After new rules, drilling permits plummet to 34

A last-minute torrent of drilling permits filed by energy companies under Colorado’s old oil and gas rules has been followed by a trickle of filings since new rules took effect.

Barely one application a day, or 34 in total, came in to the Colorado Oil and Gas Conservation Commission in April, after the rules’ implementation on nonfederal land April 1.

The near-halt in applications comes just a month after companies submitted a record 1,470 applications in March in a rush to beat the new, stricter rules. Permits applied for before April 1 will be reviewed under the old rather than new rules.

The previous one-month record for permit applications had been 784.

State officials say the new rules strike a proper balance between oil and gas development and protection of health, the environment and wildlife. But the industry argues they are costly and burdensome, and it worries about how long it may take for permits to be approved under the new rules.

The Colorado Oil & Gas Association recently sued the oil and gas commission, arguing it failed to fully consider the impacts of the new rules. In a statement released Friday, the association’s president, Meg Collins, said many companies felt compelled to beat the April 1 deadline so they would have some realistic expectation of when a permit might be issued.

“Oil and gas companies work hard to ensure that new drilling is permitted in advance. It’s just good business,” Collins said. “That approach has become even more important considering industry still doesn’t know fully what impact the rules will have on permitting timeframes. It’s vital that energy companies have an adequate inventory of permits so they can continue to develop our abundant energy resources.”

Oil and gas commission Director Dave Neslin said the state had received 2,430 permit applications for 2009 through the end of April, down about 13 percent from the same period last year. The state issued 2,160 permits this year through the end of April.

As of April 27, Garfield County led the state in approved permits with 32 percent of the total. The next-highest counties were Weld (29 percent) and Mesa (12 percent).

The state approved a record 8,027 permits last year.

But drilling activity is down sharply because of falling natural gas prices and other reasons.

Neslin said he thinks the kind of permit-application activity seen in April “may continue for a few months. I think this is obviously an unusual year.”

Companies are working through the new rules process. They also probably hold more permits today than they can put to use during the next year, particularly at a time of reduced drilling activity, Neslin said.

Drilling permits are good for one year. Harris Sherman, executive director of the state Department of Natural Resources and chairman of the oil and gas commission, has said having the grandfathered permits will allow companies to make a smoother transition to the new rules over the next year.

In anticipation of a possible last-minute rush on grandfathered permits, the oil and gas commission implemented an interim policy for permits applied for between Jan. 5 and April 1 for nonfederal lands.


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