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IHS CERAWeek: Colorado, Ohio Govs. Claim States' Rights Over Shale Regs

The two state chief executives agreed that environmental safeguards are imperative from both the public's and the industry's perspective. They offered their views during a keynote panel discussion moderated by the huge annual energy confab's founder Daniel Yergin, the well-known global energy author/expert.

"The conditions and the context of oil and gas does not lend itself to one-size-fits-all federal regulation," Hickenlooper said. "It dooms us to inefficiency and excessive red tape."

"I don't want the federal government regulating our shale gas in Ohio -- are you kidding?" Kasich said. "No way. We can do it, and we will do it right. We're as concerned as they [the feds] are. The states have to be responsible; they can't look the other way."

Citing up to 600,000 jobs supported by shale development in the past two years, Ohio's Kasich said after being elected governor in 2010 following 18 years in Congress he came to realize "energy is a huge factor in terms of economic development." Kasich admitted he has gotten "all fired up" about energy because it "represents 21st Century technology, jobs, the future, and maybe if John [Hickenlooper] and I get it right by designing our own programs, maybe someone in Washington, DC, will notice."

In reaction to Yergin's observation that Colorado has had a long-standing regulatory structure for oil/gas, but Ohio is now having to "invent" one with the fast onset of the Utica Shale, Kasich said everyone in the public and private sectors in his state has worked hard on maximizing the value of the Ohio "double-play" of natural gas and liquids-rich oil. At the same time, he said the state government wants to make sure of the safety of the hydraulic fracturing (fracking) and gathering infrastructure.

"We want to make sure the entire state of Ohio is going to benefit from this. The best thing is you can tell people you can have economic gains from this without being inconsistent with environmental concerns," said Kasich, adding that his administration would be introducing "comprehensive legislation" regarding fracking and other oil/gas production operations in about a week.

Kasich said Ohio intends to guard against getting "careless or sloppy" in developing shale resources. If accidents happen, he warned, "the public will not forgive you."

In Colorado, Hickenlooper said he wants to change how the state approaches all regulation, cutting red tape and getting rid of unnecessary regulations. "We want to be the most pro-business state in America, we want to be relentlessly pro-business, but at the same time hold our companies to the highest environmental standards, the highest ethical standards, etc."

He said permit process time for oil/gas well drilling has been cut from 100 to 20 days on average since he came into office last year. "We want to be an efficient as possible with appropriate regulation," Hickenlooper said.

"Business generally, and especially in the oil/gas business where there are long lead times and major investments in infrastructure, you want predictability, and our job in elected office is to make sure we provide a long-term predictable environment where businesses can plan and create jobs and create prosperity."

Even with the mutual boosterism toward shale development by the two governors, Kasich said he doesn't think Ohio can build its economic development "on the back of shale." It can play a "critical role," he said, but diversity ultimately matters more. "Any state or nation that builds its economic development on the basis of one industry is making a big mistake," Kasich said.

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