HomeMy WebLinkAboutMemo - Mail Packet - 7/30/2019 - Memorandum From Kelly Smith And Cassie Archuleta Re: Oil And Gas Operations - Update And Options1
Community Development &
Neighborhood Services
281 North College Ave.
P.O. Box 580
Fort Collins, CO 80522-0580
970.221.6750
970.224.6134 - fax
fcgov.com/planning
MEMORANDUM
DATE: July 24, 2019
TO: Mayor Troxell and City Councilmembers
THRU: Darin Atteberry, City Manager
Jeff Mihelich, Deputy City Manager
Jacqueline Kozak-Thiel, Chief Sustainability Officer
Dean Klingner, Interim Director Planning, Development and Transportation
Lucinda Smith, Environmental Services Director
Tom Leeson, Community Development and Neighborhood Services Director
FROM: Kelly Smith, Senior Environmental Planner
Cassie Archuleta, Air Quality Program Manager
SUBJECT: Oil and Gas Operations – Update and Options
The purpose of this memorandum is to provide an overview of potential short-term and
long-term options for Council consideration in managing the surface impacts of oil and gas
operations for new and existing wells within City limits and the Growth Management Area
(GMA).
Bottom Line:
City Council has expressed interest in conducting public outreach related to the
implications of a bill that was recently enacted by the state legislature, SB181. Staff has
identified potential short-term and long-term options for Council consideration that further
reduce or eliminate surface impacts from oil and gas operations. Staff would like direction
from Council on which option(s) to undertake.
Background:
The adoption of SB181 has granted new land use authority to local governments to
regulate the siting of new oil and gas well locations and to regulate land use and surface
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impacts, including the ability to inspect oil and gas facilities; impose fines for leaks, spills
and emissions; and impose fees to cover costs of permitting, regulation, monitoring and
inspection. Currently, there is one operator within City limits, Prospect Energy, with 10
active wells (3 of which are producing oil). The City and operator have an Operator’s
Agreement (OA) in place that provides some City oversight of the operator’s oil and gas
operations within City limits.
While few wells exist within the GMA, and no new wells are anticipated at this time:
The OA does not address requirements at existing wells with limited exceptions;
The City has no regulations for the siting of new wells and managing surface
impacts.
Since the adoption of SB181:
The Colorado Oil and Gas Conservation Commission (COGCC), which regulates
development and production at the State level, is conducting several rulemakings to
include consideration of new Local Government Provisions, with expected
completion by October 2020.
At least eight jurisdictions (Erie, Superior, Lafayette, Berthoud, Broomfield, Timnath,
Boulder County and Adams County) have adopted moratoriums on new oil and gas
development until local land-use rules for energy extraction are developed.
Larimer County has convened an Oil and Gas Task Force to assist in the
development of local draft regulations. Staff is coordinating with Larimer County to
serve on the Technical Advisory Committee (TAC) for the Task Force. Draft
standards are anticipated in November 2019.
Pending Permit Application for An Existing Well:
A recompletion permit application has been submitted by Prospect Energy for COGCC
review and approval to convert an existing “shut-in” well to an active producing well, which
would include a pump jack and other surface facilities. The current surface use includes a
small, dog-house type structure. The well is located 250 feet from existing residential
development and 350 feet from proposed residences in a platted subdivision.
Staff has corresponded with the COGCC and the operator to understand the City’s local
authority on recompletions and the operator’s proposed action. The COGCC has stated a
moratorium would not prevent the COGCC from issuing any permits. Recompletion
activities are expected to last 6 days and Best Management Practices (BMPs), such as
work during daylight hours and dust control, will be utilized.
The permit has not been released by the COGCC for public comment and formal
consideration, however the timing is potentially imminent. Per the OA, the operator is
required to meet with City staff to review the proposed activity and discuss any site-specific
concerns. Staff is working with the operator to schedule this meeting and ensure that
neighborhood notifications are sent to adjacent landowners
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Options:
Staff has prepared the following options for Council consideration to mitigate potential
impacts from existing and future oil and gas activity.
SHORT-TERM OPTIONS (<6 months)
1. Investigate Moratoriums on Oil and Gas Activity: At this time, Staff is unclear
whether a moratorium could temporarily halt oil and gas activity approved and
permitted by the COGCC. This option would engage the City Attorney’s Office
(CAO) to analyze zoning law, SB181, the OA and preemption issues to evaluate the
efficacy of a moratorium on oil and gas activity, and the types of moratoriums most
appropriate for the City. This option would allow the City to adopt a moratorium
quickly if necessary. Approximate time: 2 months.
2. Update Operator’s Agreement (OA): The OA between the City and Prospect Energy
requires BMPs for new wells and a handful of BMPs for existing wells. The OA
would be updated to broaden requirements for new and existing wells. Changes to
the OA would be negotiated and mutually agreed to by both parties. Approximate
time to complete: 6 months.
3. Land Use Code Update (zoning): This option would serve as an interim solution
until a broader regulatory framework is desired. Engage the CAO to investigate
whether new oil and gas development could be restricted to a specific Zone
District(s). If feasible, develop regulations with an appropriate development review
process. Approximate time: 1 month to investigate; 3-6 months to develop and
adopt regulations.
LONG-TERM OPTIONS (>6 months)
1. Land Use Code Update (comprehensive): Develop a comprehensive regulatory
framework on processes, programs and managing impacts that may include, but is
not limited to:
a. Monitoring, inspection and reporting programs to identify leaks, oversee
mitigation and impose fines
b. Permitting program for new wells with a fee structure
c. Development Review procedures, including public meetings, hearings and
notifications
d. Standards for water quality, drainage, air quality, land disturbance,
environmental protection, and operational methods
e. Traffic impacts and management
f. Emergency preparedness plan requirements
g. Setbacks
This option would require multi-departmental coordination, collaboration with
Larimer County for developing standards for unincorporated properties within the
GMA, extensive public involvement, and potential funding to retain outside counsel.
Approximate time to complete: 18 months-2 years.
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2. Adopt a Moratorium on Oil and Gas Activity: A moratorium on oil and gas activity
would provide Staff time to develop regulations or update the OA. This option would
be implemented when new oil and gas activity is imminent that may have adverse
impacts on the health, safety, welfare and environment. The standard moratorium
duration ranges between 6-9 months, with an option to renew. Approximate time to
adopt: 1 month.
3. Develop a Regional Regulatory Framework: Work with Larimer County to adopt a
regional regulatory framework. This option would rely on recommendations made by
the Technical Advisory Committee that are currently being developed. Draft
standards are anticipated in November 2019. Approximate time to complete: 1 year
-18 months.
Next Steps:
Work with Larimer County to explore regulatory options within the GMA;
Remain informed on COGCC rulemakings and other aspects related to SB181;
Work cooperatively with Prospect Energy on existing oil and gas operations;
Remain current on regulations being adopted by other local Colorado communities;
and
Remain current on information and trainings related to innovative technologies
related to oil and gas development and monitoring.
Respond to Council direction to further pursue preferred option/s.
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