While globally the U.S. shale development for oil and natural gas has been a game-changer, concerns about hydraulic fracturing (fracking) on a local level are threatening to sidetrack the domestic energy boom in places like Wyoming and Colorado, according to industry speakers at a symposium in Denver Thursday hosted by the law firm of BakerHostetler.
While former U.S. Rep. Mike Oxley (R-OH) stressed the global economic benefits of the U.S. energy boom, the shale panel he moderated at the half-day session showed that the oil/gas industry has a long way to go to convince the general public in Colorado that the benefits they want from production of natural resources can be obtained most effectively through safe applications of fracking.
Now a partner at the BakerHostetler law firm, Oxley said the full development of shale resources in states like Colorado, North Dakota, Ohio, Pennsylvania, Texas and Wyoming “is going to affect the world in a very positive way.” However, panelists from state government energy oversight, consulting and the exploration and production (E&P) sectors painted pictures that are a bit more problematic.
While he acknowledged that “everyone is chasing shale,” former Wyoming energy official Bob King, now a Casper, WY-based consultant, said the majority of Wyoming’s horizontal drilling activity is ongoing outside of the Niobrara formation. Only about 28% of the horizontal wells being drilled in the state are in the Niobrara, King said. More than 70% of Wyoming’s horizontal wells are located in a half-dozen other formations that are mostly in the Powder River Basin, he said.
“These other wells appear to be very prolific, and for the most part they are being drilled in the Powder River Basin in sands other than the Niobrara…I think that is a key point, that there are horizontal activities in reservoirs and formations other than the Niobrara in Wyoming, and I suspect there are in Colorado, too,” King said.
A former visiting MBA petroleum chair at the University of Wyoming and oil/gas operator from a long-time ranching/oil-gas producing family, Shaun Andrikopoulos urged the industry to “change the dialogue” in the fracking debate. He thinks that E&P companies need more “boots on the ground to change the face of the industry.”
Noting he has a lot of experience with land stewardship and environmental issues, Andrikopoulos said “how you drill is as important as if you drill and where you drill.”
As the result of his family’s experience dealing with a major E&P company that wanted to steamroll over surface owner’s rights, Andrikopoulos said he and his father, with help from BakerHostetler attorneys, were able to get the Wyoming legislature to pass a surface-owner protection law. He urged the industry to take into account the impacts of drilling and production activities on landowners and residents. “It impacts their livelihood, their quality of life, and their environment in physical ways, and we have to take that into account,” Andrikopoulos said.
Recent public opinion polling in Colorado completed by the Western Energy Alliance (WEA) indicates that the production of oil and gas in the state is strongly supported by citizens, but the practice of fracking is not.
WEA president Tim Wigley said that Colorado is “the epicenter of fracking.” In response to the Longmont, CO, ban on fracking (see Shale Daily, Nov. 8, 2012), the alliance of E&P companies held six hours of focus groups with active voters in Denver. Wigley called the results “eye-opening like I have never seen before.” WEA found “a huge information gap” between the industry and the general public, Wigley said. “It is not just the message, it is the messenger.”
In Colorado, the key target audience should be women 35-55 years old, he said. “If they are not persuaded by the jobs [created by the E&P industry], they have to be persuaded on the health and safety issues. I think we understand that now,” he said.
In August, WEA surveyed 700 registered voters and they are repeating the polling again this month, said Wigley, who thinks local initiatives against fracking in Colorado are going to move to various other states in the future. More than 70% of the respondents said they approve of drilling for oil and gas in Colorado.
“This is a strong number and we see this nationwide as well, and the numbers are going up,” Wigley said. “Even with all the controversy [surrounding fracking], people are solidly supportive of developing domestic energy resources. The numbers are even stronger [78%] nationwide.”
In terms of the respondents’ interest in more production, 85% said that some additional drilling, or greatly increased drilling, should be permitted. Wigley said this was WEA’s third poll in 18 months and the numbers have stayed the same.
In this environment, he said it would not be helpful for the industry to mount a campaign centered on claims of being overregulated. “The public thinks everything is OK, and they are comfortable with where we are [as an industry] right now [in terms of regulations].”
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