If an oil company drills in the middle of the wilderness, maybe nobody hears it.
But, experts say, it’s a different story when gas and oil rigs start chasing rich deposits under Colorado cities and towns, poking around neighborhoods and even under City Hall. An April 12 panel at the University of Denver Sturm College of Law tackled the difficult issues arising as new technologies and newly discovered fuel deposits bring oil exploration closer to urban life.
The discussion, sponsored by the law firm Brownstein Hyatt Farber Schreck, was titled “State and Municipal Regulation of Oil and Gas Development: Who Sets the Standards in Colorado?” The event drew more than 100 attorneys and others as moderator Mark Mathews, of Brownstein, grilled energy writer Cathy Proctor of the Denver Business Journal, Geoff Wilson of the Colorado Municipal League and Brownstein attorney and energy expert Wayne Forman.
Proctor, who has chronicled the past decade’s energy boom in Colorado, said she has watched as energy companies finally developed the technology and tools to unlock oil and gas deposits trapped in shale rock a mile below ground. New underground fracturing techniques — nicknamed “fracking” — can release trapped reserves but also have sparked concern over water quality and safety.
Proctor said it’s been intriguing to see exploration edge in from the prairie and push into municipalities as energy prices spiked.
With 47,000 oil and gas rigs in Colorado, 40,000 people directly employed by the industry and $31 billion of economic activity at stake, Proctor said it was only a matter of time before conflict arose between energy companies looking for fuel sources and city residents concerned about noise, water quality, dust and trucks.
“There’s money, and there’s jobs, jobs, jobs behind this,” she said.
But as county and city governments rush to protect their residents, either with new regulations or with outright drilling bans, energy companies are asking courts to intervene. Forman said companies already are under scrutiny from federal and state regulators. Hitting them with a new patchwork of varied regulations from assorted counties and cities would threaten the companies’ ability to work efficiently and profitably.
Wilson said the issue is getting increasingly complicated. While some municipalities think no one is looking out for them, others understand that the jobs they depend on can leave if energy companies pack up for a friendlier state. And some are actually deriving royalties from the energy extraction under their own cities or by selling water rights to drillers.
“I never thought that a source of revenue for my cities would be selling water to the oil and gas industries,” he said.
Forman acknowledged the delicate balance among regulators, industry and municipalities. State lawmakers need to stay on top of the issue, he said.
“For efficiency and uniformity, the state should be the ultimate decision maker,” he said. “Pushing the envelope one way or the other will lead to unrest.”
Don Smith, faculty director of the Environmental and Natural Resources Law Program at Sturm, said the topic of fracking is a timely one, as the issue is covered in the news regularly and is on people’s minds.
“It is an example of the leadership role the Sturm College of Law is taking by contributing to and encouraging public discourse about energy law and policy,” he said about the panel discussion. “In the broadest sense, these are local as well as global issues. Our goal is to be a forum, providing many different viewpoints, for wide-ranging examination of the critical energy-related issues of our time.”