Energy execs tackle controversy

The Colorado Statesman

Energy executives who gathered in Denver this week for the Rocky Mountain Energy Summit were asked to bridge a divide between critics and the industry over hydraulic fracturing in order to move forward.

Democratic U.S. Sen. Mark Udall and Republican U.S. Rep. Mike Coffman offered thoughts from their respective sides of the aisle as the industry has recently seen a spike in differing philosophies over regulation. With concerns over hydraulic fracturing and environmental impacts growing, the Rocky Mountain Energy Summit placed a focus this year on addressing some of those fears. While the industry rejects many of the claims purported by its critics, the summit still covered how to deal with the attacks.

The program was titled, “Making History: Innovation and Controversy in Oil and Gas Development.” It was held at the Colorado Convention Center.

As so-called fracking has moved into the Front Range, concerns have grown. Fracking employs the pressure of a fluid — usually sand, water and chemicals — to expedite extraction rates. But the process has raised issues around an abuse of resources, health, safety and noise concerns.

Longmont was the first notable city to take action, implementing its own rules and regulations last year that overstepped the state’s authority. The Colorado Oil and Gas Conservation Commission, or COGCC, has filed a lawsuit against Longmont for doing so.

Longmont voters then last November banned fracking altogether, which has resulted in a separate lawsuit filed by the Colorado Oil and Gas Association seeking to overturn the prohibition.

Voters in cities across the state are following Longmont’s lead, seeking moratoriums on the drilling process. Initiatives are underway for this year in Broomfield, Loveland, Fort Collins and Boulder.

Lafayette voters could also pass an outright ban this November. But Lafayette resident Jon Hydeman on Thursday filed a protest to the petition signatures gathered. Hydeman is a hydraulic fracturing operating assistant who will start a job at the end of the month with Halliburton. A ban could put his job in jeopardy.

The challenge seeks to have the signatures disqualified for not meeting a state requirement to include summary of ballot language on the petitions circulated.

“It’s been incredibly frustrating to watch these outside interest groups mislead my neighbors over oil and gas development and fracking, when study after study after study over the last decade have proven the practice is well-regulated and safe,” said Hydeman. “With all the misinformation out there about oil and gas, it’s important that citizens know what they were actually trying to accomplish with these petitions.”

Udall, an experienced mountaineer who has always fancied himself an environmental steward, placed much of the burden on the industry to bridge divides, though he acknowledged that he does not see significant harm in the process.

“I know and you know that fracking is not a threat to our communities when it is done safely and responsibly,” he spoke on Thursday to a ballroom full of oil and gas executives and employees. “But for many Coloradans who are seeing drilling rigs pop up near their homes, schools and parks, fracking is more than an abstract process. It’s an industrial activity that is increasingly being conducted in urban and suburban areas.

“Although you may not have contributed to many of the public relations and public health alarms that we’ve seen over the years, I do think it’s important to be cognizant of the bumps in the road,” Udall continued.

“I know that it’s easy to dismiss the concerns of some of the loudest anti-industry folks in our state… but that would be a mistake,” the senator cautioned.

But at the same time, Udall pointed out that activists are also to blame, adding, “Opponents… make a mistake by putting you all in a box and refusing to constructively engage with you.”

He encouraged the industry to rise above: “I extend an invitation today,” he addressed the audience. “Let’s partner together to reach the summit. Let’s avoid political labels and find commonsense compromises.”

Udall believes progress can be achieved through transparency and communication — by working together as Coloradans who want to achieve energy security. He says the industry has been making that effort.

“There is a general sense in this industry that the public feels hydraulic fracturing is of a concern, and the industry is doing more than I’ve ever seen it do to understand that concern; to listen and to respond,” remarked the senator.

Tisha Schuller, president and chief executive of the Colorado Oil and Gas Association, which hosted the event, agreed that work must continue in order to close the gap between the industry and its critics.

“We can take two paths,” she said. “We can be defensive and entitled, or we can be constructive contributors to our collective future, and that approach makes a lot more sense.

“We’re citizens of Colorado; we’re members of the community,” Schuller continued. “And when we look ahead, we know that we play a really important role in the future. So, if we ask ourselves what future do we want to create, we can be constructive contributors.”

She added that her industry’s messaging has shifted in the sense that it has recognized the mandate to reach out to all communities.

“The difference is that we get that the public doesn’t understand our role, or what we do, and so now we need to take that same framework and shift it to a larger platform,” explained Schuller. “So, the platform is our communities; the platform is the state of Colorado, or the nation, or the world.”

That said, Schuller acknowledged that it can be difficult to bring all stakeholders together in order to find compromise: “It’s messy; it’s not clear; it’s emotionally challenging; it’s vexing,” she said. “But it’s worthwhile and we have to do it.”

