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Nick Cunningham

Nick Cunningham

Nick Cunningham is an independent journalist, covering oil and gas, energy and environmental policy, and international politics. He is based in Portland, Oregon. 

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Oil & Gas Industry Braces For Regulatory Crackdown

Colorado oil and gas drillers are set to see increased regulatory scrutiny after a highly-anticipated study found that drilling sites pose health risks to people who live in close proximity.

The study used emissions data near oil and gas operations and found that estimated exposure to several dozen volatile organic compounds (VOCs) was below health guidelines.

However, it found that some chemicals – such as benzene, toluene and ethyltoluenes – may cause short-term health risks for people living between 300 and 2,000 feet of an oil and gas well. These include headaches, dizziness, as well as respiratory, skin, and eye irritation. Notably, the study found that the worst exposure came during development, specifically during the flowback period, when water and chemicals return to the surface after hydraulic fracturing. There is less risk when the wells are online and producing.

Benzene is known to cause cancer, although the study in question did not draw links to long-term effects.

“This study is the first of its kind because it used actual emissions data to model potential exposure and health risks,” John Putnam, Environmental Programs Director at the Colorado Department of Public Health & Environment said in a statement. “It is an important addition to the increasing body of knowledge about the potential health risks associated with oil and gas operations.”

The study was conducted by ICF International, and a peer-reviewed summary was published in the Journal of the Air & Waste Management Association.

State regulation should not wait while researchers continue to study the issue, the Department of Public Health & Environment said. “[W]hile we pursue further research, we won’t delay enacting stricter emissions standards for chemicals that cause human health effects, ozone pollution, and climate change. This study just reinforces what we already know: we need to minimize emissions from oil and gas sources,” Putnam added.

The study is years in the making and made a big splash when it was released on October 17. The state’s energy regulator, the Colorado Oil & Gas Conservation Commission announced that it “will immediately enact stricter and safer precautionary review measures to protect public health, safety, welfare, the environment and wildlife.” Related: The Oil Rig Count Collapse Continues

The Commission said that it will apply extra scrutiny to all well permits that are situated within 2,000 feet of a home or business. Current setback laws require distances of 500 feet from a home and 1,000 feet from a high-occupancy building. As it stands, application for wells within 1,500 feet receive a closer look; the regulator will extend that out to 2,000 feet based on the new evidence of health impacts.

The Colorado Oil & Gas Conservation Commission also said that the study will inform the agency’s rulemaking process for oil and gas drilling operations, which is expected to be completed by July 2020. 

Industry groups noted the limits of the study. “Using modeled exposures instead of measured air quality data introduces uncertainties and limitations that may result in erroneous estimates of risk for a population,” Colorado Petroleum Council Executive Director Lynn Granger said in a statement.

Colorado state toxicologist Kristy Richardson said in a press conference that the study’s results back up the hundreds of complaints that her office has received from residents. She said that about 60 percent of the 750 complaints that she has received since 2015 included the short-term health effects identified in the study, including dizziness, headaches and trouble breathing.

Some environmental and activists groups say the state still isn’t doing enough. “Dozens of children living in close proximity to oil and gas have already documented off-the-charts levels of benzene in their blood,” Anne Lee Foster, a spokeswoman for grassroots organization Colorado Rising, said in a statement. The group also pointed out that the study only looked at the health impact of individual wells, not the cumulative impact. In some cases, Colorado residents are living close to multiple or even dozens of wells.

The study is the latest chapter in a multi-year saga over oil and gas drilling, which has surged in the state in recent years. New housing has sprung up along the Front Range as the population has rapidly expanded, so conflict between the public and the industry has grown too. 

Last year, a public referendum to require setback distances of 2,500 feet (up from 500 feet for homes and 1,000 feet for buildings) was defeated. Oil and gas groups spent heavily in opposition to the measure.

However, after the November 2018 election, Democrats beefed up their ranks in the state legislature. Earlier this year, they passed SB181, which devolved setback zoning authority from the state to local communities. It also reworked the state energy regulator’s mission to focus on public health and the environment rather than industry development. The regulator is in the midst of writing new rules.

Related: Russia Ready To Seize Control Of The World's Largest Oil Reserves

The impact of the enhanced scrutiny in the wake of the health study is unclear, but it appears that it will only affect permits for new wells, not existing wells. “For those wells that are already in the production phase, this study is not implicating any health impacts,” Jeff Robbins, Director of the Colorado Oil & Gas Conversation Commission, said. “And that’s the vast majority of existing wells.”

For now, there are 39 pending permits that the state energy regulator said will be affected by the tightened up scrutiny (i.e., they are applying to drill within 2,000 feet of a home or business).

The backdrop to all of this is an oil and gas sector that has hit some speedbumps due to low oil prices. Drilling activity in the 10th District of the Federal Reserve (The Kansas City Fed), which includes Colorado as well as several adjacent states, declined steeply in the third quarter compared to a year earlier. Roughly 60 percent of the anonymous oil and gas respondents to the quarterly survey said that their main constraint on growth was low prices.

As is the case in other shale basins, some Colorado drillers are facing hard times. One notable Colorado driller saw its stock price tank in recent days. Shares for Extraction Oil & Gas fell roughly 20 percent in the past week after it was hit by a double downgrade by Imperial Capital, which said that the company “might not be equipped to weather additional commodity prices downdraft or operational upsets, planned or unplanned.”

By Nick Cunningham of Oilprice.com

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