Nov. 12–The fight over the highly charged Proposition 112 oil and gas setbacks measure may be over, but the larger battle over how tightly to regulate the energy sector in Colorado is still in full rage.
With voters on Tuesday painting both chambers of the legislature blue and the election of Democrat Jared Polis to the governor’s mansion, state Rep. KC Becker said the de facto veto power the oil and gas industry has held over proposed regulatory bills via the GOP-controlled Senate is now gone.
Becker, selected last week as Democrats’ next speaker of the Colorado House, said her message to the oil and gas industry for the upcoming legislative session is simple and direct: “Let’s get real, guys.”
“I’m not looking to drive out the industry from the state, but we have to respond to the need of communities so they feel safer,” said Becker, who was one of the only Democratic officials to back Prop 112. “If we don’t do something at the legislature in the next two years, the issue will be back (at the ballot box) and with a greater level of funding.”
What could that “something” look like? Conservationists would like to see more decision-making put in the hands of local communities, and Governor-elect Polis told The Denver Post he supports “making sure the local communities have a say in where and how fracking is done in their community.”
Dan Haley, president and CEO of the Colorado Oil and Gas Association, said the industry is willing to sit down “with all sides to have a practical, constructive conversation that goes beyond political posturing.”
But he said the more than 1.1 million Coloradans who rejected Prop 112 last week should not be forgotten.
“Governor-elect Polis has said that he will honor the will of the voters, and with Colorado voters soundly defeating this extreme measure in strong bipartisan opposition, we hope that’s true on this issue,” Haley said last week. “Colorado’s oil and natural gas companies are committed to Colorado, and to adhering to the toughest regulations in the nation. I believe that if we work together we can avoid the extremism that Colorado voters clearly rejected.”
Voters rejected Proposition 112 by a margin of 57 percent to 43 percent. The measure would have increased the setbacks for new oil and gas wells to 2,500 feet from any building or waterway in Colorado, a jump from the current 500-foot (homes) and 1,000-foot (schools) setbacks that the industry said would remove so much land from drilling and fracking that it would effectively shut down new extraction in the state.
Last year, more than 130 million barrels of crude oil were produced in Colorado, according to the U.S. Energy Information Administration. Prop 112 backers said the increased distance is necessary to protect residents from exposure to pollution and carcinogens, such as benzene, that are associated with oil production.
Setbacks might not be the solution
Becker said it’s too early to say whether any legislative fix would involve larger setbacks and if so what the distance might be. The better solution, she said, is a more comprehensive one that involves addressing air quality, water quality and establishing a plan to clean up “orphan wells” — wells that no longer have an identifiable owner.
She’s not looking to use the Democrats’ newfound power as a cudgel over the industry but rather as a strong invitation to sit down and figure out a solution to the growing tension over drilling near neighborhoods, she said.
“I want a more detailed and diverse approach than just a setback,” Becker said. “We really want to be collaborative — my hope is to solve the issue.”
Holding Democrats’ feet to the fire will be those who have been pushing for tougher regulations for years. Anne Lee Foster, who headed Colorado Rising in its efforts to get Prop 112 passed, said the measure managed to get nearly 900,000 votes from Coloradans on Tuesday despite facing a $30 million effort by the oil and gas industry to defeat it.
“We’ll continue to put pressure on our elected representatives so they aren’t making political calculations,” she said. “We’re definitely willing to go back to the ballot box in two years.”
Industry leaders are suggesting that they are ready to negotiate with Democrats to come up with a more permanent solution to what Anadarko president and CEO Al Walker described as a “two-year cycle that increasingly hurts economic stability in the state.”
“We recognize the defeat of Proposition 112 is not a lasting referendum, and we will work with the newly elected officials and those continuing in office to find a better equilibrium to reduce the concerns associated with the rapidly growing population and oil and gas activity in Colorado,” Walker said.
Noble Energy released a statement saying the company will “continue to work to create solutions that fuel the Colorado economy and jobs for many years to come while promoting safe and responsible energy development.”
Shares of several energy companies rose the day after the election, following the news that Prop 112 had been defeated. Denver-based Bonanza Creek Energy Inc., which has wells in Weld County’s Wattenberg Gas Field, saw its shares shoot up 12.1 percent. The shares of Extraction Oil and Gas, which has applied for permits in Broomfield and Commerce City, rose 8.6 percent.
“Local governments need more tools”
Kelly Nordini, who heads Conservation Colorado, said she will be pushing the legislature to let local governments set their own rules and restrictions on oil and gas development, including setbacks. In the last few years, courts in Colorado have consistently ruled that the state holds sway over local communities when it comes to setting regulations.
The city of Westminster won a rare tussle last week when an oil and gas company dropped plans to drill wells under Standley Lake, a water source for 300,000 people in the metro area. Highlands Natural Resources Corp. voluntarily withdrew its application after it received harsh comments from the public on the Colorado Oil and Gas Conservation Commission’s website.
But local resistance to extraction plans usually doesn’t work, as evidenced by the increasing number of oil and gas wells closer and closer to homes in the metro area’s fast-growing northern suburbs over the last decade.
“Local governments need more tools and more clarity on what they can do to appropriately balance these interests,” Nordini said.
Polis appeared to support such an approach in an interview with The Denver Post, though it’s not clear what would need to happen at the legislature to make that work. While the governor-elect opposed Prop 112, he said he looks forward “to working with neighborhoods, local governments and any oil and gas (company) that wants to get ahead of these issues — and not risk the existence of their industry in the ballot box every two years — to try to find some common ground.”
Sara Loflin, executive director of Erie-based League of Oil and Gas Impacted Coloradans, or LOGIC, said her organization has had a lobbyist at the state capitol for the last few years and will have one in place again when the new session fires up in January.
LOGIC, she said, will push for various reforms in how the oil and gas sector operates in Colorado, including an attempt to address forced pooling and a redefinition of the mission of the COGCC, the state’s regulatory body. While Prop 112 was ultimately unsuccessful, Loflin said it was a useful prod in the larger and ongoing debate over oil and gas production in the state.
“My hope is 112 helped us build the narrative on what people living with oil and gas impacts are experiencing,” she said.
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