11, 2017. (Photo by Lowell Lewis)
Extraction Oil and Gas company flaring gas at its Triple Creek multi-well site in Greeley on Nov. 11, 2017. (Photo by Lowell Lewis)

Untracked, unconfirmed, unknown volume of emissions

The state’s current regulations allow companies to start building well pads, drilling them and producing oil and gas for up to three months before filing what amounts to permission-to-pollute paperwork known as an Air Pollutant Emission Notice, or APEN. The document provides the health department with an estimate, based on a formula and calculated by the companies, of what kind of pollutants will be produced from different operations at each well site and, of that, how much will be captured by the company and how much will be emitted into the air.

The industry says companies need that three-month delay to establish an accurate assessment of production and emissions. Colorado’s current regulations have created “an intentional, common-sense permitting system that is based on data, approved by the EPA, and employed in other energy-producing states,” COGA’s Haley says of the permit delay. He emphasizes that once production begins, oil and gas operations install mandatory pollution control equipment, which manufacturer specifications say will burn 98% of the methane and capture 95% of pollution-causing chemicals.

“The rules are great” in theory, Murtaugh said. “But these control devices have never been tested in the field [to verify the capture rate]. Ever.”

The health department itself acknowledges that the capture rate is an aspirational number because “combustion devices designed to meet a 98% control efficiency may not actually meet this percentage in practice, given the variability of field conditions, downtime, etc. that is not tested in field conditions.”

Government reports and scientific analyses provide no evidence that much of these cumulative emissions are being captured, and consistently document that emission levels for both methane and pollutants are higher than the state has reported.

Murtaugh notes that with every other industry that requires air pollution permits, companies are able to apply for and obtain necessary permits before constructing their equipment. “There is nothing particularly special about this industry,” he says.

The industry’s defense of the APEN delay, says Murtaugh, is “a fairly effective red herring,” but in practice leaves wide gaps in accountability. The delay also coincides with a period of high emissions from oil and gas sites, including from hundreds of truck trips necessary to prepare for drilling operations. Many emissions that occur before the APEN is issued are not tracked by the state. In addition, if there is a backlog in processing APEN applications and permits, CDPHE Director Ryan says, that period of unregulated emissions can last even longer.

The cumulative problem, says WildEarth Guardians’ Jeremy Nichols, “is that we’re talking about hundreds and thousands of these operations. Without a permit in place, there are no means to hold operators accountable. There’s no way to verify it.”

Once wells are in active operation, they produce a number of different emissions from a variety of sources at different times during their life spans, which can last decades. During the phase just after the wells are fracked and before production, for example, the systems cannot always accommodate the pressure build-up and systems can fail, leading to releases. Sometimes equipment, including tanks and pipelines, are at capacity and companies need to release toxic materials to prevent explosions and accidents. Companies might burn gases through emission control devices – called flaring – or release multiple gases, including methane, directly into the atmosphere, which is called venting. Companies explicitly acknowledge in their permits that they will vent gases during times when their control devices are down for maintenance or when equipment malfunctions. In those cases, companies flare or vent gases and report emissions after the fact.

Sometimes it takes a resident to come forward to make the state agencies take notice.

In 2016, Lowell Lewis of Greeley was among a group of homeowners who tried to stop the development of a multi-well complex called Triple Creek, owned by Extraction Oil and Gas. In response to the residents’ outcries, the company promised to install the latest, most efficient equipment and use the “best management practices” to minimize the impacts.

Lowell Lewis and Dawn Stein with Extraction's drilling wall.(Photo by Ted Wood/The Story Group)
Lowell Lewis and Dawn Stein with Extraction’s drilling wall.(Photo by Ted Wood/The Story Group)

But once Triple Creek had been built in December 2017, Lewis and his neighbors started noticing that Extraction was burning off its excess fuel, mostly at night and on weekends. Lewis investigated the flaring and discovered in company reports filed with the state that Extraction had asked for, and received, permission to flare more than a million cubic feet of gas because of what the company called “upset conditions” – when gas pipelines were at capacity and there was no other place for the methane to go.

A retired civil engineer, Lewis took his findings to a meeting of the Colorado Oil and Gas Conservation Commission. Armed with the state’s own data, he told commissioners that from October 2016 to July 2017 — a period of more than nine months — Triple Creek released massive amounts of methane, carbon dioxide, and various VOCs into the atmosphere.

