Colorado Activists Drop Fracking Curbs in Deal With Lawmakers

Aug 06, 2014 12:23 am ET

Aug. 6 (Bloomberg) -- Colorado energy drilling backers and opponents, agreeing to avoid an election showdown over an industry worth $30 billion a year to the state, dropped rival measures to restrict fracking and punish towns that curb it.

Activists dropped proposals limiting fracking by requiring that it take place 2,000 feet from any occupied building as pro- energy state lawmakers ended a separate bid to deny tax revenue to cities that impose moratoriums or bans. Yesterday’s deal came after Governor John Hickenlooper negotiated a compromise creating a task force to study the industry’s impact on communities.

“This is a victory for bipartisan common sense and common ground,” said Tisha Schuller, president of the Colorado Oil & Gas Association, a Denver-based trade group, after the sides withdrew four ballot intitatives at the Colorado Secretary of State’s office.

From Texas to North Dakota, companies are clashing with landowners and environmentalists over the local impact of expanded drilling in the U.S. as production has soared because of hydraulic fracturing, or fracking, which uses sand, water and chemicals to free fossil fuels from shale rock.

The showdown had been seen as a bellwether for local control concerns, and the stakes were high because of the amount of oil production at risk. Colorado reaped $147.7 million in severance taxes imposed on energy production in fiscal 2013.

Community Control

The move to withdraw the initiatives was the result of a deal between Hickenlooper and U.S. Representative Jared Polis, who is seeking to give communities more control over oil and gas drilling.

“Going forward the grassroots movement that has driven this campaign will remain engaged in next steps and will monitor the formation of the new Blue Ribbon Commission and those appointed to it,” Mara Sheldon, a spokeswoman for Coloradans for Safe and Clean Energy, which backed the measures restricting fracking, said in a statement.

Oil executives said the 2,000-foot setback initiative would have effectively banned drilling in the Denver-Julesburg Basin, one of the nation’s richest oil and gas fields, and vowed to spend $50 million to defeat that measure and a second proposal providing communities more control. Another measure backed by energy companies and dropped in the deal would have required all ballot initiative proponents to file fiscal impact statements.

Leading Producer

Drilling in the basin has helped make Colorado the nation’s sixth-largest natural-gas producer and ninth-biggest oil producer.

A nonprofit created by Anadarko Petroleum Corp. and Noble Energy Inc., Colorado’s largest oil producers, that has spent millions on outreach efforts promoting the economic benefits of fracking hailed the agreement between Hickenlooper and Polis.

“The announcement of this task force seems to confirm the proper place for strong regulations and enforcement of oil and natural gas development is ultimately in the hands of our state environmental agencies,” Coloradans for Responsible Energy Development said in a statement.

The agreement followed months of negotiations between the governor, oil companies and residents in an effort to avoid what some predicted could be the costliest ballot initiative fight in the state’s history. The governor gave up on calling a special session to consider local control measures on July 16, saying he didn’t have the votes.

Drilling Curbs

Residents are growing more concerned that their air, water and health may be harmed as drilling moves closer to suburbs. Five communities moved to ban or place a moratorium on fracking.

Part of the compromise struck between Hickenlooper and Polis, a Boulder Democrat, involved the Colorado Oil and Gas Conservation Commission, the state agency that regulates energy development, ending its challenge to a Longmont ordinance regulating fracking in city limits.

The commission will call a special meeting this week to consider the matter, said Todd Hartman, communications director for the Department of Natural Resources, which includes the COGCC.