1. A COUNTY’S ROLE IN OIL & GAS DEVELOPMENT (ONE COUNTY’S PERSPECTIVE) Presented To – Colorado Institute for Leadership Training April 3, 2004 Presented By - Doug Dennison, Oil & Gas Auditor Garfield County, Colorado

2. 2 April 3, 2004 Outline Background Regulatory Setting 2003 Complaint Summary A County’s Role in Oil & Gas Development Garfield County’s Approach & Initiatives

3. 3 April 3, 2004 Background Most drilling activity in Colorado –As of 03/26/04, 34 out of 68 drilling rigs operating in Colorado were in Garfield County – next most was Weld County with 14 rigs –At least nine oil & gas companies are actively involved in exploration and production of natural gas in the county –Most exploration and production of natural gas is from tight sands but potential of coal bed natural gas production is being evaluated

4. 4 April 3, 2004 Background (cont.) APDs approved –CY 2003 = 566, a record high –CY 2004 (as of 03/17/04) = 141 –Projected for 2004 = >650 Over 1,600 active wells Over 300 new natural gas wells drilled during 2003 with over 500 planned for 2004

5. 5 April 3, 2004 2003 Summary of Complaints Complaints Received 4/1/03 – 12/31/03 CategoryNumber of Complaints Odors/Air Quality23 Traffic19 Facility Location/Size14 Dust/Roads12 Private Property Damage11 Water Concerns10 Noise10 Other8 Leaks/Spills7 Lights/Visual5 Trash4

6. 6 April 3, 2004 Regulatory Setting State of Colorado: –Colorado Oil & Gas Conservation Commission (COGCC) Has primary authority for regulating O&G industry Has responsibility to promote development of resources in a manner that protects human health and the environment Local field engineers based in Battlement Mesa

7. 7 April 3, 2004 Regulatory Setting (Cont.) State of Colorado (Cont.): –Certain activities also fall under jurisdiction of other agencies Colorado Department of Public Health & Environment (CDPHE) –Water Quality Control Commission (WQCC) –Air Pollution Control Division (APCD) Colorado Division of Water Resources (State Engineer) Colorado Division of Wildlife (CDOW)

8. 8 April 3, 2004 Regulatory Setting (Cont.) Federal Government –Several agencies may be involved, including: Bureau of Land Management (BLM) – primary responsibility for permitting and monitoring activities on Federal lands U.S. Forest Service (USFS) Environmental Protection Agency (EPA) Army Corps of Engineers (COE)

9. 9 April 3, 2004 Regulatory Setting (Cont.) County –County’s authority is very limited –Cannot supersede or conflict with COGCC –Few counties have O&G regulations –Generally regulate through land-use code –Most counties use planning personnel –Can participate as a Local Governmental Designee (LGD) in COGCC APD process

10. 10 April 3, 2004 Regulatory Setting (Cont.) County’s Role in COGCC LGD Process –Initial 10-day review of application –Request additional 20 days for review, if required –Request onsite consultation with COGCC, if required –Request public hearing, if required

11. 11 April 3, 2004 A County’s Role in Oil & Gas Development CAUTION: There is no “one-size-fits- all” solution –Local government’s involvement in and regulation of industry activities is dictated by several factors, including: Level of industry activity Available resources Political environment Technical factors which dictate development practices

12. 12 April 3, 2004 A County’s Role in Oil & Gas Development (cont.) In the simplest terms, a county’s role is to “fill the gap” where industry activities are not addressed by State and Federal Regulations –For example Land-use regulations Local road-use regulations Participate in the COGCC LGD process and utilize the process to its fullest extent

13. 13 April 3, 2004 A County’s Role in Oil & Gas Development (cont.) Actively participate in COGCC hearings and rulemakings Provide opportunities for citizens to receive education regarding industry Provide a forum for issues surrounding the industry to be discussed Participate with State and Federal agencies in review of proposed activities

14. 14 April 3, 2004 A County’s Role in Oil & Gas Development (cont.) Devote resources, as needed and available, to assist public in dealing with impact from industry Coordinate with other local agencies (e.g., municipalities, fire districts, etc.) to address impacts

15. 15 April 3, 2004 Garfield County’s Approach & Initiatives Attempting to establish and maintain positive relationships with industry and State and Federal regulators to effectively address issues Actively participating in rulemaking discussions with CCI, COGCC and COGA Co-sponsor of NW Colorado Oil & Gas Forum Maximizing the use of all existing resources to deal with impacts from industry –Coordinating training needs for industry with Colorado Mountain College –Assisting local emergency responders and industry in assessing HAZMAT capabilities and training needs

16. 16 April 3, 2004 Garfield County’s Approach & Initiatives (cont.) First county in CO to hire a full-time individual to be focal point for all industry activities – Garfield County Oil & Gas Auditor Specific Duties –Serve as a liaison between citizens, industry, county, and regulators –Educate citizens on industry activities –Respond to complaints and develop and maintain a database of citizen complaints –Review all Applications to Drill (APDs) for new wells

17. 17 April 3, 2004 Garfield County’s Approach & Initiatives (cont.) Oil & Gas Auditor - Specific Duties (cont.) –Develop technical information library –Conduct periodic informational meetings –Assist Assessor’s and Treasurer’s offices in validating industry financial and county royalty payment information –Provide input and advice to BOCC regarding industry issues

18. 18 April 3, 2004 Garfield County’s Approach & Initiatives (cont.) Oil & Gas Auditor - Specific Duties (cont.) –Participate in land-use review process for industry activities –Participate in development of new industry-related land-use regulations –Facilitate “lessons-learned” reviews of industry-related incidents –Other duties, as assigned and needed

19. 19 April 3, 2004 Garfield County’s Approach & Initiatives (cont.) New Initiatives –Establishing Garfield County Energy Advisory Board (EAB) Currently stated mission of the EAB is – “… to provide a forum for the oil and gas industry, the public, impacted landowners, and local government to prevent or minimize conflict associated with oil and gas development through positive and proactive communication and actions that encourage responsible and balanced development of these resources within Garfield County. “

20. 20 April 3, 2004 Garfield County’s Approach & Initiatives (cont.) New Initiatives (cont.) –Establishing Garfield Count Energy Advisory Board (EAB) (cont.) Membership of the EAB will include – –Municipalities –School districts –Citizen groups –Cattlemen's associations –Industry –6 citizen representatives

21. 21 April 3, 2004 Garfield County’s Approach & Initiatives (cont.) New Initiatives (cont.) –Evaluating new land-use regulations regarding the oil & gas industry Current revision consists of development plan review via a primarily administrative process Regulations have been referred to Planning & Zoning Commission for review and may be reviewed by BOCC again in May, 2004

22. 22 April 3, 2004 Garfield County’s Approach & Initiatives (cont.) New Initiatives (cont.) –Developing program for performing air-quality monitoring in western GarCo Assembling a group consisting of citizen groups, Colorado Mountain College, local school districts, CDPHE, COGCC, industry and others to address this issue Currently pursuing grant funds from CDPHE for start-up costs Will pursue energy impact grants and other funding sources in the next several months Pursuing training from CDPHE for certified odor assessors

23. 23 April 3, 2004 Garfield County’s Approach & Initiatives (cont.) Summary –GarCo’s relationship with industry is one of mutual need The county benefits from additional tax revenue, increased employment, etc. Industry must recognize the needs of the community and work with the county and other local governments to address those needs