GRAND JUNCTION, Colo. — Costs to the Colorado oil and gas industry as a result of proposed new rules are not as high as environmental firm Cordilleran projected last spring, said two members of the state agency that revamped the rules.

Colorado Oil and Gas Conservation Commission Acting Director Dave Neslin said Cordilleran’s report, while prepared in “good faith to provide information to the community,” is “not a reliable indicator of the cost of the final rules.”

Last year the state Legislature directed the COGCC to update rules governing the energy industry to take into account accelerated drilling and impacts on wildlife, the environment and public health.

After 18 months of public meetings and rule revisions, the eight-member commission voted unanimously on the final set of rules in December. The Legislature will review the rules for final approval this session.

State Rep. Laura Bradford, R-Collbran, along with Assistant Senate Minority Leader Greg Brophy, R-Wray, plan to introduce legislation this year to delay implementing the rules.

“The goal is to save every single job we can, given the economy,” Bradford said by phone Saturday. “It restricts ability to drill if you can’t drill for four months.”

In an early draft, one of the rules called for a four-month moratorium on drilling during certain seasons of the year for wildlife. The proposed rule was dropped last summer.

“There is no timing moratorium, period,” said COGCC member Richard Alward. “That rule was completely modified at the behest of the industry.

“There’s a lot of misinformation and fear about what the rules imply in terms of jobs and costs.”

Williams Production spokeswoman Susan Avilar said the company will not lay off anyone because of the new rules. Instead, the company’s had to hire people to deal with paperwork associated with the proposed rules.

“We’ve had to expand to implement the new rules,” and that’s only costing the company money, Avilar said.

The oil and gas industry was asked to provide the COGCC an analysis of projected costs of implementing the rules. Working with the industry, Cordilleran prepared the report analyzing cost impacts.

Cordilleran’s report was based on an initial draft of the rules from March. Many changes and clarifications were made from June through December, when the final draft was approved.

Rules calling for visual impact mitigation and emission controls were dropped from the initial draft. Other rules, regarding pit liners and wildlife management, were modified significantly.

Disagreeing on numbers

Cordilleran included costs for pre-existing rules in its report — another reason the commission said the report did not reliably indicate true costs.

For example, Cordilleran projected substantial costs to on-site consultation with surface owners, ranging from $11,500 to $223,000 per well.

“But this has been an existing requirement under our on-site inspection policy since 2005,” Neslin said. “We’ve done over 100 of those on-site inspections to date, so those projected costs shouldn’t be included.”

Cordilleran’s Doug Dennison, who prepared the report with Denver Research Group, said costs were applied to existing rules because there were changes made to those rules.

“Even though consultation with local government and surface owners was required, under the draft rules there were additional requirements. There were changes in those consultation (rules), so that accounts for the additional charges,” Dennison said.

“I respectively disagree,” Neslin said.

Companies are required to notify landowners of the policy; “All we proposed was putting this policy in the rule book,” he said.

In the end commissioners decided not to include it in the rule book.

“The policy is still mandatory,” Neslin said. “We were interested in putting it into the rule book so it would be more transparent to the public.”

As another example, Cordilleran’s report said a rule requiring consultation with local governments would cost up to $8,000.

“But local governments already have that right under an existing rule. So it’s not a new cost,” Neslin said.

Another requirement directed the industry to consult with the DOW and minimize impacts to wildlife.

Cordilleran projected the cost of consulting with the DOW to be $32,000 per well.

Because most western Colorado wells are drilled from multi-well pads, a pad with 10 wells would cost $320,000, according to Cordilleran.

But that’s excessive, said Alward and Neslin, since one consultation should suffice for one well pad.

Too high?

Alward is an ecologist and environmental scientist based in Grand Junction. He has done numerous biological studies required as part of the environmental permitting process for development projects, including energy development.

Alward questioned other projected costs Cordilleran cited in its report.

A rule requiring a company to provide a map of a well location, plus four color photographs (to reference vegetation for reclamation purposes) would cost $5,000, Cordilleran’s report said.

Companies already know where the wells are going to go, and taking four photographs should take, at the most, one day in the field, Alward said.

“It’s not ethical to pay $5,000 for one day of work,” Alward said.

Another rule requires companies to provide soil map unit descriptions, at a cost of $500 per well. If there are 10 wells on a pad, it would cost 10 times that amount, according to Cordilleran. Soil map unit descriptions are provided by Natural Resources Conservation Service and can be accessed on the COGCC Web site, Alward said.

Already abiding

Some companies are already abiding by the rules.

“We’ve been acting as so the new rules have been in effect for some time now. We had been voluntarily doing them anyway,” said Williams’ Avilar. “We like the flexibility. Now it’s a requirement.”

Gunnison Energy Corp. already complies with most of the rules. President Brad Robinson agreed with the rules’ intent to strike a balance between industry and the environment.

If adopted for final approval, the new rules go into effect in April.

If Bradford and Brophy succeed delaying the rules’ implementation, it would be unfortunate, Neslin said.

“The rules were based on an exhaustive, open, inclusive and transparent” process, he said. “The final rules included substantial input from oil and gas companies as well as from local governments, landowners and community groups.

“We included a substantial amount of suggested language from the oil and gas industry because we wanted to be sure these rules would be workable.”

Reach Sharon Sullivan at ssullivan@gjfreepress.com.