DENVER — A proposed 2,500-foot setback for new oil and gas wells in Colorado could result in the loss of up to 54,000 jobs over the first five years and up to 104,000 jobs over 15 years, according to a study released Thursday.
The study also concluded that the proposed Initiative 78 could also lower Colorado’s gross domestic product by an average of $7.1 billion for the first five years and $14.5 billion between 2017 and 2031. It noted that falling commodity prices, that began in mid-2014, have affected the industry — most notably, decreasing oil and gas activity.
The group behind the proposed initiative, Coloradans Resisting Extreme Energy Development, is in the process of collecting the needed signatures to place the initiative on the November ballot. Petitions must be turned in by Aug. 8. The group has said the 2,500-foot setback is based on “objective measures” such as health studies that show increased health risks within one-half mile of “fracked” wells and the perimeters of real-life explosion, evacuation and burn zones.
The economic impact study was commissioned by the Metro Denver Economic Development Corp., the Denver South Economic Development Partnership and the Common Sense Policy Roundtable — a nonprofit free-enterprise think tank that works to promote and protect Colorado’s economy. The study was conducted by researchers at the Leeds School of Business at the University of Colorado Boulder.
“This study illustrates the dire effects of a full attack on an industry that has been historically vital to our state’s economy,” Tom Clark, chief executive of the Metro Denver Economic Development Corp., said in a prepared statement. “Companies simply would not be able to operate here. This initiative, were it to pass, would usher in the probable demise of the oil and gas industry in Colorado.”
The proposed mandatory buffer would apply to all new oil and gas development, including hydraulic fracturing from both “occupied structures” and “areas of special concern,” such as homes, hospitals and schools, as well as sensitive areas such as playgrounds and drinking-water sources.
Researchers found that the proposal would put 95 percent of land in the top-five oil-and-gas-producing counties in Colorado off limits for new drilling and fracturing projects: LaPlata, 99.6 percent; Rio Blanco, 99.2 percent; Garfield, 98.9 percent, Las Animas, 96.3 percent, and Weld, 85 percent.
Researchers evaluated the economic impact of the setback proposal using updated depletion rates for oil and gas wells, data rig counts, price forecasts from Moody’s Analytics and the Energy Information Administration, as well as the assumption of a 90.2 percent reduction in future drilling.
Earl Wright, chairman of the Common Sense Policy Roundtable, said the setback initiative would lead to a $10.9 billion decline in personal income over 15 years.
“An unintended consequence to the passage of this initiative would not only damage the potential of Colorado’s economy, but also could significantly reduce funding for education and infrastructure,” Wright said.”
The full study can be found here.