API: Fracking, Public Lands Ban Would Threaten Colorado Jobs, Innovation
Mike Sommers, CEO of American Petroleum Institute, answered reporters’ questions during a media roundtable about the association’s new report released last week and the current state of oil and gas policy and regulations in Colorado in the aftermath of last year’s controversial and broad SB 181 bill.
Risks from a fracking ban or a ban on new permits for oil and gas leases on federal lands, such as those espoused by current presidential candidates, is a top concern for the trade association.
“When you talk about a fracking ban which is being bandied about, not just in state capitals but also in Washington, this really is not just a ban on a certain technology, but it is a ban on oil and gas development within the United States. Period,” said Sommers.
Ninety-five percent of new wells in the country are accessed via hydraulic fracturing or fracking, he added. With a ban on fracking, API estimates a loss of 7.5 million jobs, with hundreds of thousands of jobs lost in states across the west—Colorado (-353,218), Oklahoma (-319,437), New Mexico (-148,482). Texas alone is estimated to lose more than one million jobs due to a combination of a fracking ban and a ban on new oil and gas leases on federally managed public lands.
The losses would drive up the costs of household energy and drop farm revenues, among other effects beyond gross domestic production reductions and job losses. “So many of the inputs for agriculture come from natural gas and oil,” Sommers said. In contrast to household costs increasing over the past decade, such as education (up 50 percent), housing (up 30 percent), and food (up 20 percent), the price of household energy has gone down 11 percent, according to Sommers.
According to the Energy Information Administration, Colorado is seventh nationally in overall energy production, ranking 5th in crude oil and 6th in natural gas outputs. Eleven of the nation’s 100 largest natural gas fields are in the state.
“We want to ensure that we continue can produce in this state for many, many years to come,” Sommers said, with his group committed to Colorado despite recent regulatory challenges.
That includes the policies driven by Gov. Jared Polis and a Democratically controlled legislature.
“I had the privilege to meet with Gov. Polis yesterday. I knew the governor when he was a Congressman, and we have a great relationship,” Sommers said, who praised Polis’ pro-business record but had concerns about the direction the state was moving given recent regulations. “He’s someone we work with frequently. We talked about key issues, and we have some concerns about some of the policies pursued, particularly after [SB] 181 was enacted,” he continued.
That includes a precipitous drop in the number of new drilling permits issued by the Colorado Oil and Gas Conservation Commission.
“What we’ve seen over the course of the last year, permits in this state for new drilling are down 60 percent,” Sommers said. The “frustration” from member companies for how long permitting is taking—a problem even before SB 181—is “palpable,” he added.
Referendums like 2018’s 2,500-foot setback measure, Prop 112, have also threatened the regulatory certainty within the state, according to Sommers. That measure failed by a 56 to 44 percent vote, but other measures are likely to be introduced, as they have with regularity, since 2013.
“I think the governor understand how important this industry is to the state,” Sommers said, pointing to approximately $1 billion in revenues from production that flow to education and healthcare funding.
“Coloradans understand the importance of this industry because they interact with this industry every single day. It’s how we power our homes, it’s how we power our cars,” he added.
For the hundreds of thousands of oil and gas employees within the state, including the local pipefitters union, Local 208, the industry offers high-paying jobs and lifelong careers building pipelines. While opponents of oil and natural gas production have said job losses will be solved through retraining and the state’s new Office of Just Transition, Sommers said employment like the six-figure jobs building pipelines don’t just simply reappear overnight, if at all.
“You just can’t find that kind of work in other industries, so we’re keenly focused on making sure that we can maintain this production because it’s good for American workers,” Sommers said. “We have to make sure the regulatory regime meets the needs of Coloradans.”
“Frankly, it’s insulting when people say that these people can just be retrained to do something else. They don’t want to do something else. They want to work in oil and gas. It’s been a goal of this country to become energy independent, and they’re at the forefront,” he continued.
With natural gas driving emissions reductions over the last decade, Sommers said, the industry has “been a victim of our own success.” Increasing global demand for energy and will need fossil fuels, according to the International Energy Agency, he said, means that the search for resources will continue.
And that means, at least for Colorado, continued tension between a booming industry and a booming population. Despite production pre-dating the population boom along the state’s populous Front Range, the fracking innovation has allowed smaller operations with horizontal drilling to access a much larger area, while making production sites smaller and with less impact.
That decreases the industry’s environmental footprint, Sommers said, and allows producers to deal with the important third leg of what he called the “energy trilemma,” to provide affordable, reliable, and cleaner energy.
He said Colorado has become a leader in technological adaptations due to its high population surrounding the Denver-Julesburg basin. “In Colorado, where there is some development in high population centers, they have to make sure they’re not releasing any of their product into the atmosphere, and that it’s quieter. So the technology being developed here is very, very different than what you see in the Bakken or Permian [basins],” Sommers said.
“All of these producers are working together because they know the importance of their environmental footprint,” Sommers concluded.