Monday, October 29, 2018

Shale Law in the Spotlight – Colorado Proposition 112 Seeks to Expand Minimum Setback Distances for Oil and Gas Development

Written by Chloe Marie – Research Specialist

When Colorado voters head to their polling places on Election Day on November 6, 2018, they will be deciding on a ballot proposition that will have a substantial impact on how the oil and gas industry operates within the state. On August 29, 2018, Colorado Secretary of State Wayne Williams announced in a News Release that a ballot initiative – identified as Initiative 97 – had received enough signatures to be placed on the November ballot. The initiative seeks to restrict the location of new oil and gas operations in Colorado by imposing increased buffer zones between oil and gas wells and certain types of buildings and land uses. The petition proposing this initiative was submitted to the Colorado Department of State on August 6, 2018, by Designated Representatives Anne Lee Foster and Suzanne Spiegel from the environmental group Colorado Rising. Advocates for the initiative collected a total of 172,834 signatures in support of the petition.  Now that Initiative 97 has been placed on the November ballot, it is referenced as Proposition 112.

According to state regulations currently in force, wells with a depth equal to or greater than 2,500 feet must be located no closer than 600 feet from any lease line and no closer than 1,200 feet from any other well drilled in the same area (Rule 318 a). For wells with a depth less than 2.500 feet, the required setback distances are at least 200 feet from any lease line and at least 300 feet from any other well drilled in the same area (Rule 318 b). Furthermore, current state regulations provide that a well must be located at least 200 feet from buildings, public roads, railroads, and major above-ground utility lines and at least 150 feet from surface property lines (Rule 603). Finally, the state of Colorado imposes enhanced setback requirements from certain buildings and land uses. These setback requirements provide that wells and facilities must be located at least 500 feet from residential buildings and at least 1,000 feet from high occupancy buildings, such as schools (Rule 604).

Proposition 112 proposes new setback requirements that would increase the mandated setback distances and also would expand the range of land uses and geographical features from which oil and gas operations would need to be set back. Pursuant to the requirements of Proposition 112, new oil and gas wells would need to be operated with a minimum setback distance of 2,500 feet from occupied buildings, such as homes, schools and hospitals, as well as “vulnerable” areas, including playgrounds, permanent sport fields, amphitheaters, public parks, public open space, drinking water sources, irrigation canals, reservoirs, lakes, rivers, perennial or intermittent streams, and creeks. These proposed setback requirements would not apply to oil and gas development located on federal lands.

These proposed measures have generated a strong response from industry stakeholders. As one example, the American Petroleum Institute (API) noted in a letter dated August 29, 2018, that implementing such requirements would mean that around 85% of non-public lands in Colorado would be off-limits to oil and gas development.  The API assessment was based upon a GIS-Based Impact Assessment that was prepared by the Colorado Oil & Gas Conservation Commission and released in July 2018. 

In its letter, API emphasized the negative impacts that Proposition 112 would have on employment and the local economy. It declared that “if passed, [Proposition 112] could devastate the economic livelihood of hundreds of thousands of Coloradans, both in and out of the energy industry” and added that “entire communities would involuntarily find themselves closed for business. Tax revenues would plummet, crippling essential funding for education and health care across the state.”

On the other side of the debate, Colorado Rising, an environmental group that was instrumental in getting Initiative 97 on the ballot, issued in a Press Release dated August 29, 2018, espousing the benefits of the Initiative. Anne Lee Foster of Colorado Rising expressed delight that “the democratic process has prevailed despite the oil and gas industry’s blatant attempts at stopping this important issue from reaching voters in November.” Foster also stated that “this measure is designed to protect the long-term quality of our lives, our health, and a robust economy that is dependent on the natural beauty that Colorado is so famous for.” 

According to the U.S. Energy Information Administration (EIA), the state of Colorado holds approximately 4% of the United States’ proved crude oil reserves and possesses the sixth largest reserves of natural gas in the country. The U.S. EIA analysis noted that crude oil and natural gas production in Colorado have increased significantly in recent years, in particular because of the more frequent use of directional drilling and hydraulic fracturing technologies. The analysis also highlighted the fact that there has been a recent shift in drilling activity to more prolific natural gas fields in the Denver Basin located in Northeastern parts of Colorado. Because of its status as a major oil and gas producing state, the results of this ballot proposition in Colorado could have a large impact on the oil and gas industry nationwide. 

Stay tuned for the results of the voting on November 6, 2018, to see how Coloradans will decide this issue. 


This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

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