Mining a $10.2 billion industry in Colorado in 2012, environmental issues persist

LOVELAND – The mining industry contributed 1.7 percent of Colorado’s gross domestic product in 2012, or about $10.2 billion, but concerns about water and air quality and the threat of increased regulation are still cause for concern among oil and gas stakeholders.

Mining is one of the largest primary employers in Colorado, according to Brian Lewandowski, research associate at the University of Colorado Leeds School of Business in the business research division. The mining industry includes not only oil and gas producers, but also ancillary companies that manufacture supplies for oil and gas and transportation companies that haul resources like sand and water.

The mining industry accounted for 2.7 percent of the total wages paid in Colorado in 2012, Lewandowski said during a presentation at the Business Report’s inaugural Energy Summit, held at The Ranch in Loveland Tuesday.

“Mining is one of those industries that helped pull Colorado out of the recession,” Lewandowski said.

Noble Energy is transitioning part of its vehicle fleet to compressed natural gas, which results in a cost savings of $1,800 per day per rig over diesel fuel, according to Curtis Rueter of Noble.

But concerns over the environmental impact, specifically to water and air quality, of oil and gas drilling continue to plague the industry, and regulations developed at both the state and local levels pose a problem for oil and gas companies.

Several regulations have already been passed in Colorado, including increased setbacks from 350 feet in urban areas and 150 in rural areas to 500 feet. Producers would not be able to operate within 1,000 feet of buildings such as schools, nursing homes and hospitals without a hearing before the commission.

But one of the biggest concerns for the industry are fracking moratoriums that have been discussed in various parts of Northern Colorado, and have been passed in several cities, including Longmont and Fort Collins.

In Longmont, both the city and the voters passed a fracking ban, and the Colorado Oil and Gas Association and other groups have sued Longmont over the voter- passed ban.

Even temporary moratoriums can be harmful for the oil and gas production companies, according to Brad Miller of Anadarko Petroleum.

“Two years, three years, five years, that’s an eternity for our company,” Miller said.

Matt Lepore, director of the Colorado Oil and Gas Association, echoed this sentiment, saying that “a ban on fracking is really a ban on drilling.” Stopping drilling operations would mean increased dependence on coal, Lepore said, and would mean higher costs for utilities.

“Fugitive methane,” or gas that escapes from wells, is a “huge point of discussion,” Rueter said, but better data is needed to figure out how to reduce those emissions.

The release of volatile organic compounds, of VOCs, is also a concern, but more for Greeley and Weld County than Fort Collins, according to Fort Collins mayor pro tem Gerry Horak, because Weld County is home to more than 20,000 wells, whereas Fort Collins has fewer than 10.