Colorado says it leads the nation in lessening emissions from oil and gas

New rules require midstream operators to take steps by February to reduce emissions from combustion fuel equipment

by Allen Best

In December, the Colorado Air Quality Control Commission adopted new rules that address greenhouse gas emissions from engines, turbines, and heaters used in the midstream component of oil and gas operations.

The practical effect of the new rule — described by the state as nation-leading – will be largely to replace use of gasoline and oil with use of electricity. United Power and Xcel Energy both submitted letters of support in the review by the commission and can be expected to provide much of the new electricity.

Midstream activities in the oil and gas industry operations include the processing, storing, transporting, and marketing of oil, natural gas, and natural gas liquids. Such mid-stream activities can be found along many county roads in the Wattenberg field between Denver and Greeley. Weld County has the most midstream operations followed by Garfield, Rio Blanco, and then 17 other counties statewide.

Under the new rule, midstream facilities must begin taking steps to reduce gas emissions from combustion fuel equipment by Feb. 14, 2025. They have a 2030 deadline to meet greenhouse gas emissions limits for both the overall sector and for each individual company.

An economic impact analysis conducted for the commission found that 66% of the reduced emissions can be accomplished through electrification of the operations. Another 28% can be achieved through idling and shutting down and adjusting operation of the mid-stream equipment. The remaining 11% will be achieved through retrofits and efficiency improvements.

Brighton-based United Power, the state’s largest electrical cooperative in terms of the amount of electrical demand it satisfies, said it supports the rules but cautioned that electrification projects anticipated by the rule will require “careful and lengthy coordination efforts.”

United also said the oil and gas sector makes up approximately 40% of its load, i.e. the electrical demand.

Xcel Energy testified in a pre-hearing filing that overall it strongly supports beneficial electrification of the midstream operations while also encouraging sufficient flexibilities.

The Colorado Oil and Gas Association pushed back in a September 2024 filing:

“This rule as drafted is unworkable for the midstream sector of the oil and natural gas industry. For many companies this is not technically or economically feasible, it relies heavily on utility power which is outside of the purview of the regulated entity. It also relies heavily on grid power availability and reliability for compliance, which may in some instances be currently unknown or uncertain. For many companies shutting down facilities may be the only option to comply with the rule, this results in revenue lost, stranded assets and a disruption in gas delivery in many parts of the State.”

After the two-day hearing, an announcement by the Colorado Department of Public Health heralded the rule as first of its kind in the nation.

“Colorado is proud to take this bold, nation-leading step to address climate change and reduce air pollution,” said Michael Ogletree, director of the air pollution division, in a prepared statement issued in December.

“This new rule is another milestone in Colorado’s ambitious goal of achieving net-zero emission by 2050. We are especially proud that it prioritizes protections for communities disproportionately impacted by pollution.”

The rule requires midstream facilities that operate in disproportionately impacted communities to prioritize reductions of onsite greenhouse gas emissions.

Starting in 2025, the air quality division will publish an annual report on midstream emission to track the state’s progress toward the 2030 reduction goal.

For more information, visit the division’s web page on the rulemaking.

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