COGCC staff explained to the commissioners that the lack of capacity in gas pipelines during that period allowed the company free rein to emit whatever amount of pollution it needed in order to prevent accidents or explosions. Instead of shutting down the operation, this gas flaring allowed Extraction to continue producing oil from the site. This led to the following exchange:

COGCC Commissioner Howard Boigon: “Is there any oversight? Do they have to report?”

Acting COGCC Commissioner Mike Leonard: “They have to report. Yes.”

Boigon: “Is there any limit that they cannot exceed either in terms of days or quantity?”

Leonard: “Not through COGCC, No.”

Lowell Lewis: “Or CDPHE, to your knowledge?”

Leonard: “To my knowledge, that’s correct.”

Boigon: “Were there any violations of rules as far as you were concerned?”

Leonard: “There were no violations of COGCC rules.”

Finally, Lewis blew up: “Why does a citizen have to come before you to tell you that Extraction [flared] 110 million cubic feet of natural gas last December?” (That’s enough to supply more than 1,500 Colorado households with natural gas for a year.)

“Why didn’t a switch flip, or an alarm sound?” Lewis continued. “And at Triple Creek again, for a nine-month period, when neither the COGCC nor the CDPHE had regulatory control over the emissions. WHY!?!”

Acting director Leonard replied that the state health department requires that the “capture” rate of emissions during flaring operations is 98%. Even if the burning efficiency was 98%, Lewis countered, the amount of natural gas Extraction said it vented into the neighborhood air would have been more than 2.2 million cubic feet, in addition to the carbon dioxide and other combustion byproducts. “Obviously there are large releases of some pretty bad pollutants into our air in an urban residential area,” Lewis said.

“Everything leaks. It’s just a matter of how much.”  – Stephen Conley, Scientific Aviation

In addition to intentionally flaring and venting gas from their wells, companies also emit methane and other pollutants through equipment leaks. Some leaks are unintentional, such as when a valve is inadvertently left open, and some are by design. One device designed to be leaky is called a “pneumatic controller,” which releases methane as it controls a well’s valves and other functions. The EPA estimates that leaks from pneumatic controllers account for one third of all methane emissions from oil and gas development.

In Colorado, the Air Quality Control Commission (which is appointed by the governor but works under the auspices of the state public health department) recognized the massive leak problem and created a Pneumatic Controller Task Force as part of its 2017 rulemaking. The EPA had estimated that there were about 55,000 of these devices in the Denver-Julesburg Basin, which is centered in northeast Colorado and includes much of Weld County and adjacent counties. But the task force examined 178 oil and gas operations of different sizes, and extrapolated that there were nearly twice as many of these pneumatic devices in the D-J Basin as the EPA had estimated: about 100,000 of them. The task force is exploring new technologies that will replace these devices.

“If your estimate of devices is off by almost 50%, your estimate of emission numbers is going to be wrong,” said Joel Minor, an attorney with the environmental law non-profit Earthjustice and a member of the task force.

“All these leaks add up, and we’re not adding them up fast enough,” says Minor. “Our big challenge is that we have an ozone crisis,” he added. “We know what, at a broad level, is causing this,” but “the rate that we are gathering information is not keeping pace with the speed of the development.”

Daniel Zimmerle, a senior research associate at the Energy Institute at Colorado State University and director of the Methane Emissions Technology Evaluation Center (METEC), has worked with many different companies and says a lot of progress is being made. He has found that companies “take their screening and reporting very seriously,” and that the state’s 2014 rules ratcheting up reporting requirements have identified many of the largest emission sources. Companies have responded positively by repairing them.  

“The real question about production sites,” Zimmerle said, “is: How often are things not working perfectly? What happens when for some reason gas is emitted to the atmosphere that you did not intend for it to be emitted to the atmosphere?”

