What’s the issue?
Just before Thanksgiving, the Colorado Oil and Gas Conservation Commission finalized new regulations that will severely limit the continued development of oil and gas in the state by mandating new setback requirements, flaring caps, and limits on operations in high priority areas.
Why does it matter?
In 2019, Colorado ranked as the fifth-highest state in the country for oil production, and the seventh-highest for natural gas production.
What’s our view?
While the industry’s reaction to the new regulations has been mild to date, we expect the regulations will be challenged in court. In the meantime, the regulations are prospective only, which means that there is a substantial backlog of approved drilling permits that companies can use for the next two to three years as any litigation concerning aspects of the new regulations work their way through the courts.
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