March 13, 2009 01:10 AM UTC

House OKs New Drilling Rules

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• by: ClubTwitty

( – promoted by Colorado Pols)

The Colorado House has given its approval to the update of oil and gas drilling regulations.  

The rules also include new wildlife habitat protections, pit lining requirements, odor controls, chemical reporting regulations and numerous other provisions. They are scheduled to take effect this spring, pending legislative approval. The regulations are subject to a third reading in the House before being considered by the Senate.

The House vote this afternoon came after it rejected several amendments by Republican lawmakers, including one that would have postponed implementation of the rules until July 1, 2010.

The last-minute amendments were no surprise. Colorado Republicans have made cause to parrot every claim by industry lobbyists, and raised all manner of fear-based and hyperbolic arguments against the rules.  

During and after their latest defeat in the House, Republicans continued to carry the [produced] water for the oil and gas companies.  

Approval of the rules came over the strenuous objections of House Republicans, who railed for more than four hours against the rules, saying they will kill jobs, trample private property rights and maim one of Colorado’s biggest industries during a down economy.

Rep. Kevin Priola, R-Brighton, called the rules the “Utah, New Mexico and Wyoming Employment Act,” referring to neighboring energy-producing states. Other Republicans said the rules put “prairie dogs ahead of people.”

“No matter how we vote on this we are not going to kill Colorado’s economy, but we could cripple it,” said Rep. Steve King, a Republican from Grand Junction who said he has friends who have lost jobs in recent months because of a slow down of drilling activity on the Western Slope.

Rep. Steve King, recently in the news for his controversial demand that Gov. Ritter fire DNR Director Harris Sherman and acting COGCC head David Neslin, directly blamed the rules for recent layoffs in Grand Junction, according to the Sentinel:  

“I had friends last week, good friends that lost their jobs, good jobs, long-lasting until last week. And it was not because of commodity prices, it was not because of world markets. It was because of fear of the unknown. It was because of these rules,” he said.

But a quick review of articles from last week indicate the exact opposite of what King claims.

In a Sentinel article on the recent Halliburton layoffs:

All Halliburton offered was the following from District Manager Larry Kent in a midafternoon news release: “It simply is not business as usual in the current economic environment and we continue to work hard to minimize personnel reductions; however, we can confirm, unfortunately, that there were some Halliburton personnel reductions in Grand Junction today.

…And the energy sector’s cookie is crumbling. According to the transcript of a Jan. 26 Halliburton media conference call, available at www.SeekingAlpha.com, regarding the company’s 2008 fourth-quarter results and the forecast for 2009, the global company is scaling back operations, particularly in North America.

“So far in 2009, rig counts have fallen sharply and are now roughly 25 percent below 2008 highs. We expect activity declines in North America to accelerate further in the first quarter,” said Dave Lesar, Halliburton’s chief executive.

Company officials compared the slowdown to one that occurred in 2001.

“In North America, we believe the speed of the rig count drop correlates well with the depth and length of past downturns,” said Tim Probert, executive vice president of strategy and corporate development. “So far we have seen a 25 percent, or over 500-rig drop, from the (third quarter of) 2008’s peak. … It would suggest to us we would be kind of looking at a three-quarter cycle. We are obviously already in the second quarter of that right now.”

Other than some PR materials and news releases attacking these regulations, the oil and gas industry has been pretty clear that the economy is driving the rapid cutback in drilling, taking place in gasfields across the nation.  Markets are glutted and the price for these commodities have crashed.  

As one article puts it, about one Colorado-based company, Delta Petroleum shares plunge after Q4 loss:

March 3 (Reuters) – Shares of Delta Petroleum Corp (DPTR.O) tumbled to an all-time low on Tuesday, a day after the oil and gas exploration company posted a huge fourth-quarter loss partly due to an impairment charge of $327.1 million related to the decline in commodity prices.

Another Sentinel article reported on the resulting layoffs by Delta Petroleum:

Delta Petroleum Corp., which has significant Piceance Basin holdings, laid off several employees this week.

The cutbacks were a sharp reversal from the ambitious plans the company had less than a year ago for the Piceance Basin.

During the first three quarters of 2008, Delta embarked on “a concerted effort to prepare for accelerated drilling activity” that could accommodate an eight-rig drilling program, Delta said in a corporate filing. The plans included drilling 200 new wells per year in the Vega Reservoir area near Collbran beginning this year.

“As of mid-February, (Delta) does not have any drilling rigs active in the field,” the company said.

Delta Petroleum reported a loss of $452 million for 2008.

All Rep. King would need to do is read his hometown paper to understand that current layoffs and related ills are, in fact, “because of commodity prices.”  Rep. King is, of course, entitled to his opinion, even if completely wrong. But if–on the other hand–King was purposefully invoking emotions and insecurities tied to job loss and the current economy just to make a political point, that’s just shameless.