Don’t fly the skull and cross bones right now, but the 75 percent decline in new drilling permits signals trouble for the oil and gas industry and Weld County. It also makes storytellers out of Senate Bill 181’s Democrat advocates and fighters out of Weld County.
Governor Jared Polis assured Coloradans that Senate Bill 181 would be “good” for the energy industry. He said it would bring certainty and stability.
The Governor’s fellow Boulderites, Senate Majority Leader Steve Fenberg and House Speaker KC Becker, said the measure was about “local control,” suggesting that nothing would change in Weld County.
Governor Polis’ director of the Colorado Oil and Gas Conservation Commission (COGCC), Jeff Robbins, echoed the governor’s sentiments, stating outright, “We want to let oil and gas continue to thrive in Colorado.”
Those of us who live in Weld County hoped that would be true, but we knew it wasn’t. Now we have proof. New drilling permits, which drive revenue, are down 75 percent in the three months since Democrats passed Senate Bill 181. As one energy executive put it, “without new permits, companies run out of inventory. It’s like trying to feed your family with an empty pantry.”
Senate Bill 181 is the slow economic starvation of Colorado’s energy industry. That’s exactly what bill sponsor Sen. Fenberg wants. In February, Fenberg told a town hall audience in Boulder that he would like to end the extraction industry altogether. Think about that. The Majority Leader of the Colorado State Senate, who represents a county that shares a border with us, wants to destroy an industry that drives our economy, employs our friends and families, provides funding for our schools, and is part of our way of life.
Publicly traded oil and gas companies may indicate that things are fine in order to appease rulemaking bureaucrats and to calm shareholders’ fears. For the time being, some companies will be fine because they have a few new permits and enough inventory. For others, the reality is much different. If we don’t reverse course soon, all of the industry will starve, threatening everything we love about Weld County.
Our county officials provided compelling testimony to the legislature about how important the industry is to us — over 58 percent of the county’s assessed valuation is attributable to oil and gas revenues. Of the $850 million in property taxes that the county will receive in 2019, fully $490 million of it will be paid by energy companies, including nearly $200 million to Weld County school districts alone. That testimony was ignored.
From the beginning of May through the end of July, the first three months following the passage of Senate Bill 181, the COGCC approved a total of 339 new permits for energy development. In 2018, each month saw an average of 426 new drilling permits approved.
In a vacuum, one might think that oil and gas companies can withstand these stressors. But the reality is graver than their worst-case analyses offered. The Weld County economic analysis that looked at the impacts of SB 181 did so through a lens of a 50 percent reduction in production, and found devastating results. The current 75 percent reduction is much worse.
While the state is trying to force us into Boulder control, our county officials, with community support, are pushing forward with our own Weld County control, which hasn’t gone unnoticed. Our county officials already have received dictates from Denver that the new state laws supersede any of Weld’s energy-friendly policies.
The next few months will be telling. We can reverse course before this decline becomes a death spiral. I urge state regulators to support Weld’s local control that they themselves promised would be the case and allow for permit approvals to continue as they once did. Tens of thousands of good-paying jobs, our economy, our schools, and our community depend on it.
We are Weld, and we’ll fight for it.
Amy Oliver Cooke is executive vice president of the Independence Institute and a Greeley resident.