Friday, November 22, 2013

Changes in the Works for Colorado Oil and Gas Emission Standards

A derrick-man services an oil rig.
Photo Courtesy: NIOSH
Recently, the Colorado Air Pollution Control Division (APCD) held a ruling to discuss a new regulation proposal that aims to seriously reduced air pollution caused by oil and gas activities in Colorado. The proposed rule would cut emissions by one third. The ACPD would reduce the thresholds for acceptable emission levels and set the nation's first statewide standard for methane emissions.

The new rules are a product of negotiations between the APCD, three of the state's largest oil and gas developers (Anadarko Petroleum Corporation, Encana Corporation, and Noble Energy), along with the Environmental Defense Fund.

These negotiations came about due to increased citizen concern regarding the increasing oil and gas industry. The number of active wells in Colorado has risen nearly 50% from 2006-2011; there are more than 30,000 active wells within the state (according to the federal Energy Information Adminsitration).

The increase in oil and gas development has lead to an increase of smoggy haze, especially in areas where new well sites are concentrated. Currently, nine counties, including Rocky Mountain National Park, exceed federal ozone limits. However, current federal regulations apply primarily to new wells, in addition, they do not directly limit methane leaks, nor do they require companies to inspect well locations for leaks.

Colorado's new rules would alleviate these concerns by applying to new and existing wells as well as equipment. The rules would cover traditional petroleum and gas exploration and development, as well as hydraulic fracturing (which receives most of the negative attention).

The new rules are being praised by industry representatives as well as environmentalists. The Colorado environment will benefit from the reduction of pollution and oil and gas companies will benefit from the reduced amount of waste occurring during leaks.

There are still a few sticky issues to consider. Environmentalists have expressed concern that there are no requirements for well site inspections. Another issue, is that much of the cost burden of retro-fitting and adapting operations will be felt by smaller oil and gas companies. The rules could be finalized in February of 2014 and have an estimated cost of $30 million.

Wednesday, November 20, 2013

LLM Student Attends Special Institute on Renewable Electric Energy: Law, Development and Investment

Thanks to sponsorship from the Rocky Mountain Mineral Law Foundation (RMMLF), I was able to attend the Special Institute on Renewable Electric Energy in Las Vegas on November 7-8. The Special Institute brought together energy experts, investment specialists, lawyers, law students, and other professionals to examine legal, technological, and investment issues surrounding the development of renewable electrical energy sources.

Topics that were covered ranged from siting and permitting of renewable energy projects, transmission, purchase agreements for renewable power, interconnection and transmission agreements, financing, tax equity and many more. Amongst my highlights was K.K. DuVivier, professor at University of Denver’s Sturm College of Law, who spoke about how natural resources are converted into electricity, pointing out that in 2011 renewables counted for 50% of newly installed capacity worldwide.

Professor DuVivier was followed by Robert Noun, formerly working at National Renewable Energy Laboratory and currently teaching at DU. Professor Noun took a closer look at resource impacts of renewable energy projects regarding water and land use. Lastly, the presentation of Mark Safty, practice group leader for Holland & Hart’s Energy and Infrastructure Group as well as adjunct professor at DU, made for the next day’s highlight. Professor Safty reviewed the most significant terms of a Renewable Power Purchase Agreement (PPA), pointing out that revenue generated from a PPA is the most important aspect to determine financing mechanisms for a project.

On Friday I was also kindly invited by Frances Hartogh of the RMMLF, who had organized the conference, to join her and K.K. DuVivier, Mark Safty, Robert Noun and Evelyn Lim (from Chadbourne & Parke LLP and also a speaker at the conference) for lunch. I greatly enjoyed this opportunity to talk to all of them in person and hear more about their thoughts and insights on the conference topics.

In the end, I left the conference with mixed feelings: While all experts agreed that renewable energy no doubt is – and has to be – the future of energy production, there remains a lot of uncertainty in the industry regarding the federal government’s energy policy, especially when it comes to tax benefits for renewable energy projects. Money is a key player in the development of renewable energy sources and financing of projects fluctuates alongside prices and availability of fossil fuels. For example, with the recent increase in the production of cheap natural gas (in Vegas, even the buses are powered by natural gas, see picture) raising the capital for renewable energy projects, which are oftentimes extremely expensive, has become more and more of a challenge. But projects like the Ivanpah Solar Thermal Power Project outside of Las Vegas (see picture) clearly show that, particularly in the West, projects are being developed despite financing difficulties and that the field of renewable energy is a booming industry, where cutting-edge technology is invented, built and put to work an a regular basis.

Andy Liniger, 
Master of Laws in Environmental and Natural Resources Law and Policy (LLM) Candidate,
May 2014