A 2019 law that transformed the mission of Colorado’s oil and gas regulations was hailed as a game changer and a potential end to the state’s “oil and gas wars,” which flared as the growing Front Range population and drilling clashed.
Senate Bill 181 changed the focus from fostering oil and gas development to regulating production in a way that protects public health and safety, the environment and wildlife. But after seven years of hours-long debates on new rules, overhauling regulatory processes and forging new working relationships with local governments, questions remain about whether the game has changed enough.
Or changed too much, as the oil and gas industry contends. Since the bulk of the new regulations kicked in, the number of permits approved for individual wells has dropped dramatically. A new state report said a total of 14,937 well permits were approved from 2015-18, compared to 3,980 approved from 2022-25.
However, Colorado remains among the country’s top producers for oil and gas, according to the U.S. Energy Information Administration.
“Our industry has been very adaptive and innovative and working to meet those very high standards,” said Lynn Granger, CEO and president of the Colorado Oil and Gas Association.
“Unfortunately, at the end of the day, as we sit here in 2026, we still don’t have that regulatory certainty and we still have a pretty unstable environment both on the political front and on the regulatory front,” she added.
People who say the Colorado Energy and Carbon Management Commission, the state’s regulatory body for oil and gas, hasn’t done enough to prioritize public health and the environment believe the situation on the ground hasn’t changed considerably.
The landscape looks a lot like it did before SB181 became law, said Randy Willard of Aurora, who heads a community group fighting a plan by Crestone Peak Resources to drill 32 wells within roughly 3,000 feet of hundreds of homes and the Aurora Reservoir. The reservoir is the main water supply for Aurora, Colorado’s third-largest city with about 400,000 residents.
The ECMC has approved three other well locations by Crestone in the area.
“We have fundraised over $110,000 over the course of three years. We spent probably three quarters of that on legal fees,” Willard said. “And at the end of the day, from where I sit, everything looks about the same as it did before SB181.”
Mike Foote, an attorney and former legislator who co-sponsored SB181, is representing the community group Save The Aurora Reservoir.
The ECMC put the proposed Sunlight-Long multiple-well pad on hold in December and told Crestone to consider alternative locations.
Willard said considering the potential risk to the reservoir and the thousands of people in the area, he would feel safer with at least a 1.5-mile buffer from the wells. He believes making the company move the well pad would be a positive step.
“It would give people some hope that we actually can impact the process,” he said.
A role for local governments
The year before lawmakers passed SB181, Colorado voters defeated an initiative that would have required a 2,500-foot buffer, or setback, from new oil and gas development.
Proponents raised health concerns about exposure to pollutants and hydraulic fracturing, or fracking, which injects water, chemicals and other substances underground to break through rocks to extract the minerals. One of the byproducts of oil and gas activity is benzene, known to cause cancer.
Also voted down in 2018 was a counter ballot proposal that would have allowed people to seek compensation if a government action or regulation devalued their property.
Millions of dollars were spent fighting and promoting the proposals. In 2019, the Colorado General Assembly passed SB181.
Regulators decreed setbacks from wells be at least 2,000 feet. But in a move that remains a sore spot for advocates of strong protections, they also approved exemptions.
Before SB181, the director of the ECMC, then called the Colorado Oil and Gas Conservation Commission, reviewed and approved drilling applications. There wasn’t a regular public hearing process and even local governments had trouble getting an audience with commissioners, said Jeff Robbins, commission chairman and the agency’s former director.
Afterward, the volunteer commission was replaced with a full-time, professional body with a mix of expertise in such areas as oil and gas, land use and the environment. Cities and counties can write local rules and hearings for community feedback are held under certain circumstances.
A liaison team works with communities disproportionately affected by industrial pollution.
The commission completed writing rules in 2025 for the last of the bills related to SB181. Areas covered requiring oil and gas operators to show they can meet their financial obligations; restrictions on where wells can be drilled; and shutting down abandoned wells.
The ECMC regulates what happens underground while the law allows local governments to address activity on the surface and related transportation, noise, odors and dust. Local rules can be stricter than the state’s rules, but not less strict.
Robbins said SB181 didn’t spell out how the state, cities and counties should work together “in understanding this dual permitting process.” He said that gives the ECMC and local officials the opportunity to build relationships based on the different locales’ goals.
Weld County was a home-rule county before the oil and gas regulations were revamped, which granted a certain amount of autonomy over local matters. The county has nearly 14,500 active wells and is in the heart of the Denver-Julesburg Basin in northeast Colorado, one of the country’s more significant oil and gas fields.
But pre-SB181, Brett Cavanagh, director of the county’s oil and gas energy department, said local officials really didn’t have a role in overseeing the industry that’s a key part of the local economy.
