Host Daniel Raimi talks with Matt Lepore of Adamantine Energy about oil and gas development in Colorado. They'll discuss the controversies surrounding development, how the state has responded, and whether it's done a good enough job. They'll also talk about the results of the statewide election, in which Colorado voters rejected a proposal that would have dramatically restricted new oil and gas development.
Daniel Raimi: Hello and welcome to Resources Radio, a weekly podcast from Resources for the Future. I'm your host, Daniel Raimi. This week, we talk with Matt Lepore, strategic advisor and legal counsel at Adamantine Energy and the former director of the Colorado Oil and Gas Conservation Commission.
As oil and gas development has grown rapidly in Colorado, so has the controversy surrounding it, and nobody knows those controversies better than Matt. We'll talk about why they arose, how the state responded, and whether it's done a good enough job. We'll also talk about the results of the statewide election, in which Colorado voters rejected a proposal that would have dramatically restricted new oil and gas development. Stay with us.
Daniel Raimi: Matt Lepore from Adamantine Energy—Matt, thank you so much for joining us today on Resources Radio.
Matt Lepore: My pleasure. Thank you for having me.
Daniel Raimi: Matt, you and I have crossed paths many times and the first time we crossed paths, I think, was maybe three or four years ago in Buenos Aires, Argentina. And I've been lucky enough to stay in touch with you since then, working on oil and gas issues. So I've gotten to know you pretty well over that time and count myself lucky for it.
Can you just tell our listeners, briefly, a little bit about your background and how you became interested in energy and environmental issues?
Matt Lepore: Sure. Yes, Argentina—Buenos Aires, was the first time I think we met. I was there in my capacity as the director of the Colorado Oil and Gas Conservation Commission. And I came to that position because I have a law degree, and for many years I practiced environmental law at a large Denver law firm. That morphed into a position with the Colorado attorney general's office in about 2009. I was recruited there specifically to represent the Oil and Gas Conservation Commission. And I guess, in a way, kind of fell in love with the commission and with the public service aspect of that, and with oil and gas in Colorado. So, I continued to do that for a couple of years, went briefly back to private practice. When the director position (the director of the agency) came open, I applied and here we are.
Daniel Raimi: Great. There's so much interesting history with Colorado oil and gas development. I wish we could spend more time on it, but we're going to focus, I think, on some of those issues that came up in the front range over the last 10 years or so. And with all this oil and gas development happening north of Denver (that's really where, tell me if I'm wrong)—I think we've seen, sort of, the largest controversies and the largest debates emerge over oil and gas development in Colorado.
So, can you talk a little bit about what some of the factors are that have been driving those debates and policy discussions?
Matt Lepore: Yeah, sure. And you're right, controversies have been most pronounced on the front range here as that horizontal development of the Niobrara Shale emerged. I think a key factor, certainly, is that there was tremendous population growth happening in that very same area, at the very same time that there was this oil and gas surge happening. So, Colorado, over the last 5 or 10 years, has been one of the fastest growing states. And a great deal of that growth is concentrated in this area (again, just kind of north of Denver), in communities like Erie and Broomfield, and on up into Weld County—exactly the same places where the oil and gas development was happening.
So there was kind of that conflict, if you will. I think another contributing factor is that horizontal development. There's sort of a mixed blessing. You can put a lot of wells on a single pad, and from that single pad reach a great deal of acreage using the horizontal wells, which means there are fewer surface locations, less surface disturbance. But it also means, if you happen to be proximate to that large pad, it's more disruptive. So you sort of have this concentration of the impacts and I think that was a factor.
Daniel Raimi: Yeah. And so, for those listeners who aren't particularly familiar with oil and gas development (so called conventional development), we would see a vertical well drilled straight down into the earth and a single well pad would be at the surface where that well would operate. But increasingly, as companies have sought to gain efficiencies with their operations and also to disturb less surface area in many parts of the country (including the front range of Colorado), we see 10, 20, or more wells on a single pad—where companies can drill down from a single surface location, and then out to reach the rocks that they are trying to reach deep underground.
Matt Lepore: Yeah, that's exactly right. Again, you have fewer individual oil and gas locations and a smaller number of these more concentrated locations.
Daniel Raimi: Right. And when those concentrated locations appear close to population centers, then that's really where we've seen a lot of these conflicts emerge along the front range.
What are some of the measures that you and the Colorado Oil and Gas Conservation Commission [COGCC] (when you were the director)—what are some of the measures that the COGCC took, along with the Department of Public Health and Environment and the governor's office, to try to address some of these concerns?
And there are a bunch of things we could talk about. I know we won't be able to get to all of them, but can you highlight a couple for us?
Matt Lepore: Yeah, sure. Absolutely, the emergence of the horizontal development (hydraulic fracturing) kind of set off a rash of rulemaking, I suppose, at the commission level to respond to some of the changes and to the fact that the development of Colorado was happening in close proximity to a lot of people.
