Monday, August 13, 2018
Bloomberg reports that 2018 has been a banner year for Colorado’s shale drillers, but pumping oil and natural gas may be largely prohibited in the state if a November ballot initiative supported by industry critics is approved. Spurred by a fatal gas explosion last year, the initiative endangers output from one of the country’s most prolific plays. Meanwhile, the electoral contest for governor features an insurgent Democrat, U.S. Rep. Jared Polis, who has made his name in Colorado politics by bankrolling anti-hydraulic fracturing campaigns.
“The contest could mark a turning point in the long-running battle over drilling in Colorado, a politically mixed state where explorers, environmentalists, and local residents have clashed as in few other places,” Bloomberg writes, citing Height Securities LLC. “With polls showing a ‘blue wave’ of support for Democrats nationwide, Polis and the ballot initiative both stand a good chance, leaving the industry’s future up in the air.”
Countering the Democrat-led drive are business groups, which have pitched their own set of ballot questions that would require property owners to be compensated for any loss in the market value of drilling rights due to new regulations. That could hobble local government efforts to clamp down on drilling, said one analyst quoted by Bloomberg.
Noted is that advances in hydraulic fracturing and horizontal drilling have propelled Colorado into the upper echelon of oil and gas producers nationwide, but those gains have collided with the growing population in the Denver suburbs and the Front Range region along the Rockies. The state produced a record 450,000 bbld of crude in April and 149 Bcfd of natural gas, just short of the all-time high.
“The energy industry’s biggest worry this year is Initiative 97, a proposal to expand the buffer zone required between oil and gas wells and homes, schools, and other occupied structures,” Bloomberg explains. The initiative would mandate a 2500-foot setback, up from 500 feet currently. “More significantly, it would extend the requirement to cover lakes, streams, parks, open space, and a variety of other ‘vulnerable areas.’ Altogether, more than 54% of the state’s land area would be off-limits to new drilling, according to analysis by the state Oil and Gas Conservation Commission. In Colorado’s top-five producing counties, 61% of acreage would be inaccessible.”
“That is effectively a ban on the industry,” says Dan Haley, president of the Colorado Oil & Gas Association. “You’d basically have no new wells drilled in Colorado.” In all, 85% of non-federal land in the state, where the majority of oil and gas is produced, would be closed to new wells. A similar proposal in 2016 failed to gain enough signatures to qualify for the ballot. Observed is that energy and natural resources generated more than $13 billion and supported 150,000 jobs in Colorado last year. Meanwhile, Polis, a millionaire businessman from Bolder who helped finance campaigns in 2014 to tighten regulations on hydraulic fracturing, is dialing-down some of his criticism as he seeks statewide support for this gubernatorial bid, Bloomberg reports, going so far as to publicly oppose Initiative 97. “His website trumpets his plans to generate 100% of the state’s energy from renewable sources by 2040, but it makes no mention of fracking, pro or con. Polis declined a request for an interview,” Bloomberg says.
“The Democrat understands that the state can’t afford to undermine the industry,” says an analyst interviewed by the news agency. “He has had his come-to-Jesus moment where he can either pick his crusade against oil and gas or he can pick every other pillar on his platform. Is he going to shoot himself in the foot because he doesn’t like oil and gas? I find that hard to believe.”
(SOURCE: The Weekly Propane Newsletter, August 6, 2018. Receive once- or twice-weekly updates on the latest posted and spot prices at all major terminals and refineries around the U.S. with a subscription to the Weekly Propane Newsletter. Included is market analysis and expert commentary not found elsewhere. Also featured is a center spread of posted prices, which includes hundreds of postings that are completely updated each week. The Newsletter provides up-to-date news items of interest to propane industry insiders and serves as third-party pricing verification for index-pricing clients. Click the Subscription tab to subscribe.)
“The contest could mark a turning point in the long-running battle over drilling in Colorado, a politically mixed state where explorers, environmentalists, and local residents have clashed as in few other places,” Bloomberg writes, citing Height Securities LLC. “With polls showing a ‘blue wave’ of support for Democrats nationwide, Polis and the ballot initiative both stand a good chance, leaving the industry’s future up in the air.”
Countering the Democrat-led drive are business groups, which have pitched their own set of ballot questions that would require property owners to be compensated for any loss in the market value of drilling rights due to new regulations. That could hobble local government efforts to clamp down on drilling, said one analyst quoted by Bloomberg.
Noted is that advances in hydraulic fracturing and horizontal drilling have propelled Colorado into the upper echelon of oil and gas producers nationwide, but those gains have collided with the growing population in the Denver suburbs and the Front Range region along the Rockies. The state produced a record 450,000 bbld of crude in April and 149 Bcfd of natural gas, just short of the all-time high.
“The energy industry’s biggest worry this year is Initiative 97, a proposal to expand the buffer zone required between oil and gas wells and homes, schools, and other occupied structures,” Bloomberg explains. The initiative would mandate a 2500-foot setback, up from 500 feet currently. “More significantly, it would extend the requirement to cover lakes, streams, parks, open space, and a variety of other ‘vulnerable areas.’ Altogether, more than 54% of the state’s land area would be off-limits to new drilling, according to analysis by the state Oil and Gas Conservation Commission. In Colorado’s top-five producing counties, 61% of acreage would be inaccessible.”
“That is effectively a ban on the industry,” says Dan Haley, president of the Colorado Oil & Gas Association. “You’d basically have no new wells drilled in Colorado.” In all, 85% of non-federal land in the state, where the majority of oil and gas is produced, would be closed to new wells. A similar proposal in 2016 failed to gain enough signatures to qualify for the ballot. Observed is that energy and natural resources generated more than $13 billion and supported 150,000 jobs in Colorado last year. Meanwhile, Polis, a millionaire businessman from Bolder who helped finance campaigns in 2014 to tighten regulations on hydraulic fracturing, is dialing-down some of his criticism as he seeks statewide support for this gubernatorial bid, Bloomberg reports, going so far as to publicly oppose Initiative 97. “His website trumpets his plans to generate 100% of the state’s energy from renewable sources by 2040, but it makes no mention of fracking, pro or con. Polis declined a request for an interview,” Bloomberg says.
“The Democrat understands that the state can’t afford to undermine the industry,” says an analyst interviewed by the news agency. “He has had his come-to-Jesus moment where he can either pick his crusade against oil and gas or he can pick every other pillar on his platform. Is he going to shoot himself in the foot because he doesn’t like oil and gas? I find that hard to believe.”
(SOURCE: The Weekly Propane Newsletter, August 6, 2018. Receive once- or twice-weekly updates on the latest posted and spot prices at all major terminals and refineries around the U.S. with a subscription to the Weekly Propane Newsletter. Included is market analysis and expert commentary not found elsewhere. Also featured is a center spread of posted prices, which includes hundreds of postings that are completely updated each week. The Newsletter provides up-to-date news items of interest to propane industry insiders and serves as third-party pricing verification for index-pricing clients. Click the Subscription tab to subscribe.)