Now, Weld County has a memorandum of understanding with the state. Cavanagh said the county’s relationship with the ECMC has grown and the commission participates in county meetings on well permit applications.
Cavanagh said the county’s approval of an application typically takes 90 days while the state’s approval takes 185 days or longer.
Holdups on the front end ripple through the system to the midstream companies, ones that gather, process, transport and store the oil and gas.
“We’ve seen a lot of change in ownership in midstream companies, and I think a lot of that is just due to the fact that the cost to do things is a lot here in the basin” due to regulations, Cavanagh said.
Western Midstream, based in Texas, said in a statement that the volume of oil it handles in Colorado has dropped more than 26% since 2019 because of lower activity. The regulatory changes have affected how Western operates in the Denver-Julesburg Basin and evaluates future investment in Colorado, the company said.
Robbins, an attorney, has dealt with oil and gas development from the local perspective. He represented La Plata County, which years before SB181 wanted more say over the development the state was greenlighting within its borders. Counties didn’t get routine hearings before the oil and gas commission and Colorado courts ruled that state laws preempted local ordinances.
Robbins served on a task force formed by former Gov. John Hickenlooper to come up with solutions to the growing tensions between energy companies and suburban dwellers increasingly in the path of drilling. Many of the group’s ideas were included in SB181.
During that time, Robbins got to know then-U.S. Rep. Jared Polis, who signed SB181 into law during his first term as governor. When he signed the bill, Polis said the hope was “the oil and gas wars that have enveloped our state are over and the winner is all of us.”
Erin Martinez was at the bill-signing ceremony. Her husband and brother died in a house explosion in Firestone in 2017 when an uncapped, cut flow line attached to a well leaked gas into the home. The law strengthened oversight of flow lines, which carry fluids or gas from the well to other parts of the site.
SB181 promises kept?
Polis said SB181 has worked as he envisioned. “The oil and gas wars was one the reasons I ran” for governor.
While the updated rules address a number of issues, Polis said a prime goal was a more transparent system for approving development and protections for communities. Previously, drilling could be as close as 250 feet to homes.
“(SB181) gave homeowners relief that they wouldn’t wake up one day to find 250 feet from their homes an industrial operation that would last months or years,” Polis said.
KC Becker, the former speaker of the Colorado House of Representatives, was one of the prime sponsors of SB181. She called the legislation “transformational,” particularly because it changed the regulatory agency’s mission.
“For too long, the industry and the state had said that by law they had to put oil and gas interests ahead of the concerns of local communities,” said Becker, now CEO of the Colorado Solar and Storage Association.
Despite the changes, Heidi Leathwood questions how much the paradigm for oil and gas regulation has shifted in the state. The climate policy analyst with 350 Colorado, which advocates for using 100% renewable energy sources, said changing the goal from fostering oil and gas development to regulating it with an emphasis on protecting people and the environment was huge.
“I feel like it’s kind of like trying to turn a tanker around. It takes a long time and I do not think we’re there yet,” Leathwood said.
The ECMC has approved most of the new permits submitted, Leathwood said. In cases where projects have been held up, she said the communities typically have more money and resources to rally support and hire lawyers. She also believes that so far, the requirement to factor in the cumulative impacts of more drilling hasn’t been fulfilled.
The 2019 law and regulations made important moves toward addressing the effects of oil and gas development on wildlife, water and such biological resources as rare plants and invertebrates, said Joro Walker, senior attorney at Western Resource Advocates. High-priority wildlife habitats mapped by Colorado Parks and Wildlife are now considered when development is proposed, she said.
“That’s incredibly important because before SB181, compliance with CPW’s recommendations were voluntary and there were no substantive requirements in the rules to protect these habitats,” Walker said.
However, Walker said a working group focused on the potential impacts on streams and other waters has yet to be convened.
“At the end of the day, I’d say (SB)181 came out as an important evolutionary bill, but not a revolutionary one,” co-sponsor Foote said in email. “Some folks would’ve preferred it to be revolutionary. But revolutionary doesn’t usually get through the legislative process.”
Mike Freeman, an attorney with Earthjustice, said the ECMC’s requirement that new wells be at least 2,000 feet from homes, schools and child care centers was at the time the toughest setback rule in the country. Then the ECMC included four exceptions, including allowing alternative measures deemed substantially equivalent to a 2,000-foot setback.
“If the legislature really wants to ensure that drilling stays away from people’s homes, they have to adopt strict setbacks that are written into the statute,” Freeman said.
Robbins said the number of oil and gas locations approved within 2,000 feet of residences has dropped. A new report by the ECMC shows that from 2015-18, a total of 719 oil and gas locations were approved within 2,000 feet of residences.
The number dropped by 88% to just 87 locations 2022-2025. One location can have multiple wells.
Referring to the decline in permits approved, ECMC Director Julie Murphy and there were lulls as everyone adjusted course. Also, as the industry innovated, single wells could reach farther requiring fewer wells.
