2,500-foot setback for oil and gas “would pretty much gut new development”

On August 24, the Colorado Secretary of State issued a press release that announced that the two anti-frac measures seeking to become amendments to the Colorado constitution are currently in the process of having the submitted signatures counted and verified.

Colorado Anti-Frac Ballot Signatures Are Being Counted: Exclusive Interviews

Anti-oil and gas volunteers turn in petitions for initiatives 75 and 78 on Aug. 8, 2016. Photo: Greenpeace

“The Colorado Secretary of State’s Office is still tabulating the final two citizen measures that were turned in: No. 75, giving local government the authority to regulate oil-and-gas development, and No. 78, expanding setback requirements [from 500 feet to 2,500 feet] for new oil-and-gas development,” the Secretary of State’s office said in its press release.

If either 75 or 78 is deemed by the Secretary of State to have enough valid signatures to be placed on the November ballot, they could result in unprecedented challenges for the oil and gas industry in Colorado.

At the EnerCom conference last week, Oil & Gas 360® interviewed experts with diverse backgrounds about the effects, should either initiative–the 2,500-foot mandatory setback amendment or giving regulation of oil and gas activity to local municipalities–make the Colorado ballot and be approved by voters.

A legal perspective

David P. Steinberger, attorney in Denver with Feldmann Nagel, LLC, has closely followed the anti-oil and gas ballot issues and Steinberger offered his views on possible outcomes and the serious implications for the oil and gas industry and the State of Colorado in this exclusive video interview with Oil & Gas 360®’s Angie Austin.

Questions addressed by David Steinberger

  1. David, thinking about the proposed amendment to the Colo. Constitution to raise the oil and gas drilling and activity setback from 500 feet to 2,500 feet, what sort of legal recourse, if any, would oil and gas mineral owners or leaseholders have if an amendment is made to the state constitution prohibiting drilling within 2,500 feet of occupied structures or areas of special concern?
  1. How difficult will it be to overturn this if the initiative makes the ballot and is voted on and passed by Colorado voters?
  1. What happens if an oil company already has a permit to drill, or if they have drilled but uncompleted wells (DUCs) within the no-drill area of the new setback amendment?
  1. Do you have any information about the number of signatures that were turned in for 75 and 78—what are the chances of either initiative making it to the ballot this year?
  1. What happens to the rulemaking strength of the Colorado Oil and Gas Conservation Commission if 75—local control—passes and becomes a constitutional amendment?
  1. The COGCC report said initiative 78 would remove about 90% of the state’s surface area from new oil and gas operations. This would effectively put an end to oil and gas as an economic activity in the state. Is there any recourse?

An education-based perspective

Another expert, Will Fleckenstein, Ph.D., petroleum engineering department professor at the Colorado School of Mines, was also interviewed by Oil & Gas 360®’s Angie Austin for his views on the implications of the two ballot issues.

An oil and gas company perspective

Oil & Gas 360® talked to Whiting Petroleum Senior Vice President Exploration and Development Mark Williams at the EnerCom conference. Williams offered his view of the two ballot initiatives as they might affect Whiting and its operations in the Niobrara, in northern Weld County, Colorado.

After today’s announcement, Oil & Gas 360® asked Colorado Secretary of State media spokeswoman Lynn Bartels when the office expects to have the final count for the two oil and gas measures.

“I would expect sometime at the beginning of next week,” Bartels said via email.

However, judging from the pace of counting and verification for six other citizen initiatives, all of which cleared the counting process in days, notification either way could happen this week.

Read the actual petition language for 75 (local municipal control over oil and gas) and 78 (mandatory 2,500-foot setback) here.

Wells Fargo E&P Research Projects Not Enough Signatures

Wells Fargo Research - E&P:

Colorado Ballot Decision Expected Soon – All Signs Point to Defeat.

Attending the Rocky Mountain Energy Summit this week in Denver, and obviously Setback initiative (anti-fracking) and overall regulatory environment a big topic in panels and discussion. To that end, we thought we would provide an update with our latest thoughts conceding Initiatives 75 and 78 (Setback and Local Control proposals). And versus our prior note 2 weeks ago in which we stated it was very unlikely the initiative would be on the general ballot, recent data and Secretary of State verification rates from other ballot initiatives means it moves from highly unlikely to extremely unlikely.

Colorado Secretary of State's office has ruled on 5 of the 7 initiatives, and they are currently counting signatures for both #75 and #78.

Cadence of the last 5 press releases from their office has been 1 to 4 business days between, so we could hear perhaps by Friday or early next week. In the highly improbable chance it moves to line-by-line verification process, then it could drag on a little longer. Either way, very very unlikely for either to make the ballot.

Regarding verification rates, on the other 5 initiatives for which signatures submitted, verification rates have averaged 70% (on 165,000 signatures) which implies around 141,500 signatures would be needed. Again, we continue to hear from all our local industry and political contacts that closer to 105,000-110,000 signatures were submitted on August 8th.

In general, the Street has already assumed the initiatives will fail, as evidenced by moves in Colorado exposed names over the last few weeks. Nonetheless, once we get the official ruling, it would remove an overhang from DJ Basin exposed public operators - including research covered names APC, PDCE, BBG, WLL. In addition, while overlooked, this would also lift the overhang on Piceance exposed names.  

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