This article was originally published by Colorado Newsline.

The state commission that regulates Colorado’s oil and gas industry this week adopted its first set of rules governing geothermal drilling, taking another step towards fulfilling the broader mandate it was given as part of a legislative makeover of the agency last year. But regulators and experts say not to expect a “boom” in the new technology just yet.

The Energy and Carbon Management Commission was formerly known as the Colorado Oil and Gas Conservation Commission until lawmakers rebranded it in 2023. The name change that came with new authority to regulate emerging industries like carbon capture and so-called deep geothermal energy.

ECMC adopted its Deep Geothermal Operations rules on a unanimous 5-0 vote Monday. The 59-page addition to the agency’s rulebook outlines permitting and enforcement procedures broadly similar to those already in place for oil and gas operations, giving the commission the power to approve or deny permits to protect health and safety and ensuring that local governments have a say in the process.

While existing technologies like heat pumps involve drilling geothermal wells hundreds of feet into the ground to heat and cool homes and even entire neighborhoods, the deep geothermal industry aims to help power the electric grid by drilling thousands of feet down into much hotter pockets of the Earth’s crust. To date, the application of deep geothermal technology has been limited by a variety of factors, but some experts point to its potential to serve as a “baseload” source of clean energy to help offset the intermittency of renewables like wind and solar.

Gov. Jared Polis, who has touted geothermal energy’s potential in his “Heat Beneath Our Feet” initiative, said in a statement Monday that with the ECMC’s new rules, the state is “poised to leverage this clean, renewable energy resource.”

“Colorado has incredible low-cost renewable energy resources like geothermal that can help reduce emissions and save Coloradans money,” Polis said. “Geothermal energy can play an integral role in powering the way Coloradans live, work and play, and will help future generations.”

The feasibility of tapping into deep geothermal resources can vary widely according to local geology. A study released last month by the ECMC, the Colorado Geological Survey and Atlanta-based energy firm Teverra analyzed “geothermal utilization opportunities” and found that the Piceance Basin north of Grand Junction, the Raton Basin near Trinidad and a “localized hot spot” along the Colorado-Kansas border rank as the state’s most promising locations.

Colorado Communities for Climate Action, a coalition of 43 local governments supportive of clean energy policies, said the rules adopted by the ECMC struck an “impressive balance.”

“Local governments are optimistic about the role of deep geothermal electricity in efficiently decarbonizing Colorado’s power grid,” Emma Pinter, an Adams County commissioner and vice president of Colorado Communities for Climate Action, said in a statement. “But we have to make sure this new technology benefits all Coloradans and their environment while avoiding the damage we have seen from oil and gas development and other extractive industries.”

“Despite its promise as a clean energy source, (deep geothermal operations) will have some adverse impacts, although we don’t yet know the scope of them, and it’s important to recognize that,” Kate Burke, an assistant county attorney for Boulder County, told commissioners in a rulemaking hearing last week. “The net impacts … should be less than oil and gas, and in some instances, the scale may be smaller, but that doesn’t mean there won’t be impacts to the people, plants and animals living near the facilities.”

Geothermal Rising, a trade group representing geothermal energy companies, was “very satisfied with where the draft rules have landed,” an attorney for the group, Matt Lepore, told commissioners Monday. Lepore is a former chair of the agency who departed in 2018 and has gone on to represent the oil and gas industry in commission proceedings.

Environmental groups have urged the ECMC to follow up with a second geothermal rulemaking process to flesh out its regulations before operations ramp up. Commissioner Brett Ackerman, a former Colorado Parks and Wildlife official, said prior to Monday’s vote that it was important not to “hamper industry” at an early stage, but the agency should “appropriately address future concerns and opportunities as they arise.”

“I agree that it’s highly unlikely that there’s any pending boom of deep geothermal development,” Ackerman said. “We’re rather more at a pilot stage.”

Colorado oil and gas regulators adopt ‘deep geothermal’ drilling rules is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

This article originally appeared at Colorado Newsline.

