By Jen Schumann | Contributing Writer, Rocky Mountain Voice
Few states rival Colorado’s wealth of energy resources, but its oil and gas industry is up against increasing challenges. Small and mid-sized operators, once the industry’s backbone, are struggling with a growing tangle of regulations.
Delayed permits, overlapping oversight and rising fines are making it harder to stay in business, forcing many to reconsider their future in the state.
Ryan Clark, Vice President of Engineering at Petrox Resources and a fourth-generation Coloradan working in his family’s oil and gas business, has watched small operators disappear under the weight of increased regulations.
“Honestly, I don’t know if oil and gas has a future here,” he said. “Growing up, this was a business people built for generations. Now, I don’t see a lot of small operators doing much. And I don’t see a lot of big operators either. It’s like Colorado is pushing everyone out.”
Tyson Johnston, a father of four, serves as the Vice President of Land & Regulatory at Gunnison Energy LLC to ensure energy development is environmentally responsible and economically viable. He takes pride in industry innovations that reduce emissions and support sustainable energy solutions.
Johnston echoed similar concerns. “The end game under Polis will be importing energy. He believes it’s all going to be wind and solar, but the truth is that’s never going to be the case. We’ll be importing oil and gas from states that are less responsible with how they produce.”
Michelina Paulek, Executive Director of the Energy Council, is a multigenerational Coloradan raising her children on land that generates oil and gas royalties. She understands firsthand how energy development supports local economies and future generations, both as a landowner and an industry advocate.
Paulek highlighted the bureaucratic bottlenecks that are discouraging investment. “The average Oil and Gas Development Plan (OGDP) approval time in the state is over 260 days. It doesn’t give my operators or the industry confidence to invest in the state,” she said.
The regulatory overload: More agencies, more delays, more uncertainty
For decades, Colorado’s oil and gas industry operated under clear state and federal guidelines. That changed in 2019 with Senate Bill 181, which expanded oversight and brought multiple agencies into the mix.
Instead of simplifying regulations, it created overlap and delays, discouraging investment and squeezing out smaller operators.
“Colorado is different from a lot of other states. We have multiple agencies with their fingers in the pie, all trying to regulate the same thing,” said Clark.
The Energy & Carbon Management Commission (ECMC), formerly the COGCC, was rebranded in 2023 to reflect its growing regulatory scope beyond oil and gas.
Johnston explained how excessive regulations have driven up costs. “The cost, the timing and the effort has now been duplicated just to complete ECMC’s process. We’re jumping through the same hoops multiple times,” he said.
Paulek added that the financial burden of compliance is often excessive. “My operators are sometimes triple bonded, depending on where their wells are. We have a federal bond, a state bond and a county bond,” she said.
“The state already has a $27 million-plus Orphan Well Enterprise Fund, which my operators pay into annually—either $225 per well or $125 per well, depending on their BOE. So this duplicative bonding is unjustified, arbitrary, and capricious,” Paulek added.
The permitting process in Colorado has become so restrictive that many operators are looking to other states.
“If I go to Wyoming, I have the Wyoming Oil & Gas Commission and the BLM. That’s it. I don’t have to deal with five different agencies all trying to regulate the same thing. Colorado is just making it impossible,” Clark said.
Are state agencies using enforcement to fund themselves?
Beyond excessive permitting delays, fines and penalties against operators have skyrocketed. Some industry leaders believe enforcement is no longer just about compliance—it’s about generating revenue.
If you look at ECMC’s annual reports, they’ve attempted to fine people anywhere from $2 to $6 million a year over the last four or five years. That number skyrocketed exponentially last year.
Paulek pointed to publicly available data that supports this claim. “Our Notices of Alleged Violation (NOAVs) have gone up to more than $41 million in 2024. It’s public record—you can pull it from the ECMC website,” she said.
The expansion of state agencies in recent years raises further concerns about financial incentives behind enforcement actions.
“In Colorado, the second-largest sector of employment is government. You can look at how many full-time employees the Colorado Department of Public Health and Environment (CDPHE) gained in the last three years. The ECMC alone has gained almost 200 employees. If the general fund can’t support that, they go to industry,” Paulek explained.
At a recent industry panel, regulators refused to answer direct questions about whether fees and fines were being increased to support government jobs.
“At a Denver Petroleum Club panel on February 27, Julie Murphy, the director of the ECMC, was asked directly: ‘Are fees and fines going up to support ECMC staffing increases?’ She had no comment,” Paulek said.
Small vs. big operators: Who can survive in this environment?
The regulatory burden does not impact all companies equally. Smaller operators, with limited legal and financial resources, are at a clear disadvantage. Meanwhile, larger corporations can absorb the costs with dedicated compliance teams.
“In my honest opinion, they don’t want small operators. I think they’ve made that kind of clear. They want big operators they can control,” Clark said.
Paulek argued that the barriers imposed on oil and gas aren’t coincidental—they’re calculated to push the industry out.
“In talking to the NGOs, they would argue that the reason they are deterring us is because they don’t want development. That’s the bottom line—they’re admitting it. We’re being deterred from the permit process with regulatory, non-science-driven rules. They don’t want our business. They want to invest in recreation or other economic drivers. They don’t appreciate the industry that is oil and gas.”
Johnston added that the cost of compliance is becoming unsustainable. “We’re a small company. We don’t have our own GIS department. We don’t have our own survey equipment or field equipment that we can just go out there and draw up additional maps. We have to hire people to do all of that, so the cost to us is extremely expensive,” he said.
Smaller operators across the state are facing the same burden.
Clark, who works in his family business, said new regulations are piling up faster than companies can adjust. “Instead of targeting one issue at a time, they just keep adding regulations every month. A small company like us can’t keep up. Before, we could run a company with one engineer, a landman, and a CPA. Now, you need a whole team just to deal with regulations,” he said.
The side of oil & gas that isn’t given enough air time
Despite the challenges, companies such as Gunnison Energy have remained proactive, adopting innovations that cut emissions and improve operations.
“We voluntarily took on additional protections. We installed electric plants and pipelines, allowing us to pump water directly to the field and eliminate 2,500 truck trips per well completion,” Johnston said.
They didn’t stop there. “We found a way to rail sand near our project area, saving 150 to 200 miles of truck traffic per trip,” he added.
Oil and gas doesn’t just power homes—it funds communities. Revenue from oil and gas helps sustain essential public services.
“Without severance taxes from oil and gas, the state doesn’t survive. And there’s no plan to replace that income. There’s only a plan to fine people out of existence, to pillage the industry that’s been supporting this state for so long. It’s very sad,” Johnston said.
Johnston urges Coloradans to look deeper into energy policy and its real-world consequences.
“If you don’t understand the full cause and effect of energy policy—what it has on your everyday life, on every item you use, on everything from the money in your pocket to the food on your table—you don’t fully understand how important having affordable energy is to people,” he said.
The regulatory landscape in Colorado is shifting, and for many in the industry, the future remains uncertain. But as Paulek, Clark and Johnston’s experiences highlight, what happens next will have consequences not just for energy companies, but for communities across the state.