Colorado Bid to Block Oil Drilling Muddies Political Lines
(Bloomberg) -- Colorado’s Democratic candidate for governor once bankrolled efforts to restrict fracking. Now, he’s working hard to reassure the state’s oil explorers that he’s on their side.
A ballot proposal to limit drilling in the state has sent stocks of oil and gas producers on a roller coaster ride during the past month. U.S. Representative Jared Polis, running for the state’s top office, has come out strongly against the proposal, defying his own party. His opposition highlights what’s at stake for the energy industry, which is pumping record volumes of oil and gas as hydraulic fracturing and horizontal drilling propel Colorado into the upper echelon of shale producers.
So-called Initiative 97 would increase the buffer zone between oil wells and occupied structures, and could block drilling in half the state, according to Colorado’s energy agency.
“Initiative 97 would all but ban fracking in Colorado — a position I have never supported,” Polis said at the annual Colorado Oil and Gas Conference in Denver on Wednesday. “Let me be very clear where I stand on this: As I said during the Democratic primary, I oppose Initiative 97.”
Producers are nervous about the prospect of Polis, a millionaire businessman from Boulder, occupying the state’s highest office. In 2014, he personally financed campaigns to tighten regulations on fracking, although he later backed away from those efforts. And he continues to insist that communities should have more control over oil and gas development, a position that’s discomfiting to drillers active in Denver’s growing suburbs.
Explorer stocks rose after Polis’s remarks in Denver. Extraction Oil & Gas Inc. climbed 3.3 percent, PDC Energy Inc. advanced 4.9 percent and SRC Energy Inc. was up 1.1 percent.
Republican gubernatorial candidate Walker Stapleton, also speaking in Denver on Wednesday, sought to remind the energy industry of Polis’s shifting stance on oil and gas development. He also challenged Polis’s position on Initiative 97, questioning whether the Democrat’s opposition to the measure would change if he wins office.
If enacted, the measure could curb output in one of the country’s most prolific shale plays, the Denver-Julesburg Basin, which helped drive Colorado oil production to a record-high 447,000 barrels a day in April.
“It has the potential to be nothing but catastrophic to the energy industry,” Crystal Heter, president of natural gas transportation at Tallgrass Energy Partners LP, said Tuesday.
Highpoint Resources Corp., which is focused in the D.J. basin, is already evaluating how it would comply with the ballot measure if it becomes law in November. Would drilling three-mile laterals suffice, mused Chief Financial Officer Bill Crawford during a panel Tuesday. “We’re trying to plan for making the ballot” while hoping it won’t succeed, he said.
By contrast, DCP Midstream LLC is speeding up projects ahead of the election. “There are some decisions to make in the first week of November,” Chief Executive Officer Wouter Van Kempen said Tuesday. “Hopefully this is going the right direction so we don’t have to course correct.”
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