Extraction Oil and Gas' Stromberger facility in Windsor in October 2018. This same facility exploded in Dec. 2017, severely injuring one worker.(Photo by Ted Wood)
Extraction Oil and Gas’ Stromberger facility in Windsor in October 2018. This same facility exploded in Dec. 2017, severely injuring one worker.(Photo by Ted Wood/The Story Group)

‘Everything leaks’

Industries of all kinds – gravel pits, cement operators, widget factories, oil and gas facilities – must apply to the Colorado Department of Public Health and Environment for permission to pollute the air. Some of these emissions are tracked in a state greenhouse gas inventory, and others in an Air Pollutant Emissions Inventory, which is scheduled to be updated later this year.

The agency has a lot of hydrocarbon emissions to track, especially in the vast Denver-Julesburg basin, where there are almost four oil and gas wells per square mile.

Scientists from the National Oceanic Atmospheric Administration (NOAA), the National Center for Atmospheric Research (NCAR), and both CU and CSU researchers have repeatedly documented a link between oil and gas emissions in the Basin and the Denver metro area’s poor air quality.

Gabrielle Petron, a research scientist with the University of Colorado’s Cooperative Institute for Research in Environmental Sciences and NOAA’s Global Monitoring Division, has conducted several of these studies, and wrote in an email interview that oil and gas operations in northeast Colorado “have played a major role in the region’s ozone nonattainment.”

“The state inventory for air pollutants is an accounting exercise,” she said, rather than a measurement of actual emissions.

Gabrielle Petron is an atmospheric scientist at NOAA Boulder. She specializes in monitoring methane emissions. (Photo by Ted Wood/The Story Group)
Gabrielle Petron is an atmospheric scientist at NOAA Boulder. She specializes in monitoring methane emissions. (Photo by Ted Wood/The Story Group)

Petron has been involved in some of the monitoring studies taken from the air (top-down studies) that find significantly higher emissions than those measured on the ground (bottom-up studies), including carcinogenic compounds such as benzene. When industry challenges those discrepancies, she said, “it is really hard to follow-up and pinpoint what sources may be missing or underestimated.”

That’s partly because nobody is making a concerted effort to look, says Stephen Conley, who owns Scientific Aviation, a Boulder-based company that flies sophisticated monitoring equipment for federal scientists and oil and gas companies. He starts with a basic law of physics: “Everything leaks,” he said. “It’s just a matter of how much.”  

The Denver-Julesburg Basin, Conley said, has not been studied closely enough. Monitoring flights can’t be conducted at night, which, neighbors say, is when companies increase their flaring activity (and also when state inspectors don’t work). Conley suggests that companies operating in areas that don’t meet EPA ozone standards should have to check for leaks far more frequently than once a year, as the current rules require. He also suggests that wells outside of these areas should have to be inspected more than once during their operational lifetime, as is currently required.

“Given what we see when we do fly,” Conley said, the infrequency of Colorado’s monitoring requirements is “crazy.”

Conley estimates that the top 10% of emitters account for 60% to 70% of total emissions, and says state and federal regulators would do better to focus on them. “That’s what kills you,” he said. “It’s the monsters that dominate.”

Patrick Murphy, Boulder County Public Health employee, uses a FLIR infrared camera to check for gas leaks at a Crestone operating well pad in eastern Boulder County. (Photo by Ted Wood/The Story Group)
Patrick Murphy, Boulder County Public Health employee, uses a FLIR infrared camera to check for gas leaks at a Crestone operating well pad in eastern Boulder County. (Photo by Ted Wood/The Story Group)

The science of getting consistent, precise emission readings from both the air and the ground is still emerging, and, Zimmerle said, various factors make both modes somewhat inaccurate. But multiple, independent scientific assessments have consistently concluded that emissions are underreported and the state’s monitoring efforts are inadequate.

These assessments are getting better. A new study was published recently by CU scientists who set up monitoring devices in what co-author Raineer Volkamer, a fellow at the Cooperative Institute for Research in Environmental Sciences and University of Colorado professor called the “methane dome” of the Denver-Julesburg Basin. Volkamer and lead author Natalie Killie concluded that oil and gas operations were responsible for most of the methane produced in the Basin, with agricultural sources providing an important but minor source.

“There’s so much more that could be done,” said Detlev Helmig, a research scientist at the Institute of Arctic and Alpine Research at CU Boulder who works on the state’s only continuously operating monitoring operation to measure oil and gas emissions. “We’re just scratching the surface.”

