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“Complete giveaway to oil and gas companies:” Proposed rules would continue to saddle Coloradans with oil and gas industry costs

June 16, 2021
Jeremy Nichols, WildEarth Guardians, (303) 437-7663, jnichols@wildearthguardians.org
In This Release
Climate + Energy  
#ClimateJustice, #KeepItInTheGround
Denver—New regulations proposed this week would continue to force Coloradans to shoulder the liabilities of cleaning up oil and gas companies’ messes, leaving Colorado taxpayers and the state’s health, safety, and environment as vulnerable as ever as the industry continues its inevitable decline.

“Instead of ensuring the oil and gas industry is paying the true cost of doing business, these proposed rules continue to use taxpayer dollars to subsidize the industry’s risks and liabilities,” said Kate Merlin, Colorado Climate and Energy Program Attorney for WildEarth Guardians. “These rules are yet another handout to the oil and gas industry and only jeopardize the health and welfare of Coloradans.”

The Colorado Oil and Gas Conservation Commission this week released proposed updates to the state’s financial assurance regulations for the oil and gas industry. Financial assurance regulations are intended to ensure the oil and gas industry posts bonds to ensure money is set aside to guarantee that wells and other infrastructure will be reclaimed, even if companies abandon their operations.

Bonding is meant to assure that in the event a company has to abandon wells, taxpayers don’t have to pay for cleanup.

Under Senate Bill 181, passed in 2019 by the Colorado Legislature, oil and gas companies are required to provide financial assurances to cover the full cost of reclaiming their wells and infrastructure. However, under rules proposed by the Oil and Gas Conservation Commission, companies would be allowed to post bonds in amounts far lower than full cleanup costs.

While the Oil and Gas Conservation Commission has found the cost of cleaning up wells to average $82,500 per well, the Commission’s proposed rules would allow companies to post bonds as low as $1,333 per well.

“These rules are a complete giveaway to oil and gas companies,” said Jeremy Nichols, Climate and Energy Program Director for WildEarth Guardians. “As our world confronts the climate crisis and transitions from fossil fuels, the oil and gas industry is destined to fail, yet Colorado Governor Jared Polis’ Oil and Gas Conservation Commission somehow believes that companies will always be good for the money and always be counted on to clean up their messes. Rather than protect Colorado, Governor Polis and his administration are protecting the dying oil and gas industry.”

The proposed rules come amid revelations that the oil and gas industry’s abandoned wells are a more insidious and significant problem in Colorado than previously understood. This week, WildEarth Guardians filed complaints over the failure of multiple oil and gas companies to comply with legally required inspection and testing requirements for wells that are not producing.

The Colorado Oil and Gas Conservation Commission proposed rules will be up for a hearing in September and October 2021. In the meantime, WildEarth Guardians and other parties will be filing pre-hearing statements and testimony in advance.

“Colorado can’t afford to keep subsidizing the oil and gas industry,” said Merlin. “Unless and until Governor Jared Polis’ Oil and Gas Conservation Commission requires full-cost bonding, they’re effectively forcing Coloradans to pay for oil and gas companies to keep polluting and keep draining our economies. This has to stop.”

Oil and gas well site north of Denver.

Other Contact
Kate Merlin, WildEarth Guardians, (720) 965-0854, kmerlin@wildearthguardians.org