A representative of an organization whose research on oil shale production has been cited for years testified before Congress Friday that “decisions made by the federal government may have a profound impact on the residents in the northwestern quarter of Colorado …”

James T. Bartis of the RAND Corporation testified on Friday (pdf) before the House Energy and Commerce Committee’s Subcommittee on Energy and Power. He was asked to speak to the alternative fuel provisions in HR 909, the “Roadmap for America’s Energy Future” bill sponsored by Devin Nunes, R-Calif.

“Most of the high value resources lie within in a very small area (roughly 30 by 35 miles) within Colorado’s Piceance Basin and within a small portion of the nearby Uinta Basin within Utah,” Bartis said. “Large-scale development of oil shale will cause federal lands to be diverted from their current uses.

“In the absence environmental and economic mitigation measures unprecedented in scope and scale, such development would almost certainly have adverse ecological impacts, and would likely be accompanied by socioeconomic impacts that could be particularly severe, especially in the northwest quarter of Colorado.”

The RAND Corporation was hired by the U.S. Department of Energy to do a report on oil shale several years ago indicating it would require 10 new coal-fired power plants to produce one million barrels a day of oil on Colorado’s Western Slope. The report (pdf) also indicated at least five barrels of water would be required for every barrel of oil – and that’s if the technology to heat the organic kerogen in shale rock and sand is ever commercially perfected.

The report has been criticized by some who say it is outdated based on more recent research and development. Backers of oil shale production generally support Bush administration rulemaking that set royalty rates on federal lands and greatly expanded the areas available for leasing.

Critics say the so-called Bush “midnight rulemaking” in 2008 was premature because the technology is so unproven and full-scale commercial oil shale production will consume too much conventional power and scarce Colorado water.

Conservation groups have been saying for years that the resources pumped into oil shale production by Exxon, Shell and other corporations would be better spent on the development of renewable sources of energy. RAND’s Bartis cited a passage from HR 909, then refuted it:

“Section 141(a)(5) makes the claim that ‘Oil shale is one of the best resources available for advancing American technology and creating American jobs,’” Bartis testified. “I have no knowledge of any research that supports this claim. Oil shale has a potentially important role in advancing our energy security and furthering economic progress. I see no reason to promote oil shale as above other promising areas for advancing technology and creating jobs.”

A nonprofit sportsmen’s group Thursday released a report detailing 10 years of oil and gas spills in the three counties in Northwest Colorado that include parts of the heavily drilled Piceance Basin.

The Bull Moose Sportsmen’s Alliance released an analysis (pdf) detailing nearly 1,000 spills of wastewater, oil and other fluids between 2001 and 2010 – or a rate of about 100 a year. The data came from the Colorado Oil and Gas Conservation Commission (COGCC), which regulates oil and gas drilling in the state.

Garfield County saw 3.5 million gallons in spilled fluids compared to 2 million gallons in Rio Blanco County and .13 million gallons in Mesa County. Only about half of the fluids are ever recovered in cleanup operations.

According to the report: “About 91 percent of the oil and gas fluids spilled in the three counties from 2001 to 2010 was wastewater, also known as produced water. That water can contain salt, oil and grease, along with naturally occurring radioactive material and inorganic and organic compounds.”

Equipment failure was cited as the leading cause for the spills, with about 49 percent of the 992 spills blamed on faulty equipment and another 23 percent of the spills blamed on human error.

“A lifelong resident of Colorado, I have vivid memories of hunting and fishing with my dad in the Piceance Basin,” said Gaspar Perricone of the Bull Moose Sportsmen’s Alliance.

“We have seen firsthand the devastating effects of these spills and accidents. In addition to groundwater contamination, rigs, roads and production facilities have significant impacts on wildlife migratory patterns and fish habitat.”

In an interview earlier this month with the Colorado Independent, COGCC Executive Director David Neslin said investigating and resolving the state’s backlog of spill complaints is a top priority.

“Our goal is to work down the backlog by the end of June such that by the end of June all of our active enforcement cases would be no more than one year old,” Neslin said. “We’re working very hard to achieve that objective.”