Helmig’s monitoring site is located at Boulder Reservoir and funded by Boulder County and the University of Colorado with some contribution from CDPHE. Helmig and colleagues have measured extraordinarily high readings of chemicals that their data show are unmistakably coming from the oil and gas fields in Weld County. These emissions, they say, are contributing to high ozone readings in Front Range cities such as Boulder, where there is little oil and gas activity.

A slap on the wrist

Until today’s signing of Senate Bill 181, the Colorado Oil and Gas Conservation Commission had long held a contradictory mission: to foster as a source of state revenue the very industry it is supposed to regulate.

As insiders like Murtaugh tell it, a similar pro-industry bent also needs to be addressed within the Colorado Department of Health and Environment, where the culture during the Hickenlooper administration in particular placed a higher value on working collaboratively with industry than it did on regulation and enforcement. The result, several sources say, is a regulatory climate that has encouraged too much leniency.

Jill Ryan, the incoming CDPHE director, acknowledged that the culture of the agency may need to change. “People are going to be held accountable,” she said, both inside the agency and in industry. She says her initial discussions with CDPHE employees have led her to believe that “people within the Division are excited. Maybe they’ve felt oppressed in wanting to do more.”

Companies that exceed their permitted allotment of production and emissions limits – often earning millions of dollars from that excess production – often face only small fines if they are caught. Even worse, some watchdogs say, is when the state goes on to give those violators permission to increase production and, therefore, emissions.

That scenario played out at the Frye Farms production facility in Windsor, which Extraction Oil and Gas bought from Tekton Windsor LLC in 2014. Extraction was subject to the terms and conditions the state set when granting Tekton’s permits in 2013. Those permits allowed the facility to produce 50,000 barrels of oil per year and emit 6.75 tons of VOCs a year. State records, based on company reports, show that Extraction produced more than 300,000 barrels above the production limit in its application and vastly exceeded its VOC emission limits.

An inspector, reviewing company data, flagged the state Air Pollution Control Division, which notified Extraction in November 2017 of a number of violations between 2014 and 2016. Several months later, the state offered Extraction an “early settlement agreement” to take care of the problems. Extraction agreed to pay $51,450 for its failure to stick to the terms of its permit by pumping what Murtaugh estimates to have been about $15 million worth of extra oil and gas.

Despite the violations, the state granted Extraction a new permit, allowing it to more than double its VOC emissions and nearly triple production to 131,400 barrels of oil.

Extraction did not respond to an emailed request for comment.

Gov. Jared Polis signed SB-181, a landmark bill overhauling the state's oil and gas regulations, into law on April 16, 2019. (Photo by John Herrick)
Gov. Jared Polis signed SB-181, a landmark bill overhauling the state’s oil and gas regulations, into law on April 16, 2019. (Photo by John Herrick)

The state’s response

Air Pollution Control Division director Kaufman says the “sheer number” of wells, a lack of resources to enforce regulations on them, and the variety of oil and gas emissions sources collectively pose big challenges for a state that didn’t even permit oil and gas facilities’ emissions until 2002. He emphasized that Colorado “has made tremendous strides” in bringing down levels of certain pollutants.

“Our priority is to make sure companies are in compliance, and if they’re not, to bring them back in compliance,” he said.

“I’m not saying we always get it right,” he added.

Now with majority control of both of Colorado’s legislative chambers and a new governor who long has been concerned with the industry’s dangers, Democratic state lawmakers have proposed a host of new reforms, including funding for five more COGCC field inspectors.

In addition to changing COGCC’s mandate, allowing local control and seeking tighter rules on emissions, the new law requires oil and gas companies to conduct continuous emission monitoring at certain facilities. That requirement “may be the most important provision of that law just given the transparency and accountability that will flow from it,” says Nichols, the climate and energy program director with WildEarth Guardians. Another provision in the bill gives the state permission to regulate air pollution emissions earlier in the oil and gas development process, including when companies are building, drilling and testing wells for production.

The industry, which successfully defeated a ballot measure last year that would have increased setbacks on drilling and also killed multiple bills during the last legislative session – fought hard to defeat the new law. Hundreds of oil and gas workers flooded the Capitol to testify against it.

COGA’s Haley told The Story Group last week that once this bill becomes law, it starts another round of negotiations and drafting of new rules. The law, he says, “will take years to implement.”

