Some might argue that not much has changed in Colorado politics over the last year – except for the fact that the battle to ban drilling by certain groups has escalated from the local to statewide level.
Recently reported in several Colorado newspapers were the fighting words of Coloradoans Against Fracking member Karen Dike: “We need to have a ban in this state,” she was quoted as saying on behalf of the newly formed coalition. “That would be a ballot initiative in 2016.”
Although Dike later retracted her statement – requesting instead that Colorado Gov. John Hickenlooper use the power of an executive order to ban hydraulic fracturing – any threat of a possible ballot initiative is cause for concern.
“Any time there is talk of a ballot initiative, it is something to worry about,” said Doug Flanders, director of policy and external affairs for the Colorado Oil and Gas Association (COGA). “It’s very easy to get something on the ballot in this state.”
Roughly a year ago, anti-drilling groups, supported by Colorado’s 2nd District U.S. Rep. Jared Polis, a Democrat, were in the homestretch of adding two initiatives to Colorado’s November 2014 ballot that could have given local communities – many of which oppose drilling – unprecedented control over oil and gas operations in the state.
Realizing that a public vote could compromise the economy and jeopardize thousands of jobs in Colorado – which ranks fifth in the country for the production of natural gas and ninth in terms of oil – Hickenlooper swooped in at the 11th hour and proposed assembling a task force in lieu of ballot initiatives to hammer out clashes between industry and communities.
Issues ranged from local versus state control of the industry to setbacks to air quality, dust and traffic.
The governor’s 21-member task force – representing the industry, local communities, and state and local government – put forth roughly 30 proposals, and in February officially voted to support nine recommendations with a two-thirds or more majority (see sidebar page 16).
While hardcore environmentalists and other activists have publicly called the task force a “failure” for not addressing local versus state control issues, many contend the task force did just that and, furthermore, was successful in making meaningful compromises.
Three recommendations made their way to the state legislature for a vote. The two most relevant include hiring 12 additional employees for well inspections by the Colorado Oil and Gas Conservation Commission (COGCC) and converting five temporary positions to full-time status at the Colorado Department of Public Health and Environment for purposes of conducting air monitoring and leak detection activities, among other tasks.
Local vs. State
Since Colorado became a state in 1876, battles over local and state control for a host of activities – not exclusive to the oil and gas industry – have been waged, and none have been solved overnight, Flanders said.
“They are solved by years and years of work to find the best path forward,” he said.
AAPG member Peter Dea, president and CEO of Cirque Resources LP in Denver, represented the oil and gas industry on the governor’s task force.
“What we heard loud and clear is that the majority of communities don’t want local control for themselves because they realize the reality of that,” Dea said, adding that civic representatives expressed their sentiments verbally and in writing.
By taking local control, communities would have to bear the brunt of responsibility for industry activity, perform the arduous task of learning all existing rules and regulations, and determine if they should adopt the state’s rules, new rules or a hybrid of both, Dea explained.
“These communities don’t have the technical expertise, the staffing or the budget to do that. They don’t want to succumb to these hearings time and time again,” Dea said. “They would rather defer to the state for rules and regulations, which is set up to do that, yet have more say in the process.”
Furthermore, he said local communities exercising authority could feel excessive pressure from anti-drilling activists and residents who are misinformed about hydraulic fracturing to place bans on drilling.
“Local control invariably can lead to outright bans on oil and gas activities,” Dea said.
Addressing criticisms that communities did not get their wish for local control over industry, Hickenlooper issued a statement: “ … The civic leadership of this state said that’s not the right solution. To say they didn’t resolve (the issue) is inaccurate. They did resolve it.”
“Some folks at the table were calling the task force a failure before it was even finished,” Flanders said. “That is very disappointing. Those people were not looking for a solution but rather for an issue.”
“Ironically, the same hypocrites who want to unreasonably restrict or ban oil and gas are 100 percent dependent on oil and gas directly or indirectly, like all the rest of us,” Dea added, speaking of the need for reliable food, hospitals, medicine, clothing, transportation, recreation, heating, cooling and transportation.
