Colorado approves first-of-their-kind emissions intensity rules

An oil pump silhouetted on the sky

Colorado air-quality regulators on Friday approved a nationally precedent-setting plan in which oil and gas companies must limit the amount of nitrous oxide emissions from each barrel of oil they produce, in order to help the state reach attainment with federal ozone standards by 2027.

The NOx intensity measurements were part of a State Implementation Plan that also includes steps like a first-of-its-kind requirement to cut emissions from small diesel engines — an effort that comes as the state is classified as being in severe nonattainment of ozone regulations by the U.S. Environmental Protection Agency. Some environmental groups criticized the plan as not being aggressive enough and not doing enough to protect residents in communities disproportionately impacted by pollution, but the Colorado Air Quality Control Commission approved the SIP unanimously.

Arguably the biggest step the AQCC took was to establish the NOx intensity program, a key to efforts to reduce the emissions that are one of the biggest precursors to ground-level ozone 30% by 2025 and 50% by 2030. Because the oil and gas industry is the biggest producer of NOx and hydraulic fracturing activities are the largest source of NOx emissions in upstream production, the focus of the new program is on cutting pollution from wells.

Nitrous oxide intensity standards

Under the NOx intensity program, each producer must determine the amount of emissions they will produce in the high-ozone season between May and September and then cut emissions per barrel of production to hit gradually increasing goals outlined by the state. The new plan outlines multiple ways in which they can do that, but most of the reductions will come from upgrading or replacing higher-emitting equipment with lower-emitting tools or, when possible, with electric equipment.

An area of the Front Range stretching from Douglas County north into Weld County has been in nonattainment of federal ozone standards since 2008, and last’s redesignation as a severe violator brings with it increased regulations and a requirement to sell lower-emitting and more expensive gasoline during the summer, beginning in 2024. But officials from Colorado Air Pollution Control Division and from the Regional Air Quality Council, which led development of the SIP, said the new rules will put it on track to achieve attainment after 2026.

“What we are proposing would generative substantive reductions in emissions,” said Jessica Ferko, APCD planning and policy program manager.

The SIP also sets up a steering committee made up of industry and environmental leaders to discuss additional steps that can be taken to bring about the 50% reduction that Gov. Jared Polis called for in an executive order he issued in March. The steps will be costly, and the goals will not be easy to achieve, particularly the higher 2030 threshold, but oil and gas leaders lauded APCD and RACQ leaders for working with them to understand both what changes will make the biggest difference and what is technically feasible.

“Our part to reduce emissions”

Dan Haley is president and CEO of the Colorado Oil & Gas Association

“Colorado already has the toughest rules in the entire country, and this is another piece of it,” said Dan Haley, president/CEO of the Colorado Oil & Gas Association, in an interview. “It shows that our industry never stops working on what we’re doing. We want to do our part to reduce emissions.”

Ean Thomas Tafoya, Colorado state director for GreenLatinos, criticized the NOx intensity standards during public comments as being too hard to verify and criticized APCD for introducing the idea only well after rulemaking had begun on the SIP plan. One provision of the plan, thus, requires companies to file preliminary reports each November on their emissions generated for the calendar year, which allows the state to use the data in evaluating compliance with the intensity target.

Another provision establishes different requirements for oil and gas companies that are operating in cumulatively impacted communities — those with both high pollution levels and socioeconomic problems such as low income and housing shortages — and those elsewhere. Commissioner Elise Jones criticized the division for not extending tougher restrictions to disproportionately impacted communities that have some but not all those issues, noting that 175 drilling permits have been issued in DICs in the past three years but none in CICs.

“It calls into question the impact this is going to have,” Jones said.

But APCD staffers noted that the electrical equipment that Jones and two other commissioners wanted to see used by drillers in those areas has limited market availability, and they said they wanted to direct that it be used in the areas where it’s most needed. They also noted that there are several applications pending for drilling in cumulatively impacted communities, meaning that the toughest rules will be applicable for them.

What sectors need targeting for emissions cuts?

Colorado Air Quality Control Commission members discuss the new State Implementation Plan during a hearing Friday.

The debate over the impacted communities was a microcosm of the debate surrounding emissions cuts that is happening frequently before the AQCC and in a special legislative committee that met for the past four months to discuss potential ozone-reduction ideas. State officials and industry leaders both noted that the oil and gas industry is just one of many sectors responsible for greenhouse gas emissions and ozone problems in Colorado and said that new regulations must begin to focus as well on other areas.

“There seems to be a belief that shutting down oil and gas will help us attain the ozone standard. It will not get us to attainment,” said Chris Colclasure, a shareholder at Beatty & Wozniak P.C. and former APCD deputy director, testifying for industry at the three-day hearing on the SIP plan. “This industry will continue to do its part and get us to where it can. But you need realistic expectations.”

One regulation that is part of the SIP that will affect other industries is a new limit on the NOx emissions of diesel engines of 1,000 horsepower or less, which often are found in the generators used by industries ranging from utilizes to hospitals. Under the newly approved Regulation 26, there will be emissions limits and testing requirements for such engines.

Black Hills Energy led the successful fight to exempt emergency power generators that are used to meet electrical demand or provide voltage support to the electrical grid and that operate less than 250 hours per year. Shannon Pollmiller, a Black Hills senior environmental professional, warned AQCC members that the company operates just 13 such engines as emergency backup support but that replacing them before their useful lifespan ends would cost $420,000 per engine that could affect customers’ bills.