Taxes, economy _ and drilling permits spark Colorado governor’s race

Energy issues flare in Colo. governor’s race

DENVER — Taxes, jobs, budget shortfalls — the usual fodder for political wrangling is already spurring debate in the Colorado governor’s race. But the time it takes to approve oil and gas permits?

That bit of bureaucracy has become a flashpoint as Democratic Gov. Bill Ritter defends his record against two Republican challengers.

The GOP candidates are echoing the industry’s complaints about new oil and gas rules Ritter promoted during his first term. They say tougher regulations and lengthy wait times for permits are costing the state jobs and tax revenue when Colorado needs all the economic stimulus it can get.

Former U.S. Rep. Scott McInnis, considered the GOP frontrunner, will conduct a “stem-to-stern” review of what he believes are the most punitive regulations in the country if elected next November, spokesman Sean Duffy said last week.

Evergreen businessman Dan Maes said Wednesday that he believes the regulations send the wrong message to the industry.

“We’re in a battle for these companies,” Maes said. “They’re going to go somewhere else.”

Plummeting natural gas prices — not the new regulations — explain the halt to Colorado’s natural gas boom over the past year, said Michael Freeman, an attorney who represented environmental groups in negotiations on the rules.

“Companies in Colorado are actually making major long-term investments in Colorado,” Freeman said. “When the price of gas comes up, you’ll see drilling come up.”

State regulators say the permit processing time has dropped from more than 80 days earlier this year to an average of 45 days. A backlog surged as companies submitted applications to beat the new rules, which took effect April 1.

While debate continues over the rules’ effect, longtime Colorado political consultant Floyd Ciruli said there’s little doubt about the effect on the governor’s race. He said he expects McInnis to make the regulations a signature issue of his campaign.

“It’s been a major controversy in the governor’s first term,” Ciruli said.

It cost Ritter dearly in last year’s effort to eliminate a tax deduction for the industry, he added.

Opponents, including oil and gas companies, raised millions of dollars to help defeat the ballot measure that Ritter backed.

Complaints about how long it takes to process drilling permits might sound “narrow and picayune,” Ciruli said.

“But it fits nicely in the Republican argument that in the rush for green energy, (Ritter) has disparaged this huge conventional energy industry with the jobs and the economy dependent on them,” Ciruli said.

Timely approval of drilling permits is the No. 1 concern of members of the Colorado Oil and Gas Association, a trade group, spokesman Nate Strauch said.

“Any chief executive who wants Colorado’s gas industry to maintain its $23 billion presence in this state, whether it be the current administration or Scott McInnis, needs to make reducing permitting times a top priority,” Strauch said.

Two of Colorado’s major producers, Encana Oil and Gas USA and Williams Co., say they are waiting at least 80 days for permits.

Ritter campaigned in 2006 on fostering a “new energy economy” by expanding Colorado’s renewable energy industry. He included natural gas as part of the mix, but was criticized by some oil and gas officials who felt he was ignoring their industry.

Over the past several months, Ritter has more aggressively played up the virtues of natural gas. He called it “a mission-critical” fuel when he spoke at an industry conference in July and has urged federal approval of more pipelines.

The governor has directed the directors of the natural resources department and oil and gas commission to cut permit processing times, Evan Dreyer, Ritter’s spokesman said.

Dreyer noted the Colorado Oil and Gas Conservation Commission this week extended the term of drilling permits from one to two years. Before, a company would have to reapply for a permit if it didn’t drill a well within a year.

“The governor is leading Colorado toward a more balanced approach to energy development than we’ve ever had,” Dreyer said, “meaning responsible drilling and strong protections for people, water, wildlife and air quality.”

The regulations implemented 2007 laws that gave more consideration to the environment, wildlife and public health and safety when approving energy development. More information is required on the permits and in some cases, consultation is required with state health and wildlife officials.

Even so, the process is getting faster, said Dave Neslin, head of the Colorado Oil and Gas Conservation Commission.

The commission, which regulates the oil and gas industry, has been paring a backlog of permits. Neslin said his office received nearly 1,500 applications in March, the month before the new rules took effect.

That was almost double the previous monthly record number of permits — 784.

Neslin said temporary staffers have been hired and managers meet regularly to come up with ways to speed up the process. He said the approval time for a permit is averaging 45 days and the goal is to reduce it to 30 to 40 days.

The wait time logged by the state doesn’t include the 10 days allowed to make sure the permit form is complete or the 10 days set aside for a hearing if someone objects to the permit.

Companies start counting the days when they submit the application. The Colorado Oil and Gas Association said its research shows Colorado’s processing time is 10 times longer than the industry average.

Neslin said while the goal is to streamline the process, some plans require more review. He pointed to a project north of Denver that is near two schools, a neighborhood and a public road.

“I just don’t think we can shortcut public safety,” he said, “and those applications were very carefully reviewed.”