While advocates for more constraints on drilling point to the low number of permits the ECMC has denied, Robbins thinks that’s the wrong way to view the situation.
“We have much greater detailed and protective standards, all of which compels operators to apply for permits that meet our standards and thus, are approvable,” he said. “The number of instances in which the commission felt that it was necessary to deny is much less.”
Robbins acknowledges the industry’s complaints about how long it takes to approve permits. Approving an oil and gas development plan from submission of an application to a hearing took an average of 257 days in 2024 and 297 days in 2025.
“It’s going to take longer when you are making filings that are 10 times more in-depth than they were pre-SB181,” Robbins said.
More regulatory uncertainty ahead?
The time it takes to process permits is one thing. For the oil and gas industry, the uncertainty around change and the potential for even more change is another issue.
Granger of the Colorado Oil and Gas Association said industry members have participated in more than 50 rulemakings since 2020 — not all were associated with SB181. Some were before the Colorado Air Quality Control Commission.
Lawmakers, industry representatives and environmentalists struck a kind of truce in 2024 when a bill to phase out new well permits and industry-backed initiatives prohibiting mandates for carbon-free energy sources threatened to reignite the oil and gas wars.
But people unhappy with implementation of the regulations have said updates, such as stricter setbacks, might be in order.
“On the legislative side, we see ideas proposed each year that would be pretty fundamental to the industry. There’s always the possibility that things change,” said Carly West, executive director of the American Petroleum Institute Colorado.
Industry representatives say Colorado’s regulations, considered among the strictest in the nation, have dampened interest in investing in the state and increased the cost of business. Granger said demand for energy is expected to keep rising and she would like to see Colorado production increase to help meet the need.
A 2025 report by the Common Sense Institute, a Colorado research organization focused on the economy, said despite proven reserves, Colorado fell behind the national pace of oil and gas production in 2021 when new rules took effect. If production had not declined after 2020, the report said the state would have produced 16.6 million more barrels of oil and marginally more natural gas worth a combined $1.3 billion.
Denver-based Bison Oil and Gas operates nearly 600 wells in Colorado, all in the Denver-Julesburg Basin with its core activity in Weld County. Getting the full set of approvals for new wells takes longer since SB181 took effect, often 12 to 18 months, depending on the local government, said Katie Gillen, vice president of environmental, health, safety and regulatory affairs for Bison.
“In Weld County, where the local program is mature and predictable, we have been able to continue operating and investing. Where that predictability does not exist, the same rules can create significantly more uncertainty and delay,” Gillen said in an email.
Still, Colorado is among the top 10 producers nationally. In 2024, Colorado was No. 4 in oil production and No. 8 in natural gas, the U.S. Energy Information Administration reported.
Gov. Polis said he hasn’t heard from major oil and gas operators in Colorado that state regulations have prompted them to pull back production. He said the price of oil is the major driver behind decisions on drilling and investments.
Murphy said Colorado’s oil production in 2014 was about 95 million barrels. The total in 2018 was roughly 169 million barrels and ranged from about 160 million barrels to 172 million from 2022 to 2025.
Natural gas production has stayed stable, according to the ECMC. In 2018, the total was 1.85 million cubic feet and about 1.87 million cubic feet in 2024.
The operators in the Denver-Julesburg Basin have largely figured out how to work in Colorado’s regulatory environment, said Ryan Hill, principal analyst at Enverus, an energy analytics and data company.
Companies in Colorado are drilling horizontally up to 3 and 4 miles to reach the oil and gas while trying to avoid populated areas, Hill said. The typical length is about 2 miles.
The Colorado basin stands out compared to others across the country in terms of the size and quality of the resource being so close to a significant population center, he said.
“They’re doing whatever it takes to access the resource while still working within SB181 and the requirements of the state,” Hill said.
But working within the parameters of SB181 regulations does cost more, Hill added. He said the majority of the acres in the more populated parts of the basin are held by three large companies with more resources than smaller operators: Chevron, SM Energy, which recently merged with Civitas, and Occidental Petroleum.
While consolidation of companies occurs in most older oil and gas fields such as the Denver-Julesburg, Hill believes that Colorado’s regulations have played a part.
A review by Enverus showed there were 19 to 20 independent companies working in the basin in 2019 that drilled at least 10 wells per year. In 2025, there were six, Hill said. He believes the regulatory environment has affected the outlook of private equity or public companies thinking about buying assets in the basin.
Oil and gas basins across the country experienced “a pretty material drop in activity” during the height of the pandemic but most have rebounded, Hill said. Production in the Denver-Julesburg Basin has continued “to creep up,” he added.
“I think that’s a function of the resources. We do view it in that top-tier status of truly what’s left,” Hill said.
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