What Went Wrong?
Drilling for oil and gas has taken place in Colorado for more than 150 years, Flanders said. In fact, Colorado has some of the most comprehensive and strict regulations in the country – from site selection, to permitting, to downhole activities, to hydraulic fracturing, disclosure and final site reclamation, according to COGA.
Colorado is the first state to adopt strict regulations on methane emissions from the industry in addition to requiring that data from all hydraulically fractured wells be catalogued on FracFocus.org. Baseline water testing also is required.
Hydraulic fracturing, a practice that dates back more than 60 years, has increased along with horizontal drilling, which is used to tap oil and gas in the Niobrara Formation in northeast Colorado, said AAPG Honorary member Pete Stark, senior research director and adviser for IHS.
So what prompted two communities in Colorado to try to ban drilling in recent years and others to push for local control?
“Unfortunately, several external forces have driven the anti-hydraulic fracturing movement in Colorado,” Stark said. “Some are against the oil and gas industry regardless of the facts and want to shut it down.”
The Coloradoans Against Fracking coalition is actually funded by the national group Food & Water Watch.
“They have emotion on their side – fear,” Flanders said. “Fear can spread very quickly but it can also be dissipated with some facts and common sense. But that takes time.&rdquordquo;
Groups such as COGA, Western Energy Alliance and Coloradoans for Responsible Energy Development, founded by Noble Energy and Anadarko, have helped to quell fears and disseminate facts about hydraulic fracturing, which seems to have become the umbrella under which all gripes about drilling resound.
“The education of the public has advanced, but it has a long, long way to go,” Dea said. “The activists have tried to separate hydraulic fracturing from drilling, and it’s worked, unfortunately. The activists have done a good job in making frac’ing a four-letter word.”
Hierarchy of Property Rights?
Despite fear tactics and misinformation that have led many residents to believe drilling bans are fair and reasonable, the subject of property rights seems to have gotten lost in the shuffle.
And, in Stark’s eyes, it’s a critical legal issue.
“Many homeowners who bought homes in northeast Colorado moved here from other states and said, ‘Wow, I’m in God’s country.’ Unfortunately they bought property in the middle of a developing oil and gas field and were not properly informed of the situation,” Stark said. “The lack of understanding about the property rights of homeowners versus the rights of mineral owners may need to be sorted out in the courts.”
To ban industry in Colorado – whose oil and gas industry is responsible for 111,000 jobs, provides $29 billion in economic output, and contributes more than $1.6 billion in public revenues with nearly $500 million to K-12 education annually – is the equivalent of the unlawful taking of property rights, an issue that most homeowners, it can be argued, can understand.
“The oil and gas companies secured their rights by paying for them just like the homeowners paid for their land and their houses,” Stark said. “Neither has been judged, to date, to be superior to the other.”
Stark noted that in Texas fewer communities have pushed for bans, perhaps because many landowners own mineral rights to their property, making drilling a more tolerable activity once landowners are paid lease fees and royalties by operators.
In Colorado, it may not be enough for an operator to leave a property and local infrastructure in superior condition prior to their showing up.
“Eventually, some sort of compensation to communities and surface owners might need to be considered,” Stark said. “This has worked in a few international oil and gas developments.”
The Battle Rages On
Yet, the threat looms of a ballot initiative for a statewide ban.
Sam Schabacker, a senior organizer of Food & Water Watch, said in a statement to The Denver Post that while a ballot initiative for a statewide ban on hydraulic fracturing is not currently planned, “all options are on the table.”
If an initiative pops up on the ballot, Hickenlooper expressed minimal concern in an interview with Community Radio for Northern Colorado: “I think if something does go to the ballot box, it will have a much harder time passing, just because so much of what people care about is being addressed and will be addressed.”
He continued in a statement on his official website: “We have not rested in addressing the tough issues that come with balancing quality of life with an important and thriving industry. From advances in groundwater protections and methane limits to today’s recommendations that ensure the protection of people, industry and the environment, working together is how we always find the right solutions for Colorado.”