Colorado's $13 billion oil and gas industry has taken on Gov. Bill Ritter and his administration by backing out of a deal to reform energy regulation.

The industry is taking a stand against House Bill 1341, shifting from its initial decision to remain neutral. The bill seeks to increase the size and composition of the board of the Colorado Oil and Gas Conservation Commission.

Ritter had promised during his election campaign to reform the commission. Since he took office, his administration has discussed the bill with industry for at least a month to try to reach consensus, said Ritter spokesman Evan Dreyer.

"We engaged in a conversation in good faith; we were under the impression until just the other day we had a deal," Dreyer said. "The governor is disappointed that they have backed out of the deal.

But even without the backing of the industry, Ritter is pushing the bill, Dreyer said.

The bill causes many concerns, said Stan Dempsey of the Colorado Petroleum Association, which is opposing the bill.

The industry is concerned because the bill calls for a dramatic overhaul of the regulatory body. It increases the board size to nine from seven and allows other state agency heads to vote on oil and gas matters.

"The way the bill currently is drafted, if it passes, it will have a chilling effect on important oil and gas projects in Colorado," Dempsey said, testifying before a House committee Wednesday. "It creates an uncertain regulatory environment, and I believe that the entire country is watching this debate."

"I am not predicting gloom and doom, but the bill will impact our members making decisions on whether to invest or the investment schedule," Dempsey added.

The Colorado Oil & Gas Association also changed its position from neutral to conditional support, saying it has concerns about the bill's definition of waste and appointment of certain members to the board.

BP, the state's top gas producer, said it would "wait and watch the debate before taking a position," said Jack Rigg, regional manager of government and public affairs. The company recently announced plans to invest $2.4 billion over 13 years at its La Plata operations.

The commission is on track to approve about 6,000 permits to drill this year, and the state likely will have more than 33,000 active wells by the end of 2007.

"The bill is not designed to hurt or hinder industry," said Harris Sherman, executive director of the department of natural resources. "But we have received 1,500 complaints over the past five years regarding water quality, noise, odor, safety, and we can't ignore them."

Reform bill details

• House Bill 1341 increases the size of the commission to nine from seven members but reduces the number of board members with industry background to three from five.

• The new board would include a local government official, an expert in soil conservation, an owner of both land and mineral rights, and the executive directors of the departments of natural resources and public health and environment or their designees.

• The bill also changes the definition of waste to include public health, safety, wildlife and environment the commission must consider before determining how much resource can be recovered.

chakrabartyg@RockyMountainNews.com or 303-954-2976