On the other side of the debate, anti-fracking activists are unapologetic about their resistance. They are careful to point out that they are not simply environmentalists, but a broad coalition of grassroots citizens concerned with health, safety and property.

In the past couple of years, opponents have become so loud that they have earned a name for themselves: “fractivists.” They wear the name proudly. Their no-compromise approach to banning the drilling process has become a near religion.

Fractivists raise a myriad of concerns, including risks associated with cancer, water contamination and emissions.

Protect Our Colorado, a statewide coalition against fracking, points out that the energy industry receives federal exemptions for complying with clean water standards. A recent study of 353 of the 632 chemicals used by the industry found that 75 percent of the chemicals could affect public health.

There have been more than 1,000 spills in Colorado since 2009, according to state data. Fractivists believe that with rising concerns over climate change, the impacts of fracking to water supplies must be considered.

Food and Water Watch’s Sam Schabacker — who has become a spokesman for fractivists — says there is little to talk about with the industry since the goal is to completely ban the process.

He is also highly critical of Democratic Gov. John Hickenlooper for supporting the lawsuits against Longmont. Hickenlooper did not attend the energy summit this week. He has been criticized as a former geologist for being too cozy with the industry.

“I would argue that it’s actually the industry and the governor who have been exacerbating the problems by threatening, bullying, suing Coloradans. And if we want to talk about extending some olive branch, I think removing some of those lawsuits and stopping the all-out assault on Coloradans, their health, safety and quality of life, the permitting of a record number of fracking wells — that’s the real way that we’re going to begin,” said Schabacker.

He pointed out that in Longmont, voters overwhelmingly backed the ban, with nearly 60 percent of the vote. The ban passed despite massive fundraising by the oil and gas industry to fight the initiative, which totaled more than $507,000. In comparison, proponents of the ban raised only about $25,000.

“David versus Goliath, that’s the perfect characterization,” opined Schabacker.

“The industry spent nearly half-a-million dollars; they flooded the airwaves with TV commercials; they had full-page ads; online advertisements; the governor publically threatened to sue if the measure passed; every major newspaper in the state endorsed and advertised against our campaign; and a majority of the City Council in Longmont actually campaigned against the measure. Despite all of that, the Longmont citizens passed the measure with nearly 60 percent of the vote to ban fracking in their community. I anticipate that we’re going to see similar results with the ballot measures that are taking place this fall,” Schabacker said.

Love for the industry

But critics are battling a job-making, revenue-generating machine. In Colorado, the oil and gas industry directly employs over 40,000 people and supports over 107,000 jobs in the state, providing $6.5 billion in total labor income and $31 billion in economic output annually.

In 2012, the oil and gas industry paid over $163 million in severance taxes in Colorado, or 93 percent of the $175-million severance tax total.

The impact of the industry is especially noteworthy in Colorado where there are more than 40,000 oil and gas wells in production, with 10 of the nation’s 100 largest natural gas fields and three of its 100 largest oil fields found in the state. Colorado produces 25 percent of all coalbed methane in the nation.

Congressman Coffman, R-Aurora, was clear in emphasizing the value of the industry when he spoke Tuesday at the summit. As a former U.S. Marine who was stationed abroad, including in the Middle East, he understands the importance of domestic energy production for national security interests.

“Today we are now pivoting away from the Middle East towards Asia, and we are able to do that because of your industry; because of what you’ve done for America’s energy security; because of what you’ve done for America’s national security; and how much you’ve helped to do that by virtue of moving us to a path of energy independence,” said Coffman, thanking his audience as a former soldier.

Coffman believes one of the biggest issues facing the industry is how it will be regulated in the years ahead. He feels that the state, not the federal government, should craft rules and regulations. In Colorado, the COGCC creates and regulates those rules.

“The government closer to the people is going to do a better job of regulating this particular industry than Washington, D.C. with its one-size-fits-all policy for the entire country,” opined Coffman.

Udall also believes that the COGCC is better poised to regulate oil and gas operations in Colorado compared to the federal government, though he doesn’t exclude a role for the feds.

“I start from the point of view that the states ought to be driving this like Colorado is,” explained Udall. “Colorado has been a leader, but that is not to say that there aren’t Coloradans who think that the state could do more.”

Denver Mayor Michael Hancock, who offered welcoming remarks on Tuesday, also pointed to the benefits of the industry. He pointed out that Colorado, specifically Denver, is often rated as one of the best places for business and careers. The mayor said much of that has to do with the energy industry.

“We all know that the energy sector is tremendously important to our economy…” said Hancock. “The world is changing. We are still a growing nation, one that is still thirsty for traditional sources of energy and hungry for new ones… This industry could be anywhere in the world and be just as successful, but you allow and you have chosen Denver and the state of Colorado.”

—Peter@coloradostatesman.com