Many of the most high-profile spills have been dealt with in recent years, resulting in record fines against the companies responsible.

Gov. Bill Ritter and industry officials are scheduled to make an announcement at 1:30 p.m. today on the West Steps of the State Capitol in Denver, announcing “historic new agreements that will protect hundreds of square miles of important wildlife habitat on the Western Slope,” according to a release from the governor’s office.

State officials, speaking on the condition of anonymity because full details are embargoed until 1:30, said the agreements allow operators to take care of wildlife mitigation requirements under the state’s amended oil and gas regulations up front and avoid a time-consuming well-by-well review process by the Colorado Division of Wildlife.

Under wildlife mitigation plans, the Colorado Oil and Gas Conservation Commission and CDOW will identify the most appropriate locations for roads and well pads prior to the permitting process and thereby allow operators to fulfill their wildlife mitigation obligations in a more streamlined fashion.

One of the consistent complaints from operators about the amended drilling regulations before and after they were adopted in the spring of 2009 – and thereby a Republican rallying cry on the campaign trail to some degree this year – was that the new CDOW consultation requirement was unnecessarily slowing down natural gas drilling.

In a previous interview with the Colorado Independent, COGCC director David Neslin said only about 7 percent of permit applications were being flagged for wildlife concerns and any issues were being resolved between the operators and CDOW without the COGCC getting involved.

“I don’t have people coming in and saying it’s taking 80 days to get a permit – that’s just not happening – or the Division of Wildlife is being irresponsible,” Neslin said last spring. “I haven’t heard much of that.”

Today’s announcement appears to be a continuation of that streamlining process on a much larger scale. There has been ongoing debate in the governor’s race about the degree to which the amended drilling regulations should be further tweaked or scrapped altogether, as some Republicans suggest.

While humans like Denver Mayor John Hickenlooper and state Senate Minority Leader Josh Penry – current and former candidates for the Colorado governor’s office – locked horns over a recent reception for the new president of the Colorado Oil and Gas Association (COGA), a new report from the Colorado Wildlife Federation (CWF) points out the perils for the state’s distinct mega-fauna.

On the nearly 5 million acres of the gas-rich Piceance Basin, which stretchers over parts of Rio Blanco, Garfield, Moffat and Mesa counties, three huge mule deer herds range over nearly 920,000 acres and elk range on 1.3 million acres. Wildlife managers call the area “the deer factory.” Other species directly effected by the drilling include sage grouse and cutthroat trout.

More than 40 percent of the Piceance is leased for oil and gas production, including more than 54,000 acres of the Roan Plateau on the eastern edge of the Piceance in Garfield County that have yet to go into production. New state drilling regs compelling higher mitigation standards for wildlife habitat have become a political hot potato this election season.

“Fragmentation of northwest Colorado’s rich wildlife habitat, and the harms and demonstrable risks of such fragmentation, will continue as roads and infrastructure emerge on many of the leased parcels that have not been developed yet,” concluded the Wildlife Federation report entitled “Northwest Colorado’s Wildlife Habitat Today: Are We Losing Our Heritage?”

New Colorado Oil and Gas Association president Tisha Conoly Schuller pointed out that members of her lobby recognize the value of the habitat and have “donated funds with other Piceance companies to the [Colorado Division of Wildlife] for mule deer, sage grouse, and reclamation studies; conducted numerous sage grouse habitat improvement projects; and created drinking holes for wildlife to provide water sources which avoid crossing busy roads.”

But Conoly Schuller recently was left mitigating fallout from inviting the popular Democratic Hickenlooper to a COGA meeting that GOP gubernatorial frontrunner and former six-term Congressman Scott McInnis reportedly was unable to attend. She drew the ire of Penry, a former McInnis staffer who dropped out of the governor’s race and now backs his old boss.

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According to an investigation published today, the Colorado Oil and Gas Conservation Commission (COGCC) had only 11 enforcement staff for 34,144 wells in 2008, or about 3,104 wells per inspector.

