BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF THE COMMISSION

This cause was heard by the Commission on November 29, 2010, in Suite 801, at The Chancery Building, 1120 Lincoln Street, Denver, Colorado, on the application of the County of Yuma for an order granting a variance from Rule 804., Visual Impact Mitigation, to exempt all operators within the county from painting production facilities, which are observable from any public highway, with uniform, non-contrasting, non-reflective color tones and with colors matched to but slightly darker than the surrounding landscape by September 1, 2010.

FINDINGS

                        The Commission finds as follows:

1.     The County of Yuma Carson (“County”), as applicant herein, is an interested party in the subject matter of the above-referenced hearing.

2.     Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3.     The Commission has jurisdiction over the subject matter embraced in said notice and the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4.     Rule 804. of the Oil and Gas Conservation Commission requires production facilities, regardless of construction date, that are observable from any public highway to be painted with uniform, non-contrasting, non-reflective color tones, and with colors matched to but slightly darker than the surrounding landscape by September 1, 2010.  Further, Rule 801. provides that any Colorado county, home rule or statutory city, town, territorial charter or city and county may, by application to the Commission, seek a determination that any rules and regulations of the 800-Series should not apply to oil and gas activities occurring within its boundaries, or any part thereof. Such determination must be based upon a showing by any Colorado county, home rule or statutory city, town, territorial charter or city and county that, because of conditions existing therein, the enforcement of the rule and regulation is not necessary within the relevant boundaries for the protection of public health, safety and welfare.

5.     Rule 503.b.(5) provides that any local government within whose jurisdiction the affected operation is located may seek a variance from the Commission.

6.     On July 29, 2010, Yuma County, filed a written request, by its attorney, for a Commission hearing to seek an exemption from Rule 804. for all lands within its boundaries (“Application Lands”). The County is only requesting an exemption from the September 1, 2010 requirement. The County has no objection to the enforcement of Rule 804. as it existed prior to the 2009 amendments, i.e., production equipment must be painted in earth tones upon installation or repainting as part of regular maintenance.  The County alleges that the enforcement of Rule 804. is not necessary within the boundaries of the County for the protection of public health, safety and welfare.

7.     Production facilities associated with oil and gas operations are located within the County’s boundaries in the State of Colorado.

8.     The County request is made pursuant to, and consistent with authority granted in Rule 801.

9.     On July 29, 2010, Yuma County, filed a written request, by its attorney, for a Commission hearing to seek an exemption from Rule 804 for all lands within its boundaries (Application Lands). The County is only requesting an exemption from the September 1, 2010 requirement. The County has no objection to the enforcement of Rule 804 as it existed prior to the 2009 amendments, i.e., production equipment must be painted in earth tones upon installation or repainting as part of regular maintenance.  The County alleges that the enforcement of Rule 804 is not necessary within the boundaries of the County for the protection of public health, safety and welfare.

10.   At the November 29, 2010 Commission hearing, Yuma County Attorney, Michael Grinnan, appeared by telephone on behalf for Yuma County and explained that the County believes that enforcement of the September 1, 2010 deadline of Rule 804. is not necessary for the protection of public health, safety and welfare, or the environment on the Application Lands.  He requested that the Application Lands be exempted from this rule for the following reasons:

a.    Oil and gas production facilities are not located where they will distract drivers on public highways.

b.   The county, particularly in those areas where the affected oil and gas facilities are located, is not densely populated. So, aesthetics of the tanks and other production facilities are not a significant concern.

c.   Oil and gas production facilities which are not painted in earth tone colors facilitate the response of emergency services to the sites.

d.    The public, as represented by the Board of County Commissioners of Yuma County, has expressed a desire for an exemption from enforcement of Rule 804.

e.   Many of the facilities which have not already been painted in earth tone colors pursuant to the previous version of Rule 804. are low producing “stripper” wells which are of marginal economic viability. Of the 3,545 gas wells in Yuma County approximately 81% are stripper wells. Enforcement of the present version of Rule 804 could result in wells being shut in which will reduce county revenues. If stripper wells are removed from service, the number of employees hired by the gas industry will be fewer.  In 2009, nearly 200 gas employees were let go. This caused an adverse economic impact, which rippled through to local businesses.  Enforcement of the current version of Rule 804 will only exacerbate this decline.

11.  Based on the facts stated in the verified application and the testimony presented at the hearing, the Commission should allow Yuma County a variance from Rule 804 for what the Commission considers to be a land use matter.  The Commission should order that operators in Yuma County do not have to meet the deadline of September 1, 2010.  The variance does not, however, eliminate the need for painting production facilities in earth tone colors, upon installation or repainting as part of regular maintenance, with the understanding that production facilities shall be kept in good condition and subject to regular, effective maintenance.

ORDER

NOW, THEREFORE IT IS ORDERED, that:

1.     The Rule 804. compliance deadline of September 1, 2010, is hereby waived for Yuma County.

2.     The former requirement that any oilfield equipment, including tank batteries, must be painted in earth tone colors upon installation or repainting as part of regular maintenance is reinstated in Yuma County.

3.     Production facilities shall be kept in good condition and subject to regular, effective maintenance. 

                        IT IS FURTHER ORDERED, that the provisions contained in the above orders shall become effective immediately.

                        IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

                        ENTERED this          _ day of December 2010, as of November 29, 2010.

                                                           OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

                                                                                                                                                                                                                                            By_________________________________

                                                                        Robert A. Willis, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

December 22, 2010