One of the earlier changes that Colorado made was a requirement that operators disclose what was being used in the hydraulic fracturing fluid. That was a great concern to people. They wanted to know what was being injected underground near them. That rulemaking happened in 2011, and kind of raised the bar. I think we were the third state to require that information. But our requirements went farther than other requirements had gone.
In 2012, we became the first state to require operators to take groundwater samples before drilling began so that we had a baseline, data information, about the quality of the groundwater. And then operators were also required to sample after they had completed drilling so we could try to see if there had been any impacts. In the same year, we changed what are called the “setback” requirements, which govern how far away a new oil and gas location must be from things like houses or schools and other features.
At the same time, we greatly increased the notification requirements—that is, operators informing local governments and nearby residents that, “hey, you know, we plan to have oil and gas happening near you”—and giving them an opportunity to have input into that process.
In 2014, the Department of Public Health and Environment (which has jurisdiction over air emissions from oil and gas) adopted a rule requiring operators to monitor methane emission and identify leaking methane emissions and repair those leaks. So really, a first-in-the nation methane emissions rule.
Daniel Raimi: And those methane emissions are largely[...] the concern over those emissions are sort of two fold. One of them is the climate change impact of methane, and the other is the risks of ozone formation associated with methane emissions. So there's kind of a local and a global environmental concern there.
Matt Lepore: Yes, absolutely right. And I think another thing driving some of the controversy over the years has been climate change and the impact, of course, of burning fossil fuels—and this conversation around natural gas being a cleaner fuel than coal (which is true, sort of, depending on management of those methane emissions and releases during the production phases). So, it was an effort to capture those emissions and therefore have the climate change benefit.
Daniel Raimi: Yeah. So, Matt, during all these rulemakings that you helped lead and other efforts on behalf of these other departments within the government, you were really in the hot seat for a lot of these—you were at a lot of public meetings where there's a lot of strong opinions being expressed and a lot of debate happening in a very vigorous manner. With all of these rulemakings, the controversies around oil and gas development on the front range—some of them have sort of shifted or died away. And some of them have increased, it seems, over the last several years with growing concerns about health impacts and proximity to oil and gas development [...] maybe less concern about water contamination and things that were really on the front burner six or seven years ago.
In your view, how successful have these efforts been, do you think, in addressing the concerns that the public has about proximity to oil and gas development?
Matt Lepore: That's a great question—and one that's not necessarily easy to measure. I think, first, you are correct that when I first started (2012, as you kind of alluded to), there was a lot of concern about groundwater impacts. I think, through a combination of rulemaking and communication about how fracking occurs and how construction of wells occurs, we hear less of that. And we have strong, spill reporting rules—spills do happen, but we have good rules around that.
There is continuing concern about air emissions and I think that that is a function, to some extent, of uncertain science. Uncertain science I think is just part of the equation here. There's ongoing research and we'll have better data and, you know, you can make better regulatory decisions when you have better data—but that is a concern.
I think COGCC was very successful in increasing transparency about what the agency does, and what operators are doing and how it gets done—as well as increasing accessibility for the public. Even 10 years ago, this just wasn't in the public mind, and now it's very much in their mind. And there's a greatly increased demand for the public to participate and to be able to access data and so forth. I think the COGCC has been pretty successful in creating that.
The other area that remains, probably, front-burner at this point in time is the extent to which local governments get to regulate—or get a say-so, in particular, in—where oil and gas facilities are located. Historically, most of that happened at the state level. I think the citizens, for maybe a couple of different reasons, feel like that should be more of a local decision—and some local governments feel that it should be more of a local decision. That is probably the focal point of the debate at this point in time.
Daniel Raimi: Yeah, and so that question of proximity of oil and gas wells and control over where oil and gas wells can be sited—that's related to this recent ballot measure that was on the ballot a couple of months ago in Colorado, called Proposition 112. One of the main reasons I wanted to talk to you today is to get your take on the results of that ballot measure.
Prop 112 (for those that aren't familiar with it)—it would have increased the setback distance from new oil and gas development to 2,500 feet from a variety of locations, including homes, schools, but also small waterways, including creeks and creek beds. It would have put major constraints on the industry going forward. There are different estimates out there, but I think they all agree that, at least, 50 percent or more of private lands would, essentially, be off-limits to new oil and gas development if that ballot measure had passed.
So, as it turned out, the measure did not pass—which means setbacks were not increased. The vote was 56 percent to 44 percent statewide. What lessons did you take from the results of that election, and how does it inform policymaking and public opinion going forward?
Matt Lepore: Well, first, I think it tells us that the electorate, to a certain extent, was able to sort through and understand that Proposition 112 went too far, for the reasons you described. And it really was the other features—not houses and schools so much as the other features that had been included in 112, like irrigation ditches and intermittent streams—that would have resulted in so much acreage being off-limits to development.
