Colorado is ground zero in the war on fracking across the U.S. At the Western Energy Alliance (WEA) summer meeting in Colorado Springs on June 23-25, the various fracking ban and moratorium initiatives threatening oil and gas activity in the state were leading topics of discussion. The cities of Boulder, Fort Collins and Broomfield all have approved moratoriums on fracking; two others, Longmont and Lafayette, have banned it.
The oil and gas industry in the state has mounted a vociferous battle to protect drilling in the state, with tens of millions of dollars funding media campaigns and outreach. And, during the WEA meeting, there was some good news for the industry: Loveland, Colo., voters knocked down a proposed two-year moratorium on fracking. The vote was close: 10,844 against the moratorium and 9,942 in favor, representing about 50% of registered voters.
Two of the most active drillers in the Denver-Julesburg Basin, Noble Energy Inc. (NYSE: NBL) and Anadarko Petroleum Corp. (NYSE: APC), have funded an initiative called Coloradans for Responsible Energy Development (CRED), which seeks to educate voters and garner support to oppose the bans. Some of the ballot initiatives are nothing more than fracking bans disguised as setback rules, said Paul Phillips at the WEA meeting. His company, Pac/West Communications, is managing the CRED program.
Some 11 oil and gas local-control ballot initiatives have been proposed for the fall election, with most focusing on setbacks and siting of drilling. However, signatures must be collected for them to be on the ballot, and the bar--at about 86,000--is high. Initiative 75, one of the 11, has been approved by the court for supporters to collect signatures. Phillips said he hopes it gets on the ballot because it is “so poorly written” that its chances are slim.
At the WEA meeting, Phillips referred to Gov. John Hickenlooper’s efforts to work with the oil and gas industry, business groups and local governments to develop legislation to bring the opposing forces together to avoid the ballot initiatives. This would require a special session of the legislature. This past winter, Hickenlooper helped forge a consensus among the industry, environmental groups like the Environmental Defense Fund and other stakeholders to come up with new stringent rules on methane emissions from oil and gas activity. In addition, the governor’s administration sued the city of Longmont for its vote to bar oil and gas drilling inside its residential neighborhoods. The argument is that the state’s Colorado Oil and Gas Conservation Commission already regulates such activity.
Speaking at the WEA event, Phillips said a proposed statewide setbacks initiative would increase the setback rule to 2,000 feet from the 1,500 feet it was already extended to last fall. “They keep moving the goalposts,” he said. Fracking supporters are fighting back with measures of their own. This spring, two Republican legislators filed a ballot initiative that would ban oil and gas tax payments to Boulder, Fort Collins, Lafayette and Broomfield, cities that have banned fracking. Another initiative based on fiscal impact would require a community to bear the cost of a fracking ban.
For Boulder County, a study by Netherland Sewell estimates the fiscal impact would be $1 billion in compensation to mineral owners and those who receive royalties from energy development on their property. For its part, the Business Research Division of the Leeds School of Business at the University of Colorado at Boulder did a study showing that a statewide fracking ban would “result in 93,000 fewer jobs, $12 billion in lost GDP and an annual reduction of $985 million in tax revenue for local and state governments between 2015 and 2040,” according to CRED.
Speakers at the WEA event stressed the importance of education in mounting a successful battle against the proposed bans and setback rules. Their polling has shown that educating voters that regulations are already in place for the oil and gas industry, some of which are the most stringent in the country; that fracking is not a new technology; that regulators have not found a single case of drinking water being contaminated by fracking; that there is a process for ensuring oil and gas drilling is done safely; and that U.S. energy development is playing a pivotal role in energy security, all can turn negative views of fracking into positive ones.
Brett Moore, of the National Association of Royalty Owners Rockies Chapter, discussed the ways his group is fighting against fracking initiatives that for mineral rights owners represent a “private property seizure.” He said there are 600,000 mineral owners in Colorado. His and other groups are encouraging mineral owners to testify about what is at stake for them if they are deprived of this value without just compensation. In Boulder County, he said each acre could be worth up to $100,000 in value to the mineral owner with a full section yielding up to $64 million.
WEA encouraged energy firms to enlist their employees in the fight against fracking by having them reach out to as many friends and neighbors as they can. Such outreach has proven highly effective in educating the public about fracking and the importance of the oil and gas industry to national, state and local economies, energy security and jobs.