With hundreds of new oil and gas wells on the horizon, Aurora moves toward division to enforce regulations

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AURORA | With local government now at the helm of deciding how to approach oil and gas development in their communities, Aurora is on its way to establishing a whole division dedicated to handling applications, permitting, inspection and monitoring approved wells. 

Aurora city lawmakers have already approved one operator agreement with Conocophillips and is slated to discuss more agreements with Axis Exploration next week. The agreements layout standards the companies must meet, such as air quality, safety and water quality.

“We don’t have the current capacity (to address what) are in the operator agreements, so it’s definitely necessary,” said councilwoman Nicole Johnston, who has been an advocate of stronger regulation of oil and gas in the city. “Of course, I’d be remiss, if I didn’t say we need to do a lot more.”

Much of the oil and gas development occurring in Aurora is happening in Johnston’s ward in the northeast portion of the city. Johnston said she’d like to see an overhaul of the city code to include requirements of the industry.

The proposal suggests that the division be made similar to the one that was implemented to further regulate the marijuana industry in Aurora.

“Our intent is to replicate what we did on marijuana,” said Deputy City Manager Jason Batchelor during a city policy committee meeting on Wednesday.

Batchelor said there would be an initial push, about four to six months, to move through the planning and processing stages of increased oil and gas development in Aurora. Then, the city would focus on transitioning into the monitoring and regulating portion of the agreements.

This division would include a position that acts as the city’s liaison for the industry and the state oil and gas conservation commission, a senior planner that would review well sites and facilities, a project coordinator that would handle documentation required for every well site and two facility inspectors.

This year the city council adopted the ability to enter into operator agreements with companies, so far signing a contract with ConocoPhillips to bring more than 300 new wells to the city. Two more agreements are expected to be heard before council on July 15, including a central gathering facility that would collect crude oil, associated field gas and water needing treatment.

According to city documents, the city is recommending that the new division be funded through additional annual permit fees that are paid by oil and gas operators working in Aurora.

The marijuana division was also funded through fees.

Oil and gas companies already pay a standard plan review fee, but at the recommendation of staff would add approximately 50 percent to that fee, plan review fees would then range between $15,000 and $25,000 for an average-size well site.

A new fee would be implemented to “cover the costs associated with inspections.” This fee could add about $2,000 per permit.

Operator license fees would cover the majority of the division’s inspection and monitoring duties, according to the city. That annual fee is expected to be $2,640 per well, so a larger operator could pay the city upwards of $200,000 per year.

Senate Bill 181, which opted for local government to control oil and gas operations, allowed municipalities to charge such fees.