As for the climate change bill passed by the state House today, it sets a goal for Colorado to cut its greenhouse emissions, including methane, in half by 2030 and 90% by 2050, both compared to 2005 levels.

As The Colorado Independent recently reported, “the near-term emissions targets would effectively mean cutting all emissions from oil and gas drilling and relying on renewables such as wind and solar to power the state’s entire electric grid.”  The Air Quality Control Commission would be responsible for developing the rules intended to help the state reach the goals. But the bill, sponsored by House Speaker Rep. KC Becker of Boulder and Rep. Dominique Jackson of Denver, includes no penalties or provisions to allow citizens to sue the government if the state fails to meet the targets.

The Colorado Oil and Gas Association says that any climate-change solution must “balance the need to energize the lives of those struggling to access affordable energy, while simultaneously responding to climate change and powering a broader economy.”

The measure still must pass through the Senate. The governor has not said if he will support the bill, but it aligns with some of his goals, including his plan to power the state’s electric grid with renewable energy.

Now that Colorado has accepted the EPA’s “serious non-attainment” status, a number of new requirements to clean up the state’s air will be imposed. When the legislative session is done and the dust settles from the new laws, the next fight will begin to determine how those laws will be interpreted and implemented.

Jill Ryan, the CDPHE’s new director, told The Story Group that the Polis administration is committed to reform. “We’re going to examine all of our rules and processes,” from negotiating how these laws will be implemented and when emissions permits are granted to oil and gas companies to overhauling the state’s inspection regimen, she said. Ryan noted that there are benefits to accepting the EPA’s ruling, including raising the profile of the smog problem and forcing state regulators to address it.

We want the citizens of Colorado to know that we are serious about improving our air quality,” she said.

Current Colorado elected officials have stated they see this legislative session as an opportunity to be in the vanguard of a transition for more renewable energy and cleaner air. One thing is certain: without significant change, Colorado’s brown-cloud days will only get browner – and the planet’s future cloudier. 

With additional reporting by Lars Gesing and John Herrick

Correction: An earlier version of this story misstated the annual funding for the Air Quality Control Division. 

7 COMMENTS

  1. This is a very good article except for this: “A recent international report by the Intergovernmental Panel on Climate Change warned that if humans do not significantly reduce greenhouse gas emissions within about 12 years, Earth will warm enough to disrupt human societies and the planet’s systems for decades to come.”

    Not decades, but at least a millennium! I doubt the ipcc said it was decades, but if they did, that’s additional evidence that many scientists are right that the ipcc is being so conservative that it may kill us all.

  2. Studies by Dr. Lisa McKenzie of the Anshutz Medical Center shows Colorado infants have severely suffered from this failure under the Hickenlooper administration. Increases in birth defects and luekemia are the result of this industry’s toxic trespass.

    There must be strict rules under SB 181 to assure no toxic gases leave these mega frack pads and a state government funded and capable of policing that policy.

  3. I really appreciate the depth of this reporting. One error in the report, it states that 4 communities had bans. Only one had a ban, that was Longmont which isn’t listed. The others, were moratoriums. I look forward to the day when we again have clean air to breathe.

  4. Thank you for writing this in depth article on oil and gas’s impacts on Colorado’s air quality. It is so sad to see the persistent smog that hovers over the mountains these days. It is time to hold oil and gas accountable and prioritize our future to O&G profits!

  5. “the variety of oil and gas emissions sources collectively pose big challenges for a state”
    As of March 31,2109 there were 5,511,033 registered vehicles in Colorado.
    The brown cloud, which I can see from the view from my home is linear.
    It falls right in line with the major highways around the state.
    Blaming oil and gas companies for the brown cloud problem is ridiculous considering every single car I see has one person in it. The pollution and the brown clouds, which magically appear every morning from 7 to 10 AM during the morning commute, are clearly a result of the one car-one driver problem that is pervasive in society. And it is only going to get worse, as 80,000 people move to the front range every year.

    Well written article, but blame the brown cloud, “the persistent smog” on what is clearly its primary source of pollution, one car – one driver. It’s you, and me, and everyone else who commutes 10 miles to work every day. If you want to fight climate change, stop burning 8.3 lbs of gasoline in your vehicle every day, yourself. Hold yourself accountable for your contribution.

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