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Colorado Oil/Gas Industry Taking Possible Ballot Measures Seriously, Expert Says

While nothing has yet qualified for the November statewide ballot in Colorado that would restrict oil/natural gas development, the industry is taking seriously the possibility of that happening, given that some proposals seeking ballot-qualifying voter signatures reportedly could eliminate 90% of land that is eligible for future energy production.

That was the gist of a presentation on Friday sponsored by the Colorado Oil and Gas Association. It and several industry, business and economic development groups have been working to educate citizens about hydraulic fracturing (fracking), which some local governments have attempted to restrict or ban (see Shale Daily, March 4, 2014).

Among the biggest concerns is a proposal (No. 78) that would increase mandatory setbacks to 2,500 feet from the current 1,000-foot requirement.

"Setback proposals being considered were designed to mask their true intention, which would essentially ban future oil/gas development in the state," said Josh Penry, principal in EIS Solutions Rockies Region consulting practice. Penry was joined on a conference call with news media Friday by David Tameron, senior oil/gas exploration and production analyst at Wells Fargo Securities.

Penry and Tameron guessed that there is a 50-50 chance that some anti-oil/gas development measure will get enough qualified voter signatures by the state's Aug. 8 deadline to get on the November ballot. However, Penry expressed strong confidence that voters will reject any of these measures.

He thinks the oil/gas industry has done a good job of continuing strong public education programs on its operations, including fracking, and how they contribute positively to Colorado's economy. Penry cited the defeat of an attempted fracking ban in Loveland, CO, in mid-2014 as a turning point. Since then, he thinks, the industry has had the momentum on the issue.

Following the recent state Supreme Court decision rolling back local bans in Fort Collins and Longmont (see Shale Daily, May 3), "the anti-fracking movement has sort of lost its momentum," Penry said. "The momentum has shifted dramatically since then. Part of the reason the momentum is now with groups supporting oil/gas activities is that it isn't just the industry making this case. There are businesses and Democrats and Republicans alike."

"There is a whole cadre of incredible spokesperson [for the industry] that cut across industries, political parties, etc."

Compared to two years ago when anti-industry measures qualified for the ballot, the industry "appears better prepared and positioned and a more mature dialogue has ensued with the voter base," he said. Nevertheless, local residents still operate with a "built-in distrust" for oil/gas operators.

In a recent investor meeting, executives at one of Colorado's largest exploration and production companies, Anadarko Petroleum Corp., echoed that assessment. They said the current proposed ballot measures are "more poorly funded and appear to have weaker community support than the potential 2014 initiatives," according Jefferies analyst Jonathan Wolff.

Ultimately, Penry, who has experience in local government and working in Congress in Washington, DC, for a natural resources subcommittee, said the No. 78 proposed ballot measure is inherently unconstitutional. Even if it passed, it would never be upheld in court, he said. Essentially, it is proposing a "ban" that constitutes a taking of private property.

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