HomeMy WebLinkAboutMemo - Mail Packet - 12/20/2022 - Memorandum From Cassie Archuleta Re: Oil And Gas – Update On Regulations, Compliance And Enforcement For Existing Operations (Agenda Item 17 – December 20, 2022 Council Meeting)
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Environmental Services
222 Laporte Ave
Fort Collins, CO 80522
970.221.6600
970.224.6177 - fax
fcgov.com
MEMORANDUM
DATE: December 13, 2022
TO: Mayor and Councilmembers
THRU: Kelly DiMartino, City Manager
Tyler Marr, Deputy City Manager
Lindsay Ex, Environmental Services Director
FROM: Cassie Archuleta, Air Quality Program Manager
SUBJECT: Oil and Gas – Update on Regulations, Compliance and Enforcement for Existing
Operations
Bottom line
Council will consider new elements of the Land Development Code (LDC) on December 20, 2022 related to
limitations for siting new oil and gas facilities, focused on zoning and setback standards that highly restrict
the potential for new oil and gas site development. Separately, staff are pursing regulatory compliance and
enforcement related actions for existing oil and gas facilities through new State regulations and County
resources. Summarized here are some recent questions, concerns and updates regarding the regulatory
compliance and enforcement aspects of oil and gas operations in and near City limits.
Background
Over the past 3 years, City staff have been navigating a rapidly evolving regulatory landscape for oil and gas
operations, in response to new local authority that was granted through the state legislature (SB-181). This
has resulted in comprehensive updates to statewide regulations and new local enforcement resources
through Larimer County.
As discussed at the October 25, 2022 Council Work Session, staff proposed and Council supported the
following actions:
1. Update LDC to limit new oil and gas development within City limits using siting requirements (zoning
and setbacks), noting that this includes establishment of a development review process; and
2. Working with the County and State to ensure implementation and enforcement of new
comprehensive regulatory requirements for oil and gas operations both in and near City limits.
Notably, per item 2, the current proposed code updates do not offer an additional layer of regulatory
standards for existing oil and gas operations. Given new State regulations, new State and County
enforcement resources, and the small scale of operations in Fort Collins, staff is working closely with the
State and County to ensure full compliance. As discussed with Councilmembers during the Work Session,
staff and Council will monitor this approach to ensure it is effective in ensuring protections for residents, e.g.,
air quality, quality of life, etc.
Recent concerns have been noted about the limited time to review the draft code related to these objectives,
and whether a new regulatory and additional compliance program should be established by the City. The
summary below specifically addresses questions related to the need for a new regulatory program .
Concern: The proposed LDC updates for O&G are not as comprehensive as Larimer County
Regulations and do not exercise full authority granted by SB-181
Accessing mineral resources within the City is already limited, current operations (3 producing wells) occur
only in an older legacy oil field, and no new oil or gas fields of interest have been identified outside of the
existing field in NE Fort Collins. As described previously, the LDC code updates to be considered on
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December 20, 2022 are specifically related to new oil and gas facilities, and will effectively limit additional oil
and gas locations, and limit redevelopment at existing sites.
Following adoption of SB-181 some local jurisdictions, including Larimer County, opted to adopt full
regulatory and compliance program s and have hired new support staff. At the same time, SB-181 also
required a complete overhaul of State regulations. Staff evaluated the new regulatory environment and
concluded that the few active wells in Fort Collins (10 total, 3 producing) could be regulated effectively
through a combination of new State regulations and County resources. As applicable to Fort Collins:
Existing regulations through the Colorado Department of Health and Envir onment (CDPHE) and the
Colorado Oil and Gas Conservation Commission (COGCC) are comprehensive and apply within City
limits.
City staff and many advocacy groups participated in COGCC rulemaking, in part to assure there
were no regulatory gaps at the State level.
Larimer County serves as designee of the State to support compliance within City limits for State
regulations, including those related to emissions, leaks, spills, odor, noise and dust from oil and gas
operations.
As inspection and enforcement resources are sometimes limited, the City recently drafted an
Intergovernmental Agreement (IGA) with the County to use an Optical Gas Imaging Camera (OGI) to
aid in timely response to leak detections and odor concerns.
Since adoption of new COGCC and CDPHE rules, City and County collaboration has successfully supported
these compliance actions from the State as related to the oil and gas operations near City limits:
On April 5, 2022, a permit to re-complete a well just outside of City limits was declined by the
COGCC following comments received by both the City and County. No other permits are currently
pending or expected in or near City limits.
On August 9, 2022, the Colorado Department of Health and Environment (CDPHE) issued a
Compliance Advisory for a facility just outside of City limits, and the County has recommended
further compliance action. This site has been subject to violations of record keeping requirements,
leak detections and gas flaring, and was the site of a fire in May 2022.
Concern: The proposed LDC updates do not address financial assurances for wells
In April 2022, the COGCC adopted new financial assurance requirements, including bond requirements to
ensure appropriate plugging and abandonment, and increased bonds for low producing wells. The Fort
Collins operator (Prospect Energy) has filed a Financial Assurances Plan (November 1, 2022) and staff are
reviewing the plan to ensure the plan adequately addresses the COGCC’s new financial assurance
requirements. Local jurisdictions have authority to review these plans prior to approval, and City staff are
currently evaluating whether proposed financial assurances are sufficient to cover potential reclamation of
wells within City limits.
Additionally, new financial assurance requirements allow local jurisdictions to request that low or non-
producing wells be ordered plugged and abandoned (reclaimed). These are important considerations for
wells within the Fort Collins field, as some of the wells have not been operational or have been low producing
for a long period of time, and in some cases more than 20 years. Staff is preparing to submit a request for
the COGCC to order that several low producing wells in and near homes plugged and abandoned.
Next Steps
In short, the new regulatory environment for oil and gas are considered comprehensive and are expected to
provide the tools and resources to effectively eliminate or mitigate impacts from oil and gas operations within
City limits. Ongoing work in oil and gas is expected to include:
December 20, 2022 consideration of LDC standards related to limiting new oil and gas development
within City limits using siting requirements (e.g., zoning and setbacks).
Implementation and use of new OGI camera by Larimer Count y to support leak detections, per a
City/County IGA. County staff are expected to be trained and available in Q1 of 2023.
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City/County review of Financial Assurances Plan for Prospect Energy, and coordination with the
COGCC to determine sufficiency for local operations (in progress).
A City/County application to the COGCC to consider plugging and abandonment of low and non -
producing wells in the Fort Collins Field (Q1 of 2023).
Staff will continue to provide updates regarding these regulatory actions and continue to evaluate if any
regulatory or enforcement gaps are anticipated or encountered that may require further consideration of
additional regulations and/or resources.
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