Tougher Drilling Rules Can’t Stop Colorado’s Oil Bonanza

(Bloomberg) -- Colorado explorers pumped the most crude on record last year even after the state tightened restrictions on oil and gas drilling.

The boost came despite a steep decline in drilling applications following an overhaul of the state's energy laws last March. The new rules strengthened environmental standards around fracking and gave local communities more control over regulation, a move that essentially rendered some acreage off limits for development.

Drilling applications declined by more than a third in 2019, while permit approvals fell by half, according to data from the Colorado Oil & Gas Conservation Commission. Still, production rose, reaching an average 514,000 barrels a day, a record, the Energy Information Administration reported.

It still may be too early to feel the full effect of the new regulations, as some explorers built up a substantial backlog of drilling permits prior to the rule change, giving themselves room to keep pumping in the near-term. But the first hints of an eventual slowdown may lie in the monthly data. December production in the state fell 4.5%, the biggest monthly drop since January 2019.

To contact the reporter on this story: Catherine Traywick in Denver at ctraywick@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Jessica Summers

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