Of course, there's kind of a policy question in there about whether a 2,500-foot setback is appropriate for a school and, equally so, for an irrigation ditch. I sort of think the answer to that is no, and one of the reasons ballot measures are a kind of a clumsy tool for this kind of policy decision. But there are other interesting things to think about, and talk about with respect to the outcome. One of which—the percentage spread there is notable—as you said, Daniel. At the same time, more than a million voters voted for the setback. And the proponents of the setback operated on a shoestring budget.
Daniel Raimi: Right. It's just worth pointing out—maybe you're getting to this—but the industry did put substantial resources into defeating [the measure]. I don't know the exact number, but I think it was in the tens of millions of dollars, correct?
Matt Lepore: Yep. No, that's exactly right. I don't know the exact number, either—but more than $30 million and perhaps close to $40 million. And so, I mean, you could look at it [...] one way to look at it is—the proponents needed to spend about $0.70 per vote, while the oil and gas industry spent something like $400 per vote, you know, to get a no vote. And that's not perfectly the right way to look at it for a lot of reasons—but, you know, industry spent a lot of money to defeat the measure.
The other very interesting thing about the outcome was that, most of the communities in which there is substantial oil and gas development today voted against the proposition. So—Weld County, for example (which by far has the highest number of production, the highest output of oil, as well as the most wells and well starts, and all of those statistics), voted overwhelmingly against 112. As did Garfield County, which is the second highest-producing county [...] and so forth.
The counties that voted strongly in favor—Boulder County, where there's some (but not much) oil and gas development. Denver County voted in favor of it, and then lots of counties that have ski resorts.
I don’t know that there's a one-to-one correlation there, but it was interesting. So, big takeaway—is there's still concern among the population about proximity of this large-scale industrial development to homes and schools and population centers.
Daniel Raimi: Right, and that concern is continuing to play out at the policy level, right? Just a couple of weeks ago, I think, the COGCC adjusted the way that it measures setbacks between new oil and gas wells and schools, which has been a particular area of concern in some parts of the front range.
Can you just briefly touch on what that change was that the COGCC made and why it's important? And then (you know, in your opinion)—was it an appropriate change?
Matt Lepore: Sure. So, fundamentally [...] I guess maybe three years ago, citizen groups started saying, “listen, Colorado—you have a 1000-foot setback from schools, you know, which is pretty good.” That was a rule that was put in place in 2013. And, actually, no operator had ever asked for an oil and gas location closer than 1,0000 feet from a school after that rule was put in. But the concern was that that measurement happened from the school building itself and not, say, the playground or the sports field or, you know, maybe the outbuilding. And so, the citizen concern was, “hey, this is where kids are outdoors and they're playing and, really, you should measure from the boundary of the school yard.” In essence, that's what the new rule did. The new rule requires an identification of a school facility that is not just the building, but it is those other parts that are part-and-parcel of a school, such as the playgrounds and the sport fields.
So the measurement now is taken from that outer boundary, if you will. And that's really the essence of the rule. There are some notice requirements and so forth, so that the school board has an opportunity to say, “wait a second, you should measure it from over here.” Or even, “wait a second, we have a school planned in the future.” I think it goes out three years—so if there's a school to be built within the next three years, it's kind of captured by the rule.
I think it was a very appropriate rule. I think it was overdue. I think industry was a little bit stingy about engaging in the conversation earlier. And the new General Assembly session just started here in Colorado. It will be interesting to see whether they look at the rule and find it sufficient,—or whether they want to do something differently legislatively. But I think the rule that emerged was the result of the [...] the rule was actually proposed by a citizen advocacy group here in Colorado. The agency supported that rule. The proposal was made while I was still the director. We supported the rule. We went to industry and said, listen, “we need to do something here—you need to get onboard.” And eventually the industry was supportive of the rule that was passed.
Daniel Raimi: Right, that's so interesting. Matt, you just mentioned the new composition of the legislature in Colorado and there's also a new governor (Jared Polis) who's been outspoken on oil and gas issues in the past.
What's the environment like now, politically, for oil and gas development? Is there a lot of legislative activity coming down the pipe? And what do you think that means for the industry and for the prospects in the coming years?
Matt Lepore: I do think that it will be an active year in the legislature and in the administration, as it relates to oil and gas. So, maybe the most significant change is that both chambers of the legislature, the House and the Senate, are both controlled by Democrats now—which has not been the case for the last four years. And a lot of oil and gas legislation was proposed in the Democratically controlled House over the last four years, and never made it through the Republican-controlled Senate.
