Colorado shutting out energy industry? |

Colorado shutting out energy industry?

Phillip Yates
Glenwood Springs correspondent
Aspen, CO Colorado

GLENWOOD SPRINGS ” A recent report by a Canadian organization says possible new regulation of Colorado’s oil and gas industry makes the state a much worse place for oil and gas companies to invest.

The Fraser Institute, which calls itself a nonpartisan group, ranked Colorado as the 29th worst jurisdiction for “upstream” oil and gas investment out of 81 international jurisdictions, according to its Global Petroleum Survey 2008. That’s because of the prospect of the new rules, according to the institute.

The Colorado Oil and Gas Commission is drafting new rules in response to legislation passed last year. However, a swell of controversy has since consumed the process, with oil and gas industry representatives blasting the proposed regulations ” especially 90-day seasonal drilling restrictions on the Western Slope.

Several state legislators have also warned the commission of a possible rewrite of the rules.

The Fraser Institute based its report on survey results from senior executives and managers who responded to its annual survey of “upstream petroleum companies.”

“Survey respondents were very concerned with Colorado’s changes to drilling permit requirements and other stringent regulations,” said Gerry Angevine, Fraser Institute’s senior economist and coordinator of its annual petroleum survey, in a prepared statement. “The Colorado Oil and Gas Association estimates the new rules could increase drilling costs by $60,000 to $600,000 per well.”

But Mike King, deputy director of the Colorado Department of Natural Resources, said the report’s conclusions are not consistent with what “we are seeing in Colorado.” He cited several recent energy company investments in Colorado, such as Schlumberger’s purchase of 350 acres in DeBeque.

He added that he was also skeptical of the Fraser Institute’s findings because of the short time frame between the release of its two reports.

About six months ago, the same institute said industry experts ranked Colorado and Thailand as the most attractive places in the world for oil and gas investment.

Meg Collins, president of the Colorado Oil and Gas Association, said the study indicates Colorado Gov. Bill Ritter and his administration are “sending a clear message to natural gas and oil companies that Colorado is closing its doors on them.”

“The Fraser Institute’s 2008 report accurately demonstrates the real concern Colorado’s natural gas and oil producers are feeling given the state’s complete rewrite of the rules that govern the industry,” Collins said.

Duke Cox, who has been involved in the rule-making process and is the former director of the Western Colorado Congress, said people should follow what companies say to their investors about their potential investments in Colorado, rather than what industry may tell the Fraser Institute.

Cox specifically referred to what Williams Production RMT ” one of the largest producers in the county ” is telling its investors.

Williams, in its most recent Securities Exchange Commission filing on Wednesday, said its recent acquisition of 24,000 net acres in Garfield County’s Piceance Basin and the associated increase in drilling activity are the primary drivers of the increase in company’s capital expenditure guidance in 2008 and 2009.

The Colorado Oil and Gas Commission is expected vote on the new rules in mid-August.