GLENWOOD SPRINGS — The prospect of new wildlife restrictions in proposed rules for the state’s oil and gas industry has Williams Production RMT, one of the largest natural gas companies in Garfield County, warning of “serious economic impacts to communities on the Western Slope.

The “uncertain regulatory” environment from the draft rules has already caused EnCana Oil and Gas (USA), another large company in the county, to reduce its drilling plan for the Piceance Basin by about 24 percent this year and divert millions
of dollars in capital expenses to other states.

Williams, in a statement released late Wednesday, said the possibility of limiting
drilling in areas of the Western Slope for up to 90 days could have dramatic effects on Western Colorado’s economy and could lead industry companies to scale back their operations and capital expenditures.

That is already happening with EnCana Oil and Gas (USA), which is taking a pool of $500 million in capital expenditures for this year and spending it in Wyoming and Texas, rather than Colorado, because of the state’s current regulatory environment, said Doug Hock a spokesman for the company.

EnCana Oil and Gas (USA) is also planning to reduce its drilling in the area to 224 gas wells, compared to 295 wells in 2007 — a move also tied to the proposed rules, Hock said.

The biggest concern EnCana has in the proposed rules is the 90-day wildlife drilling

restriction. If that happens, the company would have to lay rigs down for three
months, Hock said.

“Those rigs aren’t going to stay there, they are going to go elsewhere,” Hock said.
“The workers are going to go elsewhere.”

Williams, however, has not yet made any cuts to its drilling schedule in the Piceance
Basin.

Donna Gray, a spokeswoman for Williams, said the company plans to drill 500 wells
this year and 500 wells next year. Gray said it was too early to tell what effect the draft
rules could have on the company’s drilling plans.

“Today, we are on target to drill those 500 wells,” Gray said.

The proposed drilling restriction was in draft rules the Colorado Oil and Gas
Conservation Commission released in late March. Bills the state Legislature passed
last year required the COGCC to expand its focus to consider public health and
wildlife impacts, and require the use of best management practices to minimize harm
from oil and gas development.

The oil and gas industry seems to be coalescing, at least in the Piceance Basin, against the proposed 90-day drilling restriction in draft rules proposed by the COGCC. However, the agency has said new rules do allow companies to avoid the 90-day drilling restriction — which it says is for critical wildlife areas especially on the Western Slope — if a company limits the density of its development in an area or consults with the COGCC and Colorado Division of Wildlife.

In its statement, Williams said it has worked the Colorado Division of Wildlife to effectively increase winter habitat for mule dear and that “sound alternatives to seasonal drilling restrictions are clearly possible.”

“Williams is committed to working with the COGCC and other agencies to develop efficient and effective regulations,” the company said. “However, we are seriously concerned about the practical results of some of the rules as drafted. In general, several of the draft rules generate additional bureaucracy and inefficiencies that will have negative consequences for Colorado and its citizens.”
Another argument

Drilling restrictions in the draft rules won’t cause serious impacts if companies
effectively plan their operations, said Duke Cox, interim director of the Western
Colorado Congress.

“If they plan ahead of time and adequately plan, there is absolutely no reason that
these seasonal restrictions are going to ‘shut down the industry,’” Cox said.

Cox said the COGCC is trying to address the need that “was mandated by the voters
of Colorado and by the legislature” to do something to protect wildlife.

“In my mind, if the industry isn’t happy, let’s see them suggest some alternatives that
will work,” Cox said. “As it stands, the way it’s been going in the past and the way the
industry been doing it in the past is not working.”

Cox admitted that while some small operators could be affected by the 90-day drilling
restriction at certain times, it is not a blanket restriction and “that will not shut the
industry, as a whole, down.”