So I think the prospect now, with Democrats having control of both, is that those oil and gas bills have a much higher chance of getting passed and then put on the governor's desk. And I do think, candidly—I think there has been frustration built up in the legislature (certainly on the Democratic side), sort of about, you know, an inability to pass anything—industry, kind of, going to it's Republican supporters in the Senate and getting lots of these things killed,including things that many might find to be sensible (like a school setback, which was proposed and was shot down).
So there's definitely that dynamic in play. Everybody is very mindful of Proposition 112. And—yes, it was defeated. But—yes, it was not that close. It got a lot of votes. People are still mindful of the tragic fire and explosion in Firestone, Colorado, that was associated with a gas line from a well that was improperly abandoned and led to this explosion of a home and the death of two citizens, the homeowner and another person that was with him in the home at the time—that's on people's minds.
Governor Polis is a Democratic governor who, in 2014, provided substantial financial backing to a proposal to have a 2000-foot setback. He eventually backed away from that setback, but he has been outspoken in saying that local governments should have more control around the siting of oil and gas facilities.
So, I think, again—that will be the focus, the major focus. The legislature clearly wants to make sure that oil and gas happens safely, that citizens' health and environments are protected when oil and gas development happens. I don't think it will go as far as a 2,500-foot setback or any kind of ban. I think people appreciate the continuing importance of fossil fuels to our economy and our way of life, and so forth. But, of course, it should be done safely and responsibly.
So I think the focus will be on local control and protecting public health.
Daniel Raimi: Yeah. You're going to be staying active in this space, I know, in the months and years to come—at Adamantine Energy, where you're strategic advisor and legal counsel.
Can you briefly tell us what you're thinking about these days? What you're working on? I know you were in South Africa recently. I'd love to hear about that trip. Maybe over a beer, later—but, you know, what are you thinking about? What are you interested in?
Matt Lepore: Sure. Well, I'll take you up on the beer offer anytime, and I think you'll actually be in Colorado soon, so—
Daniel Raimi: That's true.
Matt Lepore: —yeah. So, I was pleased to have the opportunity to go to South Africa. I was engaged with a provincial or, kind of, state-level government in South Africa. It's quite interesting, really. In South Africa (as in most of the rest of the world besides the United States), the minerals—the oil and gas—is owned by the nation, by the federal government. And the federal government makes the decisions about development. The state government (the provincial government, with whom we were meeting) is basically concerned about how that's going to play out and what that means to them, and what the impacts will be [...] and how many truck traps there will be, and whether the water will become polluted, and what they do about air pollution.
So, they are engaging us and others to help them think through and identify tools that are available to them to help regulate that development—should it happen. I mean—I have to start by saying there's a question of whether or not the development will happen in the western Cape of South Africa.
But the question that this entity is grappling with is—if it does, then how do we make it most manageable, and the least impactful to our citizens? So, very much a parallel universe (I guess is what I'm trying to say) happening halfway around the world. I am very pleased to be able to be part of that conversation with them.
Daniel Raimi: Yeah. Well, Matt, thank you so much for telling us about all this stuff you're working on, and your views on oil and gas in Colorado over the last several years. It's really fascinating and I'm looking forward to seeing you soon in Colorado and asking you many more questions over drinks about all this stuff.
As we close out, I'd love to ask you the same question that we ask all of our guests, which is—what's at the top of your reading stack? So, what's something that you've read, or seen, or maybe listened to over the last few weeks and months that you think our audience would really appreciate?
Matt Lepore: Well, I'm reading Sapiens[: A Brief History of Humankind], which I find a fascinating account of the anthropological evolution of our species [...] just an interesting assessment of that—and one that casts aside, sort of, many long-standing or long-held views of our evolution. It's worth a read.
In the fiction category, I have gone back to one of my very favorite authors, Cormac McCarthy. I'm reading Blood Meridian, which is an earlier work by him that is set in far West Texas and Mexico. Beautifully written—but also sort of violent (often very violent) and a sort of brutal account of that time, in that place. But he's just a beautiful writer.
Daniel Raimi: Great, yeah. One fiction, one nonfiction—excellent.
All right, Matt Lepore from Adamantine Energy—thank you so much for sharing your wisdom on oil and gas, fiction, nonfiction, and everything in between.
Matt Lepore: Thanks, Daniel. I appreciate it.
Daniel Raimi: Thank you so much for joining us on Resources Radio. We'd love to hear what you think. So please rate us on iTunes and leave us a review—it helps us spread the word. Also, feel free to send us your suggestions for future episodes. Resources Radio is a podcast from Resources for the Future. RFF is an independent, nonprofit research institution in Washington, DC. Our mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. Learn more about us at rff.org.
The views expressed on this podcast are solely those of the participants. They do not necessarily represent the views of Resources for the Future, which does not take institutional positions on public policies. Resources Radio is produced by Kate Petersen, with music by Daniel Raimi. Join us next week for another episode.