HomeMy WebLinkAboutMemo - Mail Packet - 6/7/2022 - Memorandum From Cassie Archuleta And Kelly Smith Re: Oil And Gas - State And Local Regulations Update
1
Environmental Services
222 Laporte Ave
Fort Collins, CO 80522
970.221.6600
970.224.6177 - fax
fcgov.com
MEMORANDUM
DATE: June 2, 2022
TO: Mayor and Councilmembers
THRU: Kelly DiMartino, Interim City Manager
Tyler Marr, Interim Deputy City Manager
Jacqueline Kozak-Thiel, Chief Sustainability Officer
Caryn Champine, Director of Planning, Development and Transportation
Paul Sizemore, Director of Community Development and Neighborhood Services
Rebecca Everette, Planning Manager
Lindsay Ex, Environmental Services Director
FROM: Cassie Archuleta, Air Quality Program Manager
Kelly Smith, Senior Environmental Planner
SUBJECT: Oil and Gas State and Local Regulations Update
Bottom Line
The purpose of this memo is to provide City Council with an update regarding new regulatory options related
to oil and gas development within City limits and the Growth Management Area (GMA). Staff is currently
drafting local regulations while exploring the new State regulations to meet the objective of reducing or
eliminating impacts from existing and new oil and gas development.
New State Requirements
The regulatory environment for oil and gas development has been rapidly evolving at the State level, raising
questions about whether existing
economically viable as they relate to the value of minerals produced. Most recently:
In April 2022, the Colorado Oil and Gas Conservation Commission (COGCC) determined that
proposed recompletions at existing oil and gas facilities within the Fort Collins GMA and in close
proximity to existing homes could not be completed without first acquiring a State land use permit.
This permit will require extensive consideration of surface impacts and is expected to limit future
development. City and County staff advocated for these considerations, and the COGCC decision
demonstrates a commitment to consider local agency input in its decision-making process.
Effective April 30, 2022, the City has new authority to request a hearing before the COGCC to
request an order to have a well plugged and abandoned that is either (1) causing adverse impacts to
public health, safety, welfare, the environment, or wildlife resources, or (2) is no longer used or
useful (uneconomic). City staff testified in support of these new rules at COGCC rulemaking hearings
in February 2022. City and County staff plan to work collaboratively to explore these options with
Prospect Energy and the COGCC.
Also effective April 30, 2022, new COGCC financial assurance requirements for existing wells
authorize the City to collaborate with Prospect Energy in developing a Financial Assurances Plan,
due to the COGCC by October 1, 2022. This plan will require Prospect Energy to either plug and
abandon wells, or post financial assurance for each well ($70-100K per well, over 10 years). This
would include 10 wells within City limits, and many more in other parts of the oil field.
2
Proposed City Regulations
Per local regulatory authority granted through SB-181, Council directed City staff to develop comprehensive
local regulations for oil and gas development. In October 2021, Council expressed support for land use
standards and setbacks requirements that go above State regulations and would effectively limit the potential
for new development. Specifically, Council supported:
Restricting oil and gas operations to the Industrial Zoned District
Requiring a 2000-foot setback from Natural Areas, Parks, and all buildings designed for human
occupancy; this also includes a reciprocal setback
Local regulations would also limit changes that could occur at existing oil and gas facilities, particularly for
those that do not conform to the established location requirements (industrial zoning and setbacks). If an
operator proposes a change, the facility must first be brought into conformance with the location
requirements.
The City oil and gas regulations, in combination with State requirements, may effectively reduce or
eliminate local oil and gas operations within the City and GMA. This could limit the need for the City to
develop and implement resource intensive operational standards, instead leveraging new State requirements
for ongoing operations.
Next steps
Based on Council interest in reducing or eliminating impacts from oil and gas operations within City limits,
staff recommends continuing to explore the application of new State rules to require or encourage wells
within the City limits or near city residents to be plugged and abandoned. Staff also recommends continuing
to pursue local land use regulations that will limit future oil and gas development. Proposed next steps
include:
City staff will collaborate with County staff to analyze existing wells within the GMA to determine
which are no longer used or useful and which pose the greatest threat to public health and safety
and welfare.
Staff will use this analysis to refer local wells to the COGCC to consider requiring plugging and
abandonment.
operator to explore current needs and future plans. Consultation will be done cooperatively with
Larimer County and will be explored during 3rd quarter of 2022.
Staff will update Council regarding results of operator consultation, COGCC hearings regarding
potential orders to plug and abandon existing wells, and projected potential to mitigate or eliminate
surface impacts through new COGCC requirements. These updates will be provided following
consultations conducted in 3rd quarter.
While preliminary draft oil and gas regulations have been developed, staff are continuing to refine
recommendations based on implications of new State and County regulations and spatially analyze
the impacts as they apply in Fort Collins and the GMA. The next Council Work Session to discuss
updates to these regulations is scheduled for October 25, 2022, and proposed regulations will be
informed by results of these consultations with the operator and the COGCC.