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On September 9, 2014, Governor John Hickenlooper appointed 19 members to join a panel led by one oil and gas company president and one environmental activist.  The idea is to help guide decisions dedicated to regulating oil and gas development throughout the state of Colorado. The task force consists of environmentalists, oil company executives and government officials, along with lawyers and members representing the housing and ranching communities. A full list of the members and their respective backgrounds can be found here.

The task force was a common ground decided upon by Hickenlooper and Representative Jared Polis, the driver of two key anti-development initiatives intended to further restrict regulations on Colorado’s oil and gas industry. The initiatives, along with two bills being pushed from the pro-industry side, were all dropped once the agreement to have a joint task force was reached.

218Edge: Pro-Drilling Side

The Marwood Group, an analytical firm that analyzes the impact of regulatory factors on industry sectors, reviewed the impact of the panel in a report on September 11, 2014, entitled: Energy Research: Colorado Regulations. “We would give the edge to the 19‐member panel’s pro‐drilling side, which isn’t all that surprising given that the formerly proposed ballot initiatives were facing near‐certain defeat in November,” reads the second bullet point of the three page analysis.

The first project from the board is to release a series of recommendations to the state legislature by March 2015. “Although largely driven by politics, we believe the panel represents a well‐balanced perspective from both political parties as well as industry and environmental groups,” the Marwood Group wrote.

But will they Reach an Agreement?

Obviously, opinions from board members will be wide-ranging on what has become an extremely controversial subject. Colorado assembled a similar task force in 2012, and the group recommended, in a nutshell, community involvement, generating a mutual understanding between parties, issuing increased disclosures to the state and longer permitting times.

The Marwood Group forecasts: Ultimately, we doubt the panel’s recommendations, assuming it actually comes to agreement on any, will enter the force of law. The result could force the issue back onto the ballot in 2016.

Task Force Makeup

Two-thirds of the task force, or 13 of 19 members, must agree on a topic in order for it to be presented to the state legislature. Marwood analysts, however, believe the spread in opinion may be too much to overcome, especially since the environmental and industry sides, consisting of six members apiece, will likely cancel each other out on the majority of proposals. The group rated each member on a scale of one to five based on “Industry Friendliness,” with one being the lowest. The “for” and “against” sides were evenly distributed at seven members apiece, while the remaining five were left on the fence with a neutral rating of three.

Marwood’s Prediction

It is most likely nothing will come of the task force, Marwood concluded in the report. The Group said, if anything is reached, it will involve further disclosure of hydraulic fracturing chemicals and possible setbacks from existing properties. “We doubt the industry will agree to more local control over drilling regulations,” the report said.

The election is also on the horizon, with mail ballots going out in a matter of days, leaving several unknowns as to government figures and their respective opinions on the industry. Recent polls have Hickenlooper and his gubernatorial challenger Bob Beauprez either even or with Beauprez in the lead. “Should this compromise fall short of becoming law, we expect pressure from environmental activists to continue to maintain momentum for another run at the ballot in 2016.”

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.