Category Archives: Financial Assurance

Financial Assurance Hearings at the COGCC – A CRUCIAL STEP

The Financial Assurances rulings coming up in January and February of 2022 represent a crucial crossroads in statewide efforts to require responsible behavior from oil and gas operators. It’s not really too complex. What we are asking of the industry is the same basic life lesson that we all learned as children: if you make a mess, you clean it up! Unfortunately, the draft proposal, provided by COGCC staff to the commissioners, takes this simple idea and twists into a byzantine labyrinth that will provide O&G operators multiple options for gaming the system, leaving clean-up to the tax-payer.

Therefore, we are asking the COGCC to approve regulations that would require full cost bonding on all new wells, all transferred wells, and on all existing wells over a reasonable timeline. Wells on BLM land should be included in all of the above. And bonding should cover both plugging and reclamation costs.

UP-COMING OPPORTUNITIES

January 20-21
1. Financial Assurance Rulemaking, Docket No. 210600097
1. Staff Presentation
2. Public Comment

January 25-28
1. Party Presentations Financial Assurance Rulemaking, Docket No. 210600097
2. Consent Agenda will be heard on 1/26

February 2-3
1. Party Final Presentations Financial Assurance Rulemaking, Docket No. 210600097
2. Consent Agenda will be heard on 2/2

February 7
1. Commissioner Deliberations Financial Assurance Rulemaking, Docket No. 210600097

February 9
1. Commissioner Comments
2. Public Comment
3. Consent Agenda

February 16 – Evening Hearing, starts at 6pm
1. Commissioner Comments
2. Public Comment

February 23
1. Commissioner Comments
2. Public Comment
(From the COGCC website under Tentative Commission Hearing Agendas. https://cogcc.state.co.us/hearings.html#/overview)

PREPARE YOUR COMMENT

Sign-up forms for the February meetings are not yet active, but there is plenty of time to begin preparing a statement. Remember, the outcome of this ruling will have significant consequences for Colorado into the foreseeable future. Our current system encourages operators to leave low producing wells sitting in the fields where they continue to emit methane and other toxins into the air. According to a Nov. 26 article in the Colorado Sun, “out of the approximately 52,000 wells on the books at the Colorado Oil and Gas Conservation Commission, 36,930 produce less than the equivalent of 15 barrels of oil a day. Of those, 17,285 produce less than 1 barrel.” These low producing wells amount to 71% of the wells in Colorado. All wells will eventually have to be plugged abandoned. If the operators don’t pay for it, then those costs will be left to the state.

Below is an excerpt from the comment I made in the Nov. 9, 2021 meeting of the COGCC:


I would like to begin by reading a quote from a previous COGCC meeting in which the following statement was made by a commissioner:


“We should not be held hostage to operators who can’t afford to do business in the state. If they can’t discharge their responsibilities to maintain their wells, they shouldn’t be approved to operate here. There should be some element of financial responsibility that’s required.”


I couldn’t agree more.
That meeting took place on March 19, 2018. Three and a half years ago. Three and a half years have gone by, and although SB-181 has given us a new legal framework which was not available to commissioners at that time, we’re still being “held hostage to operators who can’t afford to do business in the state.” Meanwhile, the COGCC continues to approve applications for more wells…and more and more operators — who have no financial incentive to do otherwise — and allow wells that should be properly plugged to spew emissions into the atmosphere. We’re talking about tens of thousands of low-producing wells–with little to no profitability…little to no contribution to energy demand — adding nitrous oxides, methane and other pollutants to the atmosphere…day after day after day.


Three and a half years have passed and we are still being held hostage.
All this within the context of a global climate emergency, in which Colorado plays a significant role. A climate emergency in which we have very little time to make the bold changes that are needed.

I ask that you require full cost bonding—full cost bonding on all new wells, all transferred wells, and on all existing wells over a reasonable timeline—if you will do that, then three and a half years from now we’ll be in a much better place.