Wednesday, November 14, 2012

CLUB 20 Fights back on setback.

DENVER – A diverse group of stakeholders have released a fact sheet regarding the real impacts of increased setbacks in regards for oil and gas activity.

The current group includes CLUB 20, Colorado Association of Commerce & Industry (CACI), Colorado Cattlemen’s Association, Colorado Farm Bureau, Colorado Oil & Gas Association (COGA), La Plata Energy Council, National Association of Royalty Owners Rockies Chapter, and Weld County.

The Colorado Oil and Gas Conservation Commission (COGCC) is currently engaged in a setback rulemaking. There are many stakeholders with an interest in the distance from an oil and gas facility to buildings. These include the surface owner, the mineral owner, adjacent landowners, the local government, and the oil and gas operator. Many elements play into this calculation: the property line, the mineral property boundaries, surface and lease agreements, development plans, encroachment on existing facilities, lease lines, drilling spacing orders, access, centralization of facilities, technical limitations, and location of the resource.

The COGCC current setback rules acknowledge and accommodate the reality of the many stakeholders, legal considerations, and technical constraints that impact the distance of wells from buildings. The common perception that distance from a well to a building is determined by the oil and gas company is simply false.

“We acknowledge that public interest is driving the call for increased setbacks, and we are interested in discussing the practices that can address these concerns in urban drilling,” said Tisha Schuller, President & CEO, Colorado Oil & Gas Association. “At the same time, we cannot forget the stakeholders most affected by drilling. Any setback solution must acknowledge the legal, regulatory, and technical complexity of well-siting.”

Any proposal of a 1,000-foot setback ignores the complex technical, logistical, and legal challenges inherent in siting a well. This approach also disregards the numerous stakeholders with an interest in this distance, most importantly, the surface owner. Arbitrary setbacks will result in disturbing additional surface area, will cause greater impacts to natural resources, and will impact property values and future land uses.

“Arbitrary setbacks result in the taking of private property – both that of the agriculture producer on the surface and the mineral owner below the surface. Setbacks reduce the ability of the farmer and rancher to negotiate the proper placement of the oil & gas well so as to not disturb agricultural activities,” said Don Shawcroft, Colorado Farm Bureau President.

“Mineral owners and royalty owners will continue to rely on the State's oil and gas regulatory body, the COGCC to protect them by applying the best engineering, scientific practice and application of policy to prevent waste and promote development of the resources in the State. Arbitrarily mandating a policy such as setbacks by statute does not serve the public interest,” said Neil Ray, President, National Association of Royalty Owners Rockies Chapter.

“Arbitrary setbacks will actually harm the environment, resulting in an ecological-takings by further fragmenting open space,” said T. Wright Dickinson, Colorado Cattlemen’s Association President. “Limiting landowners' ability to strike the necessary balance of well placement with the protection of agriculture viability and environmental conservation threatens society's access to affordable food, open space and energy. Not to mention taking a step backward from Colorado’s stance on responsible development of our oil and gas resources,”

The current setback criteria and the current process for well location adequately address the perceived health and safety risks while allowing the surface owner, mineral owner, operator and regulators the ability to determine the best location of the well so as to maximize the resource and protect private property rights.

“Communities, like Weld County, with oil and gas production have been successfully addressing our constituent concerns for decades. We do not require a draconian mandate from the state which interferes with private property rights and local authority to plan and manage our land use decisions,” said Commissioner Barbara Kirkmeyer, Weld County Board of County Commission.

“In La Plata County we have been working with neighbors, schools and industry for decades to ensure thoughtful development of natural resources,” said Christi Zeller, Executive Director of the La Plata Energy Council. “We have learned to work together to ensure industry acts as a good neighbor and provides comprehensive safety measures to people near oil and gas operations.”

“If Colorado were to transition from its nuanced and thoughtfully created setbacks requirement to a ‘one size fits all’ 1000 foot limit, the negative economic impact to our state would be substantial. From increasing the costs of current practices, to devaluing property, to hindering projects that are already under way, such a proposal would hurt a variety of businesses and employers, and without cause,” said Carly Dollar, Colorado Association of Commerce & Industry.

“CLUB 20 believes that the current COGCC rules regarding setbacks for oil and gas drilling takes into consideration the variables necessary to provide protections for public health, wildlife and environment,” said CLUB 20 Chairman, Steve Reynolds. “Establishing a one-size-fits-all rule regarding setbacks may negatively impact the rights of private landowners and local government planning efforts. CLUB 20 supports a process that recognizes and respects the needs of the stakeholders involved in the oil and gas drilling process and believes that the COGCC manages that process appropriately under the existing rules.”

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