ProPublica reported the number of oil and gas wells drilled is up 149 percent since 2003 in Colorado but enforcement actions by the COGCC are up just 26 percent in that same time period. However, state enforcement staff has jumped 73 percent since 2007, and the report says there were 19 staffers working on enforcement in 2009.

Colorado passed some of the most environmentally stringent drilling regulations in the nation last spring, prompting criticism on the political right and a lawsuit by the Colorado Oil and Gas Association. Then in June Colorado congresswoman Diana DeGette introduced the Fracturing Responsibility and Chemical Awareness (FRAC) Act.

The FRAC Act would remove a Safe Drinking Water Act exemption granted hydraulic fracturing, or fracking, in 2005 during the Bush administration. Fracking involves injecting high pressure water, sand and undisclosed chemicals deep underground to free up more natural gas. Critics say it can lead to groundwater contamination.

“Virtually all natural gas wells get fracked, so if we have to issue a specific approval for each of those fracks, we’re talking about a couple thousand additional approvals a year that we would have to be reviewing materials on and administering, and what would the ramifications of that be for our program and the other work that we’re doing?” COGCC executive director David Neslin told the Colorado Independent in August.

In a story in Tuesday’s Grand Junction Daily Sentinel, industry experts suggested Colorado’s gas-rich Piceance Basin was becoming less attractive to operators because of the state’s regulatory environment and better access to gas fields such as the Marcellus Shale in the eastern U.S.

According to the Grand Junction Daily Sentinel, REX, which now runs from Colorado’s Piceance Basin to western Ohio and kicked into full service this summer, removed what has been a “major obstacle” holding back natural gas production on the Western Slope.

Other parts of the country have also increased pipeline capacity, and major new shale plays have opened up new competition, but for the most part, pipeline capacity has held Colorado back for years, according to industry experts. Now in a bust cycle, increased pipeline capacity will be key to keeping Colorado competitive – particularly given the rising popularity of gas as a cleaner-burning electricity source than coal – once the boom is back on.

Politically speaking, though, it’s been easier for Republicans to blame the recent downturn in natural gas drilling on new environmentally tougher drilling regulations approved by the Democrat-controlled State Legislature and Gov. Bill Ritter than on factors such as the global recession, lack of pipeline capacity and overproduction during the most recent boom.

Take, for example, this exchange at the end of a recent Denver Post Q&A with former GOP gubernatorial candidate Josh Penry, a state senator from Grand Junction and a big backer of the oil and gas industry.

“[DP]: Ritter’s new oil and gas regulations are under fire from Republicans. When the governor’s office sent out a news release with the headline “Gov. Ritter bids farewell to head of state mining agency,” you forwarded it to your friends with the note “Governor bids farewell to mining agency head, and to mining, too.” People got a kick out of it. Is Scott [McInnis] that funny?

“[Penry]: Scott is quick witted. He’s got a great sense of humor. I think you have to if you’re going to be in politics.”

Funny stuff. It remains to be seen whether former six-term Western Slope Congressman McInnis – now a Denver attorney whose firm regularly represents oil and gas interests – will fire off the same zingers now that he’s all but sewn up the GOP nomination to take on Ritter next year. McInnis has promised to start rolling back those pesky (er, “punitive”) drilling regs as soon as possible if elected.

Penry, meanwhile, who bailed out of the governor’s race ostensibly to help unify the party and take down Dems in other key offices, had a few more funnies of his own in the Post interview, calling the party of Cory Gardner and Ryan Frazier the “hip party” and writing off criticism from “left-wing bloggers”: “Those bloggers are also sitting in their underwear in their grandmothers’ basements. They’re making stuff up out of thin air.”

Right, kind of like blaming the natural gas downturn on the new drilling regs when few major new drilling plans have even been tested under the new regs due to the double whammy of global recession and limited pipeline capacity. Now the pipelines have caught up to the last 10 years of drilling frenzy, and it will be interesting to see what happens as the economy rebounds.

As Jim Zadvorny of EnCana Oil & Gas told the Daily Sentinel, “There will always be production in the Rockies. The resource is huge.”

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