Energy, Environment, Exclusives, Featured, Politics, Uncategorized

Energy exec tells Federal Reserve Colorado has become ‘no investment’ state

DENVER–An unnamed energy executive told officials with the Dallas Federal Reserve office that new oil and gas regulations are making it difficult to find and maintain drilling opportunities, saying Colorado had become a “no investment” state and accused Democrats of being “hostile” to the industry.

“Continued weak oil prices and high costs are squeezing my margins,” the commenter told the Dallas Fed in response to its energy survey for the fourth quarter of 2019.

“It is very difficult to find any projects that make sense economically. I am getting increasingly selective on what deals in which I will invest. Increasing regulatory pressure in Colorado has resulted in a complete loss in value of wells in that state, and in my mind, it has become a ‘no investment’ state. The very hostile government there totally ignored the expressed wishes of the citizens of Colorado, which was expressed at the ballot box.”

In the last sentence, the executive was referring to voters rejecting Proposition 112, which would have placed extraordinary setback restrictions on new drilling, and which opponents claimed was a de facto ban on new wells. The proposal was defeated in the 2018 election by a 57-42 margin.

In the same election, however, Democrats won a majority in the state senate, giving them majority power in both legislative chambers, and Democrats maintained control of the governor’s office.

Owning all three levers of power, state Democrats then pushed through their own new set of  sweeping regulations with Senate Bill 19-181. Republicans said the legislation was rammed through and did not attempt to compromise in any meaningful fashion with energy producers.

When asked about the ‘no investment’ state comment, Colorado Oil and Gas Association (COGA) president Dan Haley told Complete Colorado, “Global commodity prices have been low and regulatory uncertainty has been high in Colorado, which is not a good combination for any business. While we won’t know the full impacts of Senate Bill 181 until it is fully implemented over the next year, we do know it was not meant to stimulate economic growth.”

Haley went on to note that permitting for new well locations has been more than cut in half since the bill was signed into law, several local governments have declared moratoria and are re-writing their laws, and industry is undergoing massive rulemakings on everything from increased air monitoring to new flowline protections.  “That said, this industry is too important to Colorado and to our country to wave a white flag,” said Haley.

Not long after the U.S. entered a recession in late 2008 and early 2009, oil and gas took off in the state, with the increases largely attributable to new technological advances like hydraulic fracturing and horizontal drilling,

Colorado’s crude oil production has quadrupled since 2010, and the state is in the top five in the nation in gas production, according to information published one year ago by the U.S. Energy Information Administration.

Much of the recent political shift against energy producers has been attributed to the transition of former Governor John Hickenlooper leaving office due to term limits and the subsequent election of Governor Jared Polis, a long-time outspoken critic of the energy industry.

“Without the pro-fracking Mr. Hickenlooper to run interference, Colorado Democrats are poised to deliver a body blow to the state’s $31 billion oil and gas industry with Senate Bill 181, legislation aimed at prioritizing environmental and safety concerns that critics have described as a de facto prohibition on drilling,” the Associated Press said in March of last year.

“COGA and our members are committed to Colorado, and we are fully engaged in both state and local regulatory discussions. We need to continue talking to Coloradans about why this industry is so important and working with elected state leaders on more workable solutions that allow operators to continue producing oil and natural gas cleaner, better and safer than anywhere in the world,” continued Haley.  “We know we’re all going to need this resource for decades to come. If you care about the environment, you want it produced here where we meet a very high bar.”

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