Houston firms fight for fracking in Colo. By Ryan Maye Handy
They say Proposition 112 will cripple industry as residents voice concerns over well explosions, water contamination
FORT COLLINS, Colo. — Houston oil and gas companies are at the center of a fight for their industry’s future in Colorado, where residents wary of deadly gas explosions, encroaching oil and gas development and hydraulic fracturing are pushing a ballot measure expected to cripple energy companies.
As Colorado’s top oil producers, Anadarko Petroleum of The Woodlands and Noble Energy of Houston could be forced to halt new production, abandon existing wells and cut jobs if the ballot measure passes. Both have poured millions of dollars into campaigns against the measure; oil and gas interests contributed at least $20 million to defeat the measure, according to campaign finance records.
The ballot measure, known as Proposition 112, would enforce a 2,500 foot drilling setback — up from the current 500 feet — around all occupied buildings and so-called vulnerable areas, such as parks. If approved by voters in November, the measure would effectively block new production in 94 percent of the state’s top oil and gas producing counties, according to the Colorado Oil and Gas Conservation Commission, the state’s oil and gas regulator.
Economists estimate that more than 33,000 energy jobs — about 1 percent of Colorado’s payroll employment — and up to $1 billion in tax revenue would be lost by 2030.
For John Cavitt, CEO of Houston well-testing firm Covenant Testing Technologies, the effects of Proposition 112 would be immediate and devastating. The company is among the top employers in the oil and gas industry in Colorado, with 400 employees testing wells as part of 24-hour monitoring systems to that assess production and emissions, among other things.
If the ballot measure passes, Cavitt said his company would cut half of those 400 jobs within six months and eliminate nearly all of them within a period of a years. Cavitt estimates that his company, which employs about 1,000, would lose one-third of its revenues — a shock that would mean layoffs in the Houston office. “It’s catastrophic,” he said. Anadarko and Noble both declined to comment on the potential effects of Proposition 112. But state records show that they stand to lose heavily if the proposition passes into law.
Noble operates more than 7,100 wells, and Anadarko, through its subsidiary Kerr McGee Oil and Gas, operated more than 6,700 — more than any other companies in the state.
Both companies have large operations in Weld County, a northeastern county that is home to the Denver-Julesburg basin and the heart of the Colorado’s shale boom, and together they have contributed about $12 million — $5.8 million each — this year to Protect Colorado, the committee campaigning to block the measure, according to state campaign finance records.
The oil and gas industry has operated in Colorado for more than a century, beginning with the discovery of oil in the south central town of Florence in the 1860s. The well was the first drilled west of the Mississippi, but it wasn’t until a century later that oil and gas development began to grow rapidly in Colorado. Colorado ranks seventh in oil production among states and fifth in natural gas production, according to the Energy Department.
As the state has grown, it has attracted residents from around the country, with most settling in Front Range, the eastern side of the Rocky Mountains and the state’s most populous corridor. Colorado already has some of the toughest regulations governing oil and gas production, but in recent years Front Range communities, including Denver and its suburbs, have launched several efforts to push fracking as far away as possible.
The courts and other voters have struck down previous attempts to limit the industry’s spread, but Proposition 112 has advanced further in the process than any other effort.
Economists expect that Proposition 112 would have a ripple effect on government budgets, leading to spending cuts for schools, law enforcement and firefighting in rural counties that rely on taxes from the oil and gas industry. Weld County, the locus of the state’s drilling, stands to lose the most.
Nearly half of the county’s property tax revenue comes from oil and gas, said Chris Brown, the director of policy and research for the Common Sense Policy Roundtable, a Colorado think tank funded by real estate firms, banks and other businesses.
“Fort Lupton Fire District in Weld County got $3.6 million dollars from oil and gas in 2017, which is about 50 percent of their revenue,” Brown said. “It’s huge.”
Proponents of Proposition 112 say it is not meant as a drilling ban, but rather as a safety measure.
Oil companies have clashed with citizens as the shale boom has brought drilling closer to homes on the Front Range. In Northeastern Colorado, fracking towers loom over subdivisions, farm fields and Interstate 25, the state’s main north-south highway, stretching from Fort Collins through Denver to Colorado Springs.
In April 2017, a cut flowline from a gas well 170 feet from a home in the northeastern town of Firestone caused a massive explosion that killed two people and injured two others. Anadarko, which owned the well, settled a lawsuit brought by the family of the victims against the company in May.
Threat at the doors
A second lawsuit was filed in 2017 by a handful of former employees who blamed the explosion on the company’s decision to cut safety budgets. The lawsuit was dismissed in June, but refiled in August. In court record, Anadarko dismissed the allegations as “a series of leaps in logic that cannot withstand scrutiny.”
Proponents of the Proposition 112 say Coloradans have more to fear from oil and gas than explosions. Anne Foster, a spokeswoman for Colorado Rising, an advocacy group pushing the anti-fracking measure, said that people who live near wells remain concerned about water contamination, methane emissions and other environmental hazards.
“Proposition 112 is really the response of mothers and grandmothers and teachers to a threat that has arrived on their doorstep,” Foster said. “At every turn, we’ve been told that nothing can be done, and the industry will develop where it would like.”
The debate has riven the state politically, separating conservative communities on the eastern plains and on the Western Slope of the Rockies from the more liberal metropolitan areas Denver, Boulder and Fort Collins.
The state’s politicians have been left to straddle the divide as they try to court liberal antifracking communities and appease rural residents dependent on oil and gas. Gov. John Hickenlooper, a Democrat and former oil and gas engineer, famously boasted during a U.S. Senate committee hearing in 2013 that he once drank fracking fluid with Halliburton executives as part an effort to prove that the chemical mix is not dangerous.
Jared Polis, a Democratic congressman from Boulder who is running to succeed Hickenlooper, has refused to back Proposition 112, even though he supported a similar, but unsuccessful, measure in 2016.
Oil and gas companies, meanwhile, are left to hope that their warnings of dire economic consequences will reach Coloradans whose only contact with petroleum products is the local gas station, said Dan Haley, president of the Colorado Oil and Gas Association. Energy industry projections estimate that the approval of the initiative would cost the state nearly 150,000 jobs by 2030, including both those in the oil and gas sector and others that depend on the economic activity generated by the industry.
“Once Coloradans understand the broad impacts on our economy,” Haley said, “they will reject it.”
A worker adjusts hoses at a well near Mead, Colo. Proposition 112 would enforce a 2,500-foot drilling setback.
Texas-based oil refiners have infused more than $18 million into a fight against Initiative 1631 in Washington state.
Proponents of hydraulic fracturing point to the economic benefits. Opponents point to potential environmental impacts.