As a major measure that revamps how the oil and gas industry is regulated in Colorado awaits the governor’s signature, Aurora isn’t waiting for the new state statute to take effect before addressing anticipated impacts of dozens of new wells proposed inside the city.
On Monday night, the City Council gave unanimous final approval to an ordinance that authorizes the city to enter into operator agreements with oil and gas drilling companies seeking to extract underground energy deposits in Aurora.
The agreements would address concerns that have arisen in many Front Range communities where drilling activity has moved ever closer to neighborhoods, including the distance wells need to be from homes or schools and what kind of screening should be put around oil field equipment.
Several cities and towns at the edge of the resource-rich Denver-Julesburg basin, including Broomfield and Erie, have employed an approach similar to what Aurora landed on Monday. But Aurora, with a population of about 370,000, would be the state’s largest city to embrace operator agreements.
“Let’s get ahead of this,” said Jason Batchelor, Aurora’s deputy city manager.
RELATED: Bill overhauling how oil, gas is regulated in Colorado clears legislature: Now the action really begins
Aurora, he said, has been working for several years trying to formulate local controls on oil and gas activity without getting crosswise with state regulators who have ultimate purview over the industry.
Two operators — ConocoPhillips and Extraction Oil and Gas — have proposed nearly 100 wells in Aurora and Batchelor said the city’s new approach codified Monday means those wells will more than likely get completed under specific terms and conditions agreed to by the companies and Aurora.
“We want to get more than what is minimally required by state law,” Batchelor said.
What isn’t certain is what role Senate Bill 181, passed by the Democratic-controlled legislature earlier this month and now sitting on Gov. Jared Polis’ desk awaiting his signature, might play when it comes to cities and towns pursuing local regulations on drilling. The controversial bill, which the industry has condemned as governmental overreach, allows cities and counties to regulate oil and gas development under their planning and land-use powers.
But to what extent that power will be exercised by communities worried about the health, noise and aesthetic impacts of oil and gas operations near neighborhoods concerns the industry.
The last few years have featured more than a few legal battles between drillers and cities that have tried to ban or curtail fracking in the name of public health. Those disputes have largely been won by the industry, which cites state preemption in overseeing energy extraction in Colorado.
But SB 181 tilts the balance of power back toward communities. That’s because the bill makes protecting public health and safety and the environment a priority when the Colorado Oil and Gas Conservation Commission, the state’s regulatory body, considers issuing permits for wells. The COGCC would no longer be charged with fostering development, under the new law.
The Colorado Oil and Gas Association, which lobbies for the industry, said voluntary operator agreements have worked well at assuring that more rigorous standards are adhered to when drilling in communities.
“It allows local governments to dive into specifics about what is best for their community, and then work with all sides to essentially write a contract that makes win-win scenarios much more likely,” COGA president and CEO Dan Haley said. “These agreements take close coordination between local governments and operators, but that time and effort is typically worth it.”
Broomfield has some of the most extensive local rules on oil and gas drillers, having embraced an approach that emphasizes operator agreements. Those agreements with Extraction have established setbacks between wells and buildings that are greater than 1,300 feet (the state limit is 500 feet) while also placing stringent regulations on pipelines and emissions.
Tami Yellico, Broomfield’s director of strategic initiatives, said the city’s move in 2017 was a sensible response to neighbors who were becoming increasingly fed up with wells getting drilled closer and closer to homes. Eight-four proposed wells along the Northwest Parkway will get additional scrutiny under the operator agreements hammered out between Broomfield and Extraction, she said.
But Yellico said the city will still see what additional discretion SB 181 gives to local communities.
“We will amend our regulations after looking closely at powers granted to us under 181,” she said.
Polly Page, a former Aurora city councilwoman who serves on the city’s Oil and Gas Advisory Committee, said operator agreements that go beyond state minimums are “the way to go.”
“It’s a give-and-take on a city’s and company’s part,” she said.
Page is worried that a sweeping oil and gas measure such as SB 181 could lead to local rules that will chase energy companies out of state, and with them, billions of dollars that the industry generates in Colorado annually.
“(Operator agreements) give the oil companies some certainty and I think that’s a good thing,” Page said.