A drilling proposal that was seen as one of the first big tests of recent sweeping changes to state oil and gas rules has failed to earn the approval of state regulators.
The Colorado Oil and Gas Conservation Commission voted 4-1 Thursday against plans by Kerr-McGee to drill 33 oil and gas wells near a neighborhood in Firestone. One well pad would have had 26 wells and a second would have had seven.
The commissioners’ main objection was that 62 homes would be within 2,000 feet of the 26-well site. New oil and gas rules mandated by a 2019 law requires that new wells be at least 2,000 feet from homes and schools unless certain conditions are met.
Kerr-McGee contended that it had complied with the exceptions allowed by providing protections “substantially equivalent” to a 2,000-foot buffer. Four of the commissioners disagreed.
Kerr-McGee, a subsidiary of Occidental Petroleum, Colorado’s largest oil and gas producer, revamped its proposal to reduce the number of homes within the 2,000-foot distance and offer alternative locations after the commission requested the changes in a Feb. 16 hearing.
The commissioners voiced frustration in Thursday’s hearing that the revisions didn’t go far enough.
“I don’t feel like you heard, at least me, when I said, ‘Is there a place you can move further away and leave some of your minerals stranded?’ And you didn’t bring that forth,” said commission member Karin McGowan.
Under Kerr-McGee’s original proposal, 89 homes in the Falcon Point at Saddleback subdivision would have been within 2,000 feet of the larger well pad and seven homes would have been within that distance from the smaller pad.
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The company’s revised plan would have shrunk the larger site, the McGavin pad, and removed 27 homes out of the 2,000-foot radius moved by removing some of the tanks from the pad. The seven-well Columbine pad still would have been within 2,000 feet of seven homes.
Commission member Bill Gonzalez said the protective measures Kerr-McGee planned to take, including using an electric drilling rig and piping in water to cut truck trips, would have provided safeguards similar to drilling farther away. He was the lone vote for the project.
“We’re disappointed with the Colorado Oil and Gas Conservation Commission’s decision to deny our permits with the Longs Peak development,” Kerr-McGee spokeswoman Jennifer Brice said in a statement. “Our partners in Firestone want us to operate in their town, and our next steps include reviewing all available options to develop the mineral resources Coloradans rely on for their energy needs.”
A 2019 report by the state health department said people living within 2,000 feet of oil and gas sites have experienced certain short-term health impacts. Laurie Anderson, on the Broomfield City Council, said in the hearing that the city receives hundreds of complaints about headaches, breathing problems and other ailments from people who live near well sites.
The 2,000-foot buffer was among the new rules approved by the COGCC. The 2019 state law, Senate Bill 181, changed the commission’s mission from balancing public health and the environment with the development of oil and gas to regulating oil and gas in a way that protects the public health, the environment and wildlife.
Opponents of Kerr-McGee’s project argued that if the commission approved the drilling, it would undermine the intent of SB 181. The legislation was passed after conflicts between energy companies and growing communities along the Front Range increased and voters rejected a 2018 ballot proposal for 2,500-foot setbacks between wells and homes.
“Senate Bill 181 was a reaction against neighborhood drilling and was designed in large part to keep that from happening again,” said Mike Foote, a former legislator and one of the bill’s sponsors. “When you put something like that close to people’s homes, there will be detrimental effects to public health safety and welfare.”
Area homeowners and people who live close to well sites in other areas have urged the commission to reject Kerr McGee’s proposal.
“We would have definitely thought twice about purchasing here had we known what we know now,” said Kathleen Scott, who moved with her husband, Mike, into the Firestone subdivision in November 2021.
However, others said the oil and gas industry has long been an important part of Colorado’s economy and said with rising gas prices and Russia, one of the world’s major oil producers, waging war in Ukraine, now is not the time to discourage domestic production.
“In the face of a supply crisis and rising energy costs here and abroad, this is the absolute wrong approach. This application is an example of the highest standards of energy development anywhere in the world,” said Dan Haley, president and CEO of the Colorado Oil and Gas Association, said in a statement.
Lynn Granger, president of the American Petroleum Institute-Colorado, said the U.S. needs more oil and natural gas, with skyrocketing energy prices, inflation and political instability. That won’t be possible in Colorado if regulators “choose to flout their own standards” and reject permits, she added.
IFirestone officials said the town has a history of balancing oil and gas production with other land uses. The town planning commission recommended denying Kerr-McGee’s land-use permit, but the town trustees approved it.
Kerr-McGee’s agreement with the town included the company giving Firestone a 78-acre parcel of land. Town Manager A.J. Krieger said the land deal and the agreement with Kerr-McGee were not linked.
But Jeff Robbins, the oil and gas commission chairman, noted that as part of the agreement, Firestone said it would not object to the company’s application to the state.
Updated at 8:28 to add comment from Kerr-McGee and the American Petroleum Institute-Colorado.
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