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Permit Bids Soar in Colorado

The new regulations by the Colorado Oil and Gas Conservation Commission (COGCC), which went into effect by August 1, require wells to be at least 500 feet from the nearest occupied building, mandate pre-drilling notification for nearby landowners and introduce measures to reduce noise, odors, dust, and light.

Technological advancements in hydraulic fracturing or fracking pushed permits for horizontal wells in Colorado to a record level in 2012. Permits for such wells have already exceeded that pace this year.

According to U.S. Representative Jared Polis, a Boulder Democrat, thousands of Colorado families have been devastated by fracking in their neighborhoods and by fracking on their property. Polis has argued the state doesn't really have the right process around fracking. Polis came into direct contact with the oil boom when a towering drilling rig appeared July 18 about 50 feet from the driveway of his 50-acre weekend retreat, about 46 miles north of Denver in Weld County, home to the state's largest number of oil drills.

The rush to drill in the Niobrara formation is leading to a backlog of permit applications at the oil commission. Fracking pushed oil production in Colorado to its highest level in 55 years in 2012. Matt Lepore, director of the COGCC, said that over the past 18 months, the commission's processing time for both oil and gas location assessments and drilling permits averages 36 days. The commission had a backlog of 404 drilling applications in June, according to a July 29 staff report. The agency has approved drilling 1,201 horizontal wells this year, compared with 1,190 permits in all of 2012. The number of permits is 13 times higher than in 2008.

During the second quarter of this year, production of Noble Energy, Inc's horizontal wells in the Denver-Julesburg Basin more than doubled from a year earlier, to about 50,000 barrels equivalent per day. Noble plans to drill 300 wells in the basin in 2013, with a capital budget for the area of $1.7 billion, according to a presentation given to investors in May. Anadarko Petroleum Corp., which holds about 350,000 net acres in the Wattenberg field, located in the Denver-Julesburg basis, invested about $3.3 billion in capital in the region from 2007 to 2012, according to the company's website.

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