Colorado’s Oil and Gas Landscape May Seem Complicated, but the Reality Isn’t

We’re over three months into the Trump administration’s second 4-year term, and the Colorado legislature has roughly a month left in their 2025 legislative session.The Trump administration’s bloodlust for dinosaur juice is no secret, but neither is the fact that Colorado’s oil and gas regulations comprise the most “robust” program in the nation and worldwide per Stefanie Shoup, director of the Office of Innovation and Planning at Colorado’s Air Pollution Control Division.

Colorado is the seventh highest oil and gas producing state in the country just behind Texas. On a local level, Broomfield is the eighth highest county in the state for production, and Weld County is No. 1 in the state and fifth nationally. To outsiders, Colorado is full of mountain views, red rocks, and nary a fracking pad in sight. The inclusion of three oil rigs on a ceramic Starbucks mug for our state led to local outrage that didn’t take into account the reality of Colorado’s oil production.

According to one angry X user:“@Starbucks, CO is a beautiful state represented by mountains, blue skies, and skiing. Oil and Gas harms our kids and environment. #OilAndGasIsNotColorado”

On a state level, Colorado officeholders hail most often from the Democratic Party. We even have cute names like “ trifecta” and “triplex” to capture when the Democratic Party controls the offices of governor, secretary of state, attorney general, and both chambers of the state legislature. I’d argue Governor Polis eschews all labels except for “billionaire.”

Something Polis did that was “innovative” to his fans but equivocal in my opinion, was brokering a truce between oil and gas and environmental groups in mid 2024. Democrats agreed to squash three bills meant to reduce ozone and rein in the oil and gas industry’s air pollution. In turn, oil and gas producers tabled their ballot initiatives banning restrictions on gas appliances in new buildings and adding Republicans and Independents to the state air pollution commission.

The trade off codified the Colorado Energy & Carbon Management Commission’s (formerly known as Colorado Oil and Gas Conservation Committee until 2023) rules to reduce nitrous oxide nitrogen from oil and gas operations in certain areas by 50% by 2030 relative to 2017 levels and mandated an orphan and marginal well mitigation fee of $115 per well in SB 24-229. Even though SB 24-229 became effective May 16, 2024, the logistical details for the marginal well fee are about as clear as our air quality. “Our staff will develop that criteria this spring for the April (2025) launch,” said Kristin Kemp, public information officer and community relations manager for the ECMC.

Any blowback against oil and gas is more likely to come from inside a courtroom. In a stunning rebuke, a state court judge earlier this year ruled against a Denver oil and gas company’s attempt to toss out a regulator’s’ 2023 order fining the company,  (K.P. Kauffman Co.,) almost $2 million and could revoke the company’s license to operate in Colorado. But until K.P. Kauffman ceases operations in Colorado, it’s premature to call this a regulatory win.

In a business as usual 4-to-1 vote, the ECMC just approved Civitas Resources’ plan to drill 26 wells, extending five miles underneath Erie from a 19-acre location in Weld County just outside city limits. The so-called Draco site is next to the Southern Land Company’s planned 1,400-home subdivision. Prior to approval, the ECMC had asked Civitas to find another site, but when Civitas said it looked at two other sites and determined them “infeasible,” the ECMC approved the original site they wanted.

Ok so there’s bills, commissions, and judicial rulings, but what about our champions in the state capitol? Under the 24k gold dome at Colfax and Broadway, Democrats have a 22-to-12 advantage in the Colorado State Senate and a 43-to-22 advantage in the State House. But besides a bipartisan push for nuclear power to be deemed a clean energy source in HB25-1040, the so-called push to regulate oil and gas looks more like a shoulder shrug.

In areas like Erie, neither Republican State Rep. Dan Woog, House District 19, or Democratic State Senator Katie Wallace, Senate District 17, sponsored any bills related to oil and gas. In Broomfield, State Senator Faith Winter was one of four Democratic sponsors to adopt rules regarding the implementation of advanced leak detection of gas pipelines with HB 25-1280, but as of now, it’s still making its way through committees.

