Geological Survey’s MS-33 Oil and Gas Fields of Colorado). See 2 CCR 404-1-431(e)(2). In line with the Consortium’s recommendations, these new water usage standards will be phased in, and measured over the course of four-year compliance periods starting on January 1, 2026. Operators must also account for any permitted wells outside of an established geologic basin; for purposes of compliance, any ‘non-basin’ well must be treated as and allocated toward the basin nearest in proximity to such well location. See id. The Commission’s decision to measure compliance with the Rules across each basin (as opposed to a state-wide average, as the Consortium recommended), or on the other hand, measuring at a micro level, was an intricate one. Historically, there has been a large disparity in produced water usage across the state due to differences in topography, infrastructure, and localized water scarcities. Four-Year Compliance Periods. In the first compliance period, “an Operator’s geologic basin- wide combined oil and gas developments permitted on Oil and Gas Development Plans (OGDPs) filed after January 1, 2026, and the combined subsequent operations to recomplete or restimulate any existing well within the relevant geologic basin, will use a minimum average of 4% Recycled Produced Water and Recycled Produced Water Alternatives for Well Stimulations commenced before January 1, 2030.” 2 C.C.R. 404-1-905.c.(6)(A)(i) . During the next period, which begins on January 1, 2030, “an Operator’s geologic basin-wide combined oil and gas development, regardless of when the Wells were permitted, will use a minimum average of 10% Recycled Produced Water and Recycled Produced Water Alternatives for Well Stimulations commenced before January 1, 2034.” See id. at 905.c.(6)(A)(ii). The Commission declined to formalize the Consortium’s recommended targets for later compliance periods. Instead, the Rules call for the Commission to conduct further rulemakings by June 1, 2028, to set minimum requirements for the periods beginning in 2034 and 2038; but if later rulemakings do not occur, the recommended averages of 20% for 2034- 2037 and 35% for 2038-2041 will become effective. See id. at 905.c.(6)(A)(iii).
An operator must demonstrate compliance with the water usage standards, measured by that operator’s proportionate, aggregate usage of Recycled Produced Water (or Alternatives) across all of a relevant geologic basin. See 2 C.C.R. 404- 1-905.c.(6)(B). More specifically, the calculation of this compliance measurement is (i) the total volume of Recycled Produced Water used, plus the total volume of Alternatives used, (ii) plus Recycled Produced Water Credits (Credits, discussed further below) created at all applicable wells within the basin during the relevant four-year compliance period; (iii) divided by the total volume of all water used for Well Stimulations at all applicable wells within the basin during the relevant four-year compliance period.” See 2 C.C.R. 404-1-431.e.(2)(G) . Compliance with these standards, including the creation or transfer of any Credits, will be tracked by several new reporting requirements introduced by the Rules.
Additional Reporting Requirements to Monitor Compliance
Operators must demonstrate compliance with the new usage targets via new reporting and filing requirements that call for water usage data to be reported monthly, quarterly, and annually, as further explained below. Annual Certifications. While the Rules establish four-year compliance periods as described above, it is important to note that the reporting of relevant water usage figures, and whether an operator is on pace to meet the compliance targets, is required on a yearly basis. Starting in 2027, by April 1 of each calendar year, each operator will be required to submit a certification to the ECMC that states whether it met the applicable water usage standard for the previous year(s) in the compliance period. See 2 C.C.R. 404-1-905.c(6)(D) . Notably, with respect to the first year in any compliance period, operators must show that they reached no less than 50% of the applicable percentage target for the period during that first year.
For example, in the first Annual Certifications due before April 1, 2027, an operator would
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