Energy executives embrace changes facing industry

LOVELAND — Oil and gas companies in Northern Colorado have weathered the downturn in prices and, now that prices have stabilized in the $50 per barrel range, are thriving.

Energy executives at BizWest’s CEO Roundtable on the topic of energy held Tuesday said that they’ve found ways to be more efficient while also being more sensitive to the needs of the communities in which they operate.

Oil and gas companies and companies that support them said that efficiency has enabled workforces to double or triple since the downturn in prices in 2015 and still be profitable. They anticipate that they’ll continue to be able to grow as long as they are able to manage political headwinds and find ways to engage with communities.

Craig Rasmuson, executive vice president for business development with SRC Energy, said that it’s been amazing how much more work can be done in a few days on a fracking site, thus reducing the impact on neighbors. And as noted by Brian Cain, director of public affairs for Extraction Oil & Gas, the fracking work that was historically loud and disruptive is now so quiet that OSHA does not require workers to use hearing protection.

Noise and dust reduction were just two practices that have improved community relations. The industry has also worked to reduce truck traffic through use of pipelines.

Still, recognizing that population growth in the Denver-Julesburg basin will continue, the companies are keeping track of where development is likely to occur and getting their operations past the most disruptive phases before home construction begins.

Political implications

Executives said that they are watching the upcoming legislative session and elections next year closely. SRC Energy, which bought many of Noble Energy’s resources when Noble contracted in the area, feels the political pressure significantly.

Rasmuson said activist groups are tracking permit applications and trying to get in ahead of the company to knock on doors in neighborhoods. He said the industry must work harder to tell its story. Current extraction efforts are removing about 10 percent of the available resource, which means that future generations will have energy resources and the jobs that come with them if they choose to pursue them. “This basin has nine lives; this will continue to support our economy for many years to come,” he said.

Ron Gusek, president of Liberty Oilfield Services, said that consistency and predictability in governance is critical. “We want high standards that we can work with. We want consistency in order to make business decisions.” He referred to a large investment in a rail transfer center under construction in Eaton as an example of the commitment that the company is willing to make when it feels confident in the future.

Public safety

The fatal explosion in Firestone in April that resulted from an abandoned but uncapped gas line sent the industry scurrying to respond. Cain said that Gov. John Hickenlooper’s executive order requiring the inspection of every gas well in the state was appropriate and found what the industry expected: 99.65 percent of wells passed inspections. The wells that didn’t pass experienced minor issues that were easily corrected.

“This is one of the safest industries across the United States,” Cain said. “It’s safer than the florist industry,” he said.

Energy utilities

Jason Frisbie, CEO of Platte River Power Authority, thanked the oil and gas producers for providing fuel at consistently low rates. “Gas prices are so low that in the budget that we’ll show to our board on Thursday, we’re proposing investing $9 million in energy efficiency.”

Frisbie also said that PRPA’s board will consider whether to study how soon it can replace coal-powered generators with more environmentally sustainable electricity generating methods. Member cities such as Longmont and Fort Collins are pushing to power the communities using 100 percent renewable energy.

Frisbie said PRPA will continue to make investments in renewables such as wind and solar but “we’re not out to make a name for ourselves. We need to be sustainable with our rates for the individuals and industries who depend upon low rates.”

David White, vice president of member relations for Poudre Valley Rural Electric Association, said that providing electricity is still a demand business. “Electricity needs to be consumed when it’s generated. There is no warehouse of electrons waiting to be consumed,” he said.

Frisbie echoed that. “We’ll be environmentally sustainable but we have to look at things through a different lens. Our system peaks between 3 and 7 at night. Solar and wind peaks around noon,” he said. That means coal and natural gas are needed.

“We’ll add some battery components in order to learn and understand how this affects the load,” he said, but indicated that the technology isn’t there yet to save enough solar and wind energy for use later in the day.

Future projections

Oil and gas producers expect prices to be stable, especially considering the continued upheaval in the Middle East.

“We have a positive outlook on prices. Demand is climbing. We’ve overshot on supply and now the supply/demand curves are aligning better. The political situation in the Middle East weighs favorably on price stability here,” Gusek said.

Rasmuson said the nation ought to be celebrating the self-sufficiency that has been achieved in the industry. Cain concurred. “Our ability to produce domestic oil and gas cannot be understated when you have regimes that use oil and gas as a weapon. I’m thinking of Russia. We have global influence as a result.”

BizWest’s CEO Roundtables in Northern Colorado are sponsored by EKS&H, Elevations Credit Union and HUB International.

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