In December 2021, the Colorado Air Quality Control Commission (AQCC) adopted a broad range of new regulations aimed at reducing emissions of greenhouse gas (GHG) pollutants and ozone precursors, with emission reductions prioritized in disproportionately impacted communities (DIC). The regulations adopted covered several broad topic areas and spanned both Regulation 7 and Regulation 22.
This post is dedicated to the revisions adopted for Regulation 22 that affect Upstream Operations:
- The latest full version of Regulation 22 can be found at the following link.
- A redline version of Regulation 22, showing all changes adopted in December 2021, can be found at the following link.
Greenhouse Gas Intensity Program for the Oil and Natural Gas Upstream Segment (Part B, Section IV)
Beginning January 1, 2023, any person or entity that operates upstream segment activities or equipment must participate in the GHG intensity program outlined in Section IV. The program consists of preproduction and production GHG intensity targets that step down over time to achieve the GHG reductions required of upstream segment operators to meet the requirements of House Bill 21-1266.
GHG Intensity (IV.A., IV.D.)
GHG intensity is defined as metric tons of carbon dioxide equivalent (mtCO2e) emissions from pre-production and production operations, divided by total production of oil and natural gas in thousand barrels of oil equivalent (kBOE). Natural gas production in million standard cubic feet (MMscf) can be converted to kBOE by dividing by 5.8 MMscf/kBOE.
GHG Intensity Targets for Upstream Segment Operations (IV.B.)
Two (2) sets of GHG intensity targets were developed: one (1) for majority operators and one (1) for minority operators.
Majority operators are defined as operators with company-wide production from current, acquired, or developed assets in Colorado of greater than or equal to 10,000 kBOE per calendar year. This also applies to new to market operators whose first transaction(s) in Colorado is to purchase the assets of a majority operator.
Minority operators are defined as operators with company-wide production from current, acquired, or developed assets in Colorado of less than 10,000 kBOE. This also applies to new to market operators whose first transaction(s) in Colorado is to purchase the assets of a minority operator. A minority operator may become a majority operator in a given calendar year beginning in 2023 if they have production greater than or equal to 10,000 kBOE, or if they have an increase in production greater than or equal to 2,500 kBOE compared to the previous calendar year.