Carman: Oil and gas industry grifters violate Colorado law with impunity by Diane Carman, Feb 2, 2020, The Colorado Sun
Let’s face it, outrage is our new normal. … Still, even if you rigorously avoid the spectacle of $1,500-an-hour attorneys trying to defend the indefensible, there’s always more.
The report last week from the Colorado State Auditor on the grifters in the oil and gas industry cheating taxpayers out of hundreds of millions in severance tax revenues will make your blood boil.
The audit, requested two years ago by House Speaker KC Becker, D-Boulder, uncovered flagrant disregard for state-mandated monthly well reports. More than 75% of oil and gas operators in the state had not complied.
One of the biggest drillers reported producing 46 million barrels of oil and 187 million MCF (1,000 cubic feet) of natural gas in the period from 2016 to 2018 and missed 8,407 well reports during that time.
Clearly, that must have been company policy. How else to explain it?
Meanwhile, the state agencies assigned with enforcing the law were understaffed to the point that drillers had little concern about getting caught. [Even in the heavily staffed AER in Alberta, companies have little concern about getting caught either because the “regulator” breaks the law too, helping companies break the law and avoid “rules” pimped by politicians, the AER and CAPP, the industry’s propagandist lobby group, as “Best in the World” and “World Class.” ]
It was an honor system among thieves.
So, the oil and gas industry was allowed to rip off taxpayers with impunity. [Throughout Canada too!]
And while it’s troubling to hear that the audit estimates the state lost roughly $308 million in revenues just from the fines that should have been imposed on the 316 drillers that violated the law, what’s worse is that the money will never be recovered.
Under the rules of the Colorado Oil and Gas Conservation Commission, which until last year was more of a promotional arm of the industry than any kind of regulatory agency, the statute of limitations on penalties for failure to file well reports is one year.
The situation is laughable, especially if you’re an oil industry exec.
The sad thing is that while $308 million is pocket change for the industry, it means a lot to the state budget.
Annual revenues for the eight major oil and gas drillers in Colorado are estimated at $44.6 billion, certainly enough to pay for a handful of people to comply with state law.
Even when they do comply, they’re getting a sweet deal. Colorado’s severance taxes are among the lowest in the country, thanks to intense and wildly successful lobbying efforts, and industry-friendly governors and state legislatures over the decades.
So, to appreciate how much this has cost Coloradans in services, consider the governor’s 2020-21 budget proposal.
Among the governor’s key initiatives are to expand the preschool program ($27.6 million), improve child care quality and facilities ($10 million), pay down the debt owed to the K-12 education fund ($40 million) and add $26 million to the higher education budget to keep tuition increases below 3%.
That amounts to $103.6 million, roughly one-third of the lost revenues from the oil and gas industry fines.
Gov. Jared Polis is calling for $2.3 million to help reduce air pollution (of which oil and gas drilling is a major contributor, just incidentally); $15 million for mental and behavioral health programs; $30 million for health insurance for kids; $10 million to improve access to public lands; and $10 million for overdue water infrastructure.
That brings us to $170.9 million.
What else could we have paid for with the oil and gas penalties we can’t collect?
There’s the $87 million requested for treating Coloradans trapped in the opioid epidemic and $31 million sought for the reserve fund to get us through the next recession.
Add it all and we still have $19 million and change left to pay for an army of enforcement personnel to monitor the oil and gas industry to make sure the companies pay their taxes, monitor wells for leaks, protect the safety of their workers, ensure their fracking fluids aren’t polluting the water supply, and maybe even oversee an effort to find and secure abandoned flow lines across the state like the one that blew up a suburban home in Firestone in 2017 and killed two people. [the industry and its putrid enablers will never allow that to happen]
OK, so even if we can’t collect the lost revenues from the past, spending money to enforce the laws regulating the industry seems like a no-brainer. Surely it would pay for itself almost immediately.
And if nothing else, it would ease a bit of our collective outrage, maybe even soothe our weary souls … if only for a moment.
IT’S ONE HELL OF A LOT WORSE IN ALBERTA:
BNN Interviews Alberta Oil Patch Consultant Brent Nimeck on Lexin and AER’s Orphan Wells: “This problem is 30 years in the making. … I would call it a Ponzi Scheme…. This is an orchestrated fraud from multiple angles: Industry, CAPP and the Alberta Energy Regulator have enabled this to happen. … Through our independent analysis and we’ve confirmed this at multiple sources within the energy regulator, the liabilities are over $300 billion. That’s what’s on the hook for Alberta taxpayers right now – $300 billion.”
The Promise: Fracking brings prosperity & jobs.
Reality: Tens of thousands of oil patch workers out of work and $300 billion in liabilities.