Newly confirmed Interior Secretary Doug Burgum said he views those who want to develop resources on federal lands as “customers” who are contributing to the national “balance sheet.” Note that Burgum was confirmed 80-to-17 with Colorado’s two Democratic Senators voting yes. It’s true that federally owned land is predominantly located west of the Continental Divide and greenlighting more oil and gas operations depends on state and local factors, but those who share the Trump administration’s desires to plunder and pillage, or just acquiesce, make up these groups.

What does this complicated but overall favorable landscape mean for the health of our state’s oil and gas sector? What about Coloradans’ health?

Let’s look at how many oil and gas wells currently exist, whether more permits are being approved in our state with a particular focus on Weld and Broomfield counties where Yellow Scene Magazine (YS) is created, sourced, and distributed.

There are 123,491 wells that have been drilled in the state since data recording began in 1998. Currently, there are three pending wells for Adams County and 28 for Weld County.

Looking at the trend of oil and gas wells completed in Colorado on a year-to-year basis, there has been a significant decline since a peak in 2008 of 3,898 to to 40 2017, which was the last year with completed wells. But what about spills, active and resolved, from operations approved years before?

Adams, Broomfield, Boulder, and Weld counties had 1,459 spills for those four counties in 2024. Remember, these are just spills when there are operators present. What about orphan wells where operators cannot or will not clean up?

The risks to health and environment are numerous and even more of an issue without someone to foot the bill. Orphan wells can leak oil, gas, and other pollutants into groundwater, potentially contaminating drinking water sources. Leaking wells can release methane, a potent greenhouse gas, and other harmful substances like hydrogen sulfide, benzene, and arsenic into the air, contributing to air pollution and climate change.Leaks can contaminate the soil with oil, gas, and other chemicals, harming plant life and potentially impacting nearby ecosystems. Pollution from orphan wells can harm wildlife by contaminating their habitats and food sources.

Exposure to methane and other pollutants from leaking wells can cause respiratory problems, including asthma attacks. Exposure to benzene and other carcinogens can increase the risk of cancers, notably leukemia, blood, liver, and kidney. Long-term exposure to pollutants, like hydrogen sulfide, from leaking wells can irritate the eyes, nose, and throat; cause breathing problems, headaches, dizziness, and nausea; and are especially problematic for those who already have respiratory issues like asthma, COPD, etc. If you can smell rotten eggs, it’s already a problem, and good luck getting the emitter to stop.

Methane, an odorless gas, can seep into homes, offices, schools, and other nearby buildings without a trace, causing serious health problems and symptoms like nausea, weakness, vomiting, and convulsions. In high concentrations, methane exposure can cause coma and even death. It is also highly explosive.

But didn’t we do something about orphaned wells?

Yes, in 2022, the Colorado Legislature passed SB22-198 to address orphaned wells in Colorado by creating a fee-based system where oil and gas operators pay per well, and monies from the fund go to pay the nearly $100,000 to clean up and seal each orphan well. The latest estimate is that 1,725 abandoned wells exist in Colorado.

On Aug. 1, 2022, the first mitigation fee payment was due, and on April 30,2023 forward, operators were required to pay the annual fee. The initial fees were $225 per well for operators with an average daily per-well production greater than 15 barrels of oil equivalent or 22 one thousand cubic feet of natural gas equivalent for the previous calendar year; and $125 for operators with an average daily per well production less than or equal to 15 BOE or 22 MCFE for the previous calendar year. Effective April 2025, oil and gas operators will pay a flat fee of $115 per well to fund the plugging of marginal wells in Colorado.

When contacted by this reporter about how someone can get data about the payments from producers, ECMC employees Megan Adamczyk, community relations liaison, and Kristin Kemp, community relations manager, replied:.“Payments for both the orphan well mitigation fee and marginal well mitigation fee are due by April 30th of each year. In FY 2024, the amount of mitigation fees collected equals $8,789,326. There is currently no data to provide for the marginal well fee since this is the first year of this fee.”

But who is paying? Who isn’t? If this went into effect in August 2022, we should have had three payment dates by this point.

“An operator will pay the orphan well mitigation fee for every well it operates as of December 31 of the previous calendar year,” Adamczyk and Kemp explained further. “After a well is spud, the operator will pay an annual mitigation fee for the well until it is properly plugged and abandoned. Mitigation fee amounts are dependent on the amount of production activity for each well. The operators who pay the orphan well mitigation fee will also pay the marginal well fee. There is no breakdown for the marginal well fee because the fee payments are not yet paid since the due date is April 30, 2025.”

