Colorado Oil & Gas Industry Anxious About Potential November Ballot Measure

---

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--A proposed ballot initiative to severely restrict new Oil & Gas drilling in Colorado was discussed widely by speakers, attendees and exhibitors at this week's 30th annual energy summit sponsored by the Colorado Oil & Gas Association (COGA) (Denver, Colorado). The Colorado Secretary of State is required to determine by early September if enough signatures were collected to put the issue on the November ballot.

Initiative 97, backed by environmental and citizens' organizations, would impose dramatically higher setback requirements for new oil and gas wells. Currently, the state requires those wells to be no less than 500 feet away from homes and 1,000 feet away from schools. Initiative 97 would increase those setbacks to 2,500 feet, and the setback requirements would be expanded to include waterways and undefined environmentally sensitive areas.

To get on the November ballot, organizers need to collect 98,492 signatures from registered Colorado voters. Organizers reportedly said they dropped off about 171,000 signatures at the Secretary of State's office earlier this month.

Environmental groups and the Oil & Gas Industry have crossed swords for years over regulation of drilling in Colorado. During the summer of 2014, Governor John Hickenlooper, a petroleum geologist by training, managed to table the issue by proposing to create a broad stakeholder group to consider potential changes to Colorado's regulation of the Oil & Gas Industry. For more on that, see August 2, 2014, article - Oil & Gas Industry Sees Brisk Business in Colorado after Withdrawal of Voter Initiatives. Two years later, during the summer of 2016, organizers failed to gain enough signatures to put two different measures to restrict drilling on the November 2016 ballot. For more on that, see September 2, 2016, article - Oil & Gas Industry Urged to Continue Personal Outreach After Measures to Restrict Drilling in Colorado Fail to Make the Ballot. The two proposed measures in 2016 each came up short by about 25,000 signatures of getting on the ballot.

Potential restrictions on new oil and gas drilling were front and center during COGA's annual conference this week. In his welcoming address to about 1,000 conference attendees, Denver Mayor Michael Hancock emphasized the number of direct, indirect and induced jobs tied to the state's Oil & Gas Industry. He said the industry generates billions of dollars of direct, indirect and induced value for the state. An executive for HighPoint Resources Corporation (NYSE:HPR) (Denver, Colorado) pointedly told the conference that his company's drilling operations were located in rural parts of the state, "outside population centers and local government control."

Another executive, Wouter Van Kempen, chairman, president and chief executive of DCP Midstream L.P. (NYSE:DCP) (Denver, Colorado), said, "how we deal with our neighbors" is one of his top concerns. "We need to sit at our neighbors' kitchen tables, engage them, figure out how one plus one can equal three. How can we live and work together?"

Speaking on August 21, the DCP executive likened oil and gas development to building roads: "When you build a road, there is noise, dust, lights, emissions and sometimes accidents. But there also are benefits. The energy industry is no different. We need to show there are tradeoffs as well as advantages" to oil and gas drilling.

"Everyone wants their iPhone fully charged and their air conditioning on when it is 90 degrees," Van Kempen told the COGA conference. "We need to have an authentic conversation about the tradeoffs and the benefits of oil and gas development."

"We are in the quality-of-life business," the DCP head said. "That's how we should answer the question, 'What do you do?' "

In an impassioned lunchtime talk on Tuesday, author Robert Bryce made the case for hydrocarbon development and urged his audience to do the same. "Why do we use hydrocarbons? They work. They scale. They're affordable. And they're reliable." Regarding Initiative 97, he implored his audience, "Don't apologize. Don't hide. We need to beat Initiative 97 and beat it badly. But understand this: It won't end at Initiative 97."

He excoriated the groups leading the ballot measure's signature-collection effort, calling their push for all-renewable energy a "mirage" and a "myth." Pointing to Germany, he said tens of billions of dollars have been invested in that country with the goal of going to 100% renewable energy, but there was effectively no impact on that country's carbon emissions.

The signature drive, and any possible vote on the measure in November, could be affected by recent accidents that have taken place north of Denver. In early 2017, three people were killed and three were injured in two separate accidents involving oil and gas facilities. In one incident, a home blew up in Firestone when an abandoned natural gas flow line ignited, killing two and injuring two. For more on this, see May 23, 2017, article - How Will Natural Gas Explosion Affect Colorado Oil & Gas Development? Then, in late May that year, a tank-farm fire in Mead killed one and injured one. Those tragic accidents may have played a role in the signature-gathering drive. If the measure makes it onto the Colorado ballot, voters may get visual reminders that the oil and gas business can be a hazardous one.

Earlier this month, as Initiative 97 signatures were delivered to the Colorado Secretary of State, COGA President and Chief Executive Officer Dan Haley released this statement: "Members of Colorado Rising claim to have submitted 171,000 signatures to get their job-crushing initiative on the ballot. If this measure makes it onto the ballot, Coloradans will know exactly what is at stake: private property rights, more than 100,000 good-paying jobs, more than $1 billion in taxes for schools, parks and libraries and our nation's energy security. If approved by voters, 147,000 jobs would be lost - 43,000 in the first year alone - and our state's GDP [gross domestic product] would take a $218 billion hit. That's not a joke to Colorado families. These activists are fueled by money from out of state and Boulder County, and they don't care if they put Colorado families out of work. We're confident most Coloradans will see this charade for what it is and support the men and women who are the backbone of our state and who produce the energy we all need each day."

At the COGA conference, numerous speakers and attendees echoed Haley's prediction that Coloradans would not harm themselves economically. But one conference speaker, Trisha Curtis, an economist and president and co-founder of consulting firm PetroNerds (Denver, Colorado), doesn't think the economic self-interest argument will necessarily prevail. On August 21, she told attendees, "I'm not sure facts and logic will convince the population on Initiative 97. Initiative 97 is a huge risk."

Beyond the challenge of trying to predict which way the public may vote, assuming it gets to vote on Initiative 97, another uncertainty facing the industry is the governor's race. Incumbent Governor Hickenlooper is term limited and will leave office in January. The Democratic candidate vying to replace him has denounced oil and gas drilling and was a driving force in earlier efforts to restrict the industry. The Republican candidate supports the industry.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.