Gas rules to be costly, industry says
State low-balled price tag on regulations, groups say
Two oil and gas groups contend the state is vastly underestimating the costs of proposed tighter restrictions on air pollution by their industry.
The Colorado Petroleum Association and the Colorado Oil & Gas Association (COGA) raise the issue in a joint statement submitted in advance of the state Air Quality Control Commission’s upcoming hearing on the proposal.
The groups’ own estimate, based on an economic impact analysis by a consultant, is that leak detection and repair requirements for well production facilities and compressor stations would cost $128.6 million a year, compared to less than $14 million under the Air Pollution Control Division’s own estimate. Storage tank emission rules would cost $63.3 million for compliance, they say, whereas the state estimates a $20.8 million cost.
The groups say the discrepancy is due to factors such as failure to address significant costs of leak repairs and follow-up monitoring.
Gov. John Hickenlooper announced the proposed rules in November. They would make Colorado the first state to specifically target methane — a greenhouse gas — for detection and reduction in oil and gas operations.
The proposal is a substantial revision of an earlier proposal, and is the result of negotiations between the Environmental Defense Fund and energy companies Encana, Noble Energy and Anadarko Petroleum.
The two industry groups said in a news release Tuesday that they support many aspects of the proposal. But they also questioned several aspects of it, including the cost and whether the state can regulate greenhouse gas emissions for one industry while exempting other industries that also generate such emissions.
State officials also estismate the rules would cut emissions of volatile organic compounds by 92,000 tons per year. The compounds, such as benzene, contribute to smog and ill health.
According to an initial economic analysis by the state, that 92,000-ton reduction would cost about $29 million, with the cost per ton reduced ranging from $176 to $818. The industry groups say their own estimated per-ton costs are many times higher than the state’s estimates, “especially for smaller producing operations and newly affected facilities outside the ozone nonattainment area.”
One issue that has been raised by those groups and Garfield County is whether uniform statewide emissions rules should apply, when rural Colorado mostly isn’t dealing with the ozone problems faced by the Front Range.
The Rangely area has been facing high ozone levels, however. Jeremy Nichols with the group WildEarth Guardians said Tuesday that if current ozone problems are going to get better along the Front Range or on the Western Slope, “overall emissions need to be reduced.”