Colo. Fracking Votes Put Pressure On Energy Companies
The 2013 election marked a victory for foes of hydraulic fracturing, or fracking, in Colorado. Voters in three Front Range communities decided to put limits on the practice.
Next week, the north Denver suburb of Broomfield will launch a closely watched vote recount on a proposed moratorium there.
Oil and gas companies say the measures create an uncertain business environment.
During its original vote count, Broomfield felt more like Miami-Dade County circa 2000 than a sleepy Denver suburb. About two dozen lawyers and other observers invested in the outcome of the proposed five-year fracking moratorium crowded into a windowless room.
Among them was Laura Fronckiewicz, head of the anti-fracking group Our Broomfield.
"There are other counties and other cities along the Front Range that have been planning for this for the last year," says Fronckiewicz. "We really threw this together in a couple months ... out of total concern about what's going on. We couldn't wait."
But they'll have to wait a bit longer, because the closeness of the vote triggered an automatic recount.
That adds up to a lot of uncertainty for Sovereign Operating Co., which has plans to drill 31 new wells in Broomfield.
"It would shut down future operations for new drilling, which is where all of our investment and our activity primarily are focused," says Sovereign's chairman and CEO, Thomas Metzger.
Metzger says losing access to the wells could translate into a loss of tens of millions of dollars. Earlier this year, he spent months negotiating an operating agreement with the city and county, which he says exceeds state and federal rules.
"Certainly, we are easily a year and a half to two years off our schedule, and its economic impact is very substantive," Metzger says.
Tisha Schuller, president of the industry trade group Colorado Oil and Gas Association, says that for some smaller companies, bans can have a "really significant impact."
Sculler's group is already engaged in a pending lawsuit over a 2012 voter-approved ban in another Colorado town.
Schuller says the association is weighing its legal options. But for now, overall production across the state will not be affected.
"The vast majority — 99.9 percent — of all wells in the state are still operating in areas unaffected," Schuller says. "And so we're going to continue to work to engage our communities."
Hoping to build on momentum, some environmental groups have said they're considering putting a statewide ban or moratorium on the 2014 ballot.
That's unwelcome news for energy producer Encana Corp. Community Relations Director Doug Hock says this year, Encana revamped its strategy and workforce to have more of a Colorado focus.
"A decision has been made to have a presence here in Denver and in Colorado," Hock says. "And when you have these types of initiatives being bandied about — again — it doesn't create a good business climate."
Other companies are feeling the same pressure.
"There's been a lot of talk recently about changing the conversation, of really changing the dialogue that's been happening between the industry and our stakeholders," says Robin Olsen, who handles external affairs for Anadarko Petroleum Corp., the second largest operator in the region.
She says part of the engagement will take place through a media campaign Anadarko launched through a nonprofit 501(c)(6) organization created before the election, called Coloradans for Responsible Energy Development, or CRED.
"This is how the voters in the those four communities have told us they feel," says Olsen. "How can we take that feedback, how can we take that, learn from it, and be better stewards of our environment?"
Olsen says Anadarko is committed to making a "significant" investment in CRED in the coming years.
That means Coloradans won't be done hearing about hydraulic fracturing any time soon.