Air-rule creators 
hope it will serve as nation’s model

BEAVER CREEK — Partners in landmark new Colorado air emission standards for the oil and gas industry voiced hope Saturday that it can serve as a model for the United States and beyond.

“To me this is a great opportunity for the industry to show how they can do things in a better way, dealing with requirements that they’ve never had to deal with before. It can be done, they can comply with it,” Noble Energy chairman, president and chief executive officer Charles Davidson said at the annual Vail Global Energy Forum.

He was joined by Gov. John Hickenlooper and top executives with Encana, Anadarko Petroleum and the Environmental Defense Fund. Hickenlooper and those entities all had a hand in negotiating air-pollution limits approved last Sunday by Colorado’s Air Quality Control Commission.

They include the nation’s first-ever rules specifically targeting emissions of methane, a potent greenhouse gas, by the industry. The new rules also will significantly curtail volatile organic compound emissions that contribute to smog. The rules apply to things such as leak detections and repairs and replacement of high-bleed valves with low- or no-bleed valves. Hickenlooper called the rules “really the most comprehensive clean-air rules surrounding oil and gas of any state in America.”

Environmental Defense Fund President Fred Krupp said he wants to see solar, wind and geothermal energy developed as fast as possible.

“But realistically we’re going to down-ramp coal faster if we also have natural gas as a tool,” he said.

But he said making natural gas “a clear win over coal” in fighting global warming requires addressing methane leaks, “because otherwise methane undermines that advantage,” he said.

Davidson said the industry won’t have done its job until it convinces people it is dealing with emissions through the entire life cycle of natural gas production, transportation and consumption. “Just because we hadn’t addressed (methane emissions) before doesn’t mean it wasn’t the right time to take it on,” he said.

Doug Suttles, president and CEO of Encana, said his company employs some 1,200 to 1,400 Coloradans, many of whom choose to live in the state because of the lifestyle it offers.

“They don’t want a polluted state. They don’t want a state that the air’s not healthy as well,” he said.

He said the collaborative way Colorado undertook its air-rules rulemaking provides confidence, and it was important that the new regulations not simply drive oil and gas activity outside the state.

“There was an issue here and it needed a solution and it needed a smart solution,” he said.

Davidson credited Hickenlooper for “tremendous leadership” on the rulemaking. Krupp said the initial inkling for him of what might be possible in Colorado was when he first heard Hickenlooper talking about the need for zero tolerance for methane emissions.

“That got my hopes up,” he said.

Davidson said when he first heard of a collaborative process with a national environmental group, his thought was, “Am I hearing this conversation right?”

Ultimately, though, “I connected with this is a fabulous opportunity to show that we can do things differently,” he said.

Said Brad Holly, vice president of operations in the Rockies for Anadarko, “We were very excited and happy when this group came together.”

Suttles said the undertaking wasn’t without difficulties.

“We have relationships with all the other companies within our industry and when you step outside the group it is uncomfortable,” he said.

Industry associations and energy-producing counties, including several on the Western Slope, raised several concerns about the proposal, regarding things such as their cost, and their statewide scope when air in rural Colorado is generally cleaner.

But Suttles said that as uncomfortable as things were, an answer to emission concerns was needed and it wasn’t likely that the industry as a whole was going to “get to that answer in a reasonable time frame.”

“… This was about let’s find a workable solution now,” he said.

He said it was difficult for Encana to look at taking on additional costs even as it’s going through a 20 percent workforce reduction related to low natural gas prices. But he said the company already has undertaken some of the emission-reduction actions envisioned in the rules in Wyoming and knows they can work.

He said the new rules also allow room for innovation.

“They’re more about goal-setting than they are about being prescriptive. That’s incredibly powerful,” providing room for complying with the rules in increasingly efficient ways, he said.

Said Davidson, “Every time we face new requirements we kind of go into a shock, wonder how we’re going to do this. Of course, here we don’t have any excuse because we wrote them this time.”

Davidson said the new rules also provide important regulatory certainty, letting companies know what’s expected of them in Colorado.

“It’s the first (set of regulations of its kind) in the country, so I would say there’s 49 other states where there’s a lot more uncertainty about where (air regulation) is going to go than Colorado.”

Hickenlooper said public anxiety about oil and gas development has risen along with the opportunities for such development. In seeking to harness energy, “we really need to harness ourselves,” he said. And just as industry needs to adapt, so does government.

“If government can’t keep up then the public is not going to have any faith at all,” he said.

He said Colorado has made real progress in adopting rules to protect air and water, noting its past implementation of rules requiring public disclosure of hydraulic fracturing chemicals while providing some trade secret protections.

As chair of the Western Governors Association, he’s talked about the need to get western states to make compromises aimed at achieving lean, efficient regulations while protecting air and water. He said he’s gotten lots of buy-in from fellow governors.

“I think we’ve got a great opportunity in the next couple years to do that,” he said.

Krupp said legitimate community concerns remain related to oil and gas development, and no one who lives near industry facilities should have to give up their rights to clean air and water. But he said the passage of Colorado’s new air rules “to me says that the state of Colorado has shown itself capable of coming to grips with these issues and dealing with them — that the state government is competent in minding the store.”


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