A new economic analysis released last week found that oil and gas companies operating on public and tribal lands in Colorado lost nearly $1 million in state revenue in 2019 due to leaky wells.

The study, commissioned by the Environmental Defense Fund (EDF), a nonprofit environmental advocacy group, and the Taxpayers for Common Sense (TCS), a nonpartisan federal budget watchdog, found that Colorado wasted the sixth-highest amount of natural gas among U.S. states in 2019. In total, oil and gas companies lost $500 million worth of natural gas in 2019 on U.S. public and tribal lands.

Above: a map from the study showing wasted gas on public and tribal lands in different states.

The study used data from 2019 as it is the most recent year of data available that is a reflection of the oil and gas industry. The years 2020 and 2021 were severely impacted by the COVID-19 pandemic and data from 2022 is not yet available.

Natural gas flaring was the leading source of the waste as it was responsible for 54% of all methane wasted on public lands. Flaring is a regular part of oil and gas drilling that environmental experts and activists claim is bad for the environment. The other contributor to natural gas waste is gas being vented or just leaking from wells into the atmosphere during production.

Above: another slide from the study findings.

According to climate scientists, methane, a potent greenhouse gas, leaked into the atmosphere contributes to global warming.

In 2020, Colorado became the first state to end routine flaring. Since then New Mexico has also passed rules to limit flaring.  

Currently, the Bureau of Land Management and the Environmental Protection Agency are both accepting public comments on proposed rules to reduce methane waste on public lands.

Jon Goldstein, senior director of regulatory and legislative affairs at EDF, explained his support for these rules in a press release announcing the study.

“We can’t continue to allow half a billion dollars’ worth of taxpayer-owned resources to go to waste every year,” Goldstein said. “The Biden administration has a clear opportunity to step up with strong rules that stop waste and pollution from practices like routine flaring to protect the public interest. These resources should benefit priorities like education and infrastructure, not be released into the atmosphere to undermine our climate and health.”

In the same press release, TCS vice president Autumn Hanna said the study reveals how this waste is a blatant giveaway to the oil and gas industry. According to the analysis, the total of 163 billion cubic feet of methane wasted on public lands translates into nearly $64 million in lost revenue for tribes, states, and the federal government due to the lost royalty and tax revenue.

“This new reporting further confirms that hundreds of millions of dollars’ worth of natural gas is being lost each year,” said Hanna. “Not only is this an unnecessary waste of a valuable natural resource, allowing drillers to release and burn off natural gas royalty-free in nonemergency situations, instead of capturing and selling it, is a blatant giveaway to the industry. It is time for the administration to stop this waste.”

While Colorado has some of the most progressive rules in the nation surrounding oil and gas production and limiting its harmful effect on the environment and public health, environmental advocacy groups in the state have concerns about the state implementing those rules.

Click here to read the results of the study.