And are there consequences for companies who are late paying or who aren’t paying?

“If an operator is late with a payment,” Adamczyk and Kemp said, “we contact the operator and notify them the payment is past due. The operator will typically pay the fees which rectifies the situation. If a payment is not received, the staff can notify ECMC’s Enforcement Unit, and they may issue a warning letter to the operator regarding missing fee payments. This would be a rule 205.c violation.”

Are oil and gas companies leaving Colorado with all of these rules, agencies, and regulations?

It appears yes, a few are, but not the big players. Ryan Hill, an analyst at Enverus Intelligence Research said there is concern that lawmakers and regulators will continue to add new environmental rules. But the companies operating in Colorado, he called them the “Big Three:” Chevron, Civitas Resources, and Occidental Petroleum, can largely manage the challenge.

Getting an industry perspective is difficult outside of company spokespersons and dedicated marketing and public relations staff. This is by design as a former oil and gas employee, Karen Tonso, relayed, “It’s almost a closed society. You cannot talk to anyone or be interviewed about your work. We all signed upon exit NDAs.” But those in adjacent and complementary roles were more willing to talk about what is happening in the industry the last few years.

Industry insiders weigh in

Jack Rosenthal, geologist and founder of Scale Geo, a company formed to provide geological and strategic consulting services to oil and gas producers, replied when  asked about the effects of oil and gas regulation and if oil and gas companies are doing more, less, or the same business in the state due to the regulations.

His answer? “There are four key elements that have steered changes in oil and gas development over the past five years: commodity prices, regulation, cost, and a shift towards less growth and more cash flow or dividends, which has been market driven. Oil and gas companies have certainly shied away from development activity in Colorado due to the regulatory environment.”

Rosenthal continued, explaining exactly how the rulemaking works. “Western Colorado is dominated by federally owned mineral rights,” he said, “which are governed by the Bureau of Land Management. There, federal rulemaking associated with leasing and permitting is impactful. As I recall, many of the emission monitoring rules and permitting rules were put in place prior to the pandemic.

“Those changes have made it harder (more costly) for small companies to operate and have influenced the rash of company consolidation in northeastern Colorado more recently. It is also easy for the new administration to say they’ll roll back lots of regulations, but since the local state regs are in place, I don’t think that will change anything.”

But so much of the oil and gas industry’s activities are dictated by the cost of materials, Rosenthal explained. “When prices are high, companies are eager to drill, and they generally slow down activity during periods of lower pricing. Oil prices have a major impact on activity in northeast Colorado, while western Colorado is controlled by natural gas pricing.” With the cost of materials, especially steel, rising significantly since 2020, companies have been particularly interested in drilling new wells.

“Last but certainly not the least is a broad industry shift towards less growth over the past five years or so,” Rosenthal explained. “Before the pandemic, companies poured money into new drilling to increase their daily production rates, and valuations increased as daily production (and associated reserves) increased.”

The larger picture is a complicated one indeed. If we focus too intently on what regulations, commissions, legislators, and industry are doing, we’re going to become overwhelmed and confused. It’s by design. If you think having more Democrats in state office means they’re fighting against the industry, news of oil and gas donations to Democratic House Speaker Julie McCluskie and the Colorado Democratic Party should give you pause.

All the commissions and regulations are meaningless if industry doesn’t change their behavior, and why should they when the potential of fines and recordkeeping seems to be the most severe repercussions they face? The rare wins, where oil and gas producers pick up their ball and go home — but they keep looking to play elsewhere — have happened when community members organize, run for office and commissions, and make “doing business” more of a headache than profitable.

If the decision makers are local and would be affected by oil and gas development, there’s a better chance they would be more likely to listen to their constituents who they’ll have to see on a regular basis. After all, many oil and gas executives call Boulder, Cherry Creek, or Greenwood Village home and even though the Denver-Julesburg Basin extends to these high-income zip codes, oil and gas operations never will. In the least crass way to put it without losing the point, you don’t go to the bathroom if you also have to eat there.

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