Colorado regulators on Tuesday approved a sweeping set of new financial requirements for oil and gas companies that operate within the state, completing the last major rule change mandated by a landmark drilling reform law passed by Democrats in the General Assembly three years ago.

The five-member Colorado Oil and Gas Conservation Commission voted unanimously to adopt the new rules on financial assurance, also known as bonding. When they take effect in April, the changes will significantly increase the amounts of the bonds that oil and gas producers must provide to the state to cover potential cleanup costs, and new fees will raise millions of dollars to fund the plugging of wells that are abandoned, or “orphaned,” typically as a result of bankruptcy.

In a press release, COGCC officials called the new rules “the strongest in the nation.” Commissioner John Messner, a former Gunnison County commissioner, said prior to Tuesday’s vote that the rules represent a “paradigm shift.”

“I think they fundamentally change how financial assurance for oil and gas activities in the state of Colorado are addressed,” Messner said. “They were an outcome of over a year’s worth of collaboration and input from a really diverse group of individuals and stakeholders.”

The financial assurance changes were the last major rulemaking required by Senate Bill 19-181, a law that overhauled the COGCC itself and tasked it with reorienting state oil and gas policy to be more protective of health, safety and the environment. The commission is still set to consider additional rulemakings on worker safety certifications and permit application fees at a later date.

“These innovative rules will allow the COGCC to continue its oil and gas regulatory duties in a meaningful, impactful and protective manner for all of Colorado,” agency director Julie Murphy said in a statement. “Staff will begin the work to integrate these new rules into daily operations.”

The COGCC’s new requirements are structured around six different tiers or “options” through which operators can provide financial assurance to the state. The largest operators, which are considered to be at the lowest risk of abandoning wells, could continue to provide statewide “blanket” bonds set at amounts as low as $1,500 per active well, while smaller, riskier operators will be required to provide “single well” financial assurance, at a cost of $110,000 per well or more.

Additionally, the new rules establish an annual well registration fee that is projected to raise $10 million annually to fund the cleanup of orphaned wells. That money will be augmented by the $10 million or more annually that the COGCC expects to receive for orphaned-well cleanup from the federal government as a result of last year’s infrastructure law.

In a statement Tuesday, Lynn Granger, executive director of the American Petroleum Institute’s Colorado chapter, called the approved rules “the epitome of a ‘belt and suspenders’ approach.”

“We extend our gratitude to the commission, in particular commission staff, for their tireless work on this incredibly complex issue,” Granger said. “Their efforts have gone a long way toward developing a workable framework for most of Colorado’s natural gas and oil industry.”

Environmental groups, who had long criticized the state’s bonding requirements as inadequate, applauded the new rules. Between the higher bonding amounts, incentives for operators to plug existing wells and the expanded orphaned well program, they’re hopeful that up to one-fifth of the state’s 50,000 active wells could be plugged in the coming years.

“For too long, the oil and gas industry dumped their responsibility for low-producing wells onto the people of Colorado, and our health, safety, and environment paid the price,” Kelly Nordini, CEO of Conservation Colorado, said in a statement. “By requiring industry to pay for and plug 10,000 high-risk wells and so many others that dot our landscape, the COGCC moved one step closer to ensuring that Coloradans’ health and safety always comes before oil and gas industry profits.”

“The new bonding requirements are a major step forward,” Jacob Smith, executive director of Colorado Communities for Climate Action, said in a statement. “They could have been stronger, but this is a dramatic improvement, and it includes mechanisms for making adjustments if these rules prove to be inadequate.”

Colorado Newsline is part of States Newsroom, a network of news outlets supported by grants and a coalition of donors as a 501c(3) public charity. Colorado Newsline maintains editorial independence. Contact Editor Quentin Young for questions: info@dailymontanan.com. Follow Colorado Newsline on Facebook and Twitter.

Colorado oil and gas regulators approve ‘strongest in the nation’ financial rules is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.