Group: Setbacks may cost $206B

A statewide ballot initiative to widen the buffer between oil and gas drilling and development could cost $180 billion in lost petroleum production and $26 billion in lost royalties in northeastern Colorado alone, a group representing mineral rights owners said Tuesday.

Statewide Initiative 97 would require new wells to locate 2,500 feet or more from homes, schools and water sources, an expansion of the current buffer of 500 feet or 1,000 feet.

“That 2,500-foot setback would eliminate oil and gas production in the Wattenberg,” argued Neil Ray, president of Colorado Alliance of Mineral and Royalty Owners, or CAMRO, which commissioned Netherland, Sewell & Associates, a petroleum consulting firm, to conduct the analysis.

As concentric circles are drawn around the areas where drilling would be off limits, including waterways, they would overlap and effectively leave no viable areas available to host well pads, Ray said.

Measuring lost production and royalty streams matters to CAMRO, primarily to make a political argument against the initiative. But it could also help establish a baseline for a “takings” case. A taking represents a public appropriation of a private property right where a judge could require government compensation.

“Our cities, counties and state simply cannot afford to compensate mineral owners for their property,” said Ray, whose groups represents the interests of 600,000 owners of mineral rights in the state.

That potential liability would come on top of the hundreds of millions of dollars in annual tax revenues the public sector would lose, not to mention the loss of a substantial number of the 232,900 jobs the Colorado Petroleum Council estimates are tied to the indus- try.

The Wattenberg Field, the state’s largest and most productive petroleum area, runs under the western half of Weld County and into parts of Adams, Broomfield, Boulder and Larimer counties.

Efforts to expand horizontal drilling outside of Weld County, where residents are more used to oil and gas drilling, and into more populated areas to the west, has met with stiff resistance.

Colorado Rising, the group behind Initiative 97, dismissed the CAMRO report as industry-funded, speculative and based “completely on false assumptions.”

“The outrageous claims in this report are nothing more than a desperate attempt by the oil and gas industry to maximize profits by cutting corners and disregarding the safety and well-being of our communities,” Colorado Rising said in a statement.

Regarding the takings claims, the group said the initiative doesn’t ban fracking. Producers can still access their mineral rights, but just from a greater distance, one that is both within the reach of directional drilling technology and protective of the community.

Colorado Rising said 80 grassroots organizations and elected officials have endorsed the initiative and that early polls show it has 69 percent approval. But none of the gubernatorial candidates, with either party, have signed on.

The measure is a statutory initiative, which, while easier to place on a ballot than a constitutional amendment, can be reversed by the state legislature — especially one skittish about having to make royalty owners whole.

A previous effort to write a 2,500-foot setback into the state constitution in 2016 failed. A study back then by the Colorado Oil and Gas Conservation Commission found that 90 percent of state’s oil and gas reserves would be put off limits, especially given the restrictions on being near active waterways and even dried stream beds.