WINDSOR — A month out from Election Day, executives from Colorado’s energy and oil and gas industry are concerned that state voters may pass Proposition 112.
A group of industry leaders gathered Tuesday in Windsor for BizWest’s CEO Roundtable on energy. They agreed that the measure, which would increase setback requirements, is likely to hurt energy companies, slash jobs in a variety of sectors and shrink tax revenues.
Proposition 112 “would slow our business down quite a bit,” United Power CEO John Parker said.
If passed, Proposition 112 would require new oil and gas drilling activity to be no closer than 2,500 feet from occupied buildings and areas such as parks and open spaces. Current setback regulations are 500 feet from residential properties and 1,000 feet from structures such as school and hospitals.
Proponents of Proposition 112 argue that increased setbacks help protect people from danger or negative health impacts posed by close proximity to oil and gas operations.
But industry representatives say those concerns are unfounded and argue that reduced access to future drill sites will hurt the economy.
The measure “would dry up growth, and from a financial perspective, it would hurt our business,” Poudre Valley REA CEO Jeff Wadsworth said. “ … It’s a much bigger play than just the setback issue — (Proposition 112) would have ripple effects.”
SRC Energy executive vice president of business development Craig Rasmuson agreed. He cited potential loss of tax revenues for schools and higher utility costs for consumers as examples of ripple effects.
“It’s so far-reaching with the trickle down of what could happen,” he said.
Industry leaders warned of the possibility that companies and jobs would be forced out of Colorado if the measure is approved.
“We will figure out a way to reinvent ourselves, and to me that would mean we would have to go out of the state,” Rasmuson said. “ … I don’t want to go to Montana — I like Colorado.”
In addition to being potentially harmful to the economy, Wadsworth said that regulating the industry with a seemingly arbitrary setback distance is “not good government or good process.”
Colorado Energy Office representative Kathleen Staks echoed his sentiments. Measures such as Proposition 112 and Amendment 74 are “big, blunt instruments that aren’t good at solving any of these issues,” she said.
Amendment 74 would change Colorado’s constitution to require the government to compensate private property owners when regulation reduces the value of their property.
Staks said the government has “much more nuanced and surgical ways to address” concerns raised by supporters of the measures.
Despite their objections to Proposition 112, energy-industry leaders acknowledged that they might be fighting an uphill battle to win over voters.
“We are up against it,” Rasmuson said. “ … We haven’t gotten the word out the way we need to.”
He joked that in an effort to avoid angering potential voters, he’s become a much more courteous driver since putting an anti-Proposition 112 sticker on his truck.
Staks noted that anti-Proposition 112 messaging would be much more effective if it came from people not seen as energy-industry insiders.
She also warned that even if the measure is defeated, November won’t mark the end of efforts to increase oil and gas regulations.
“If (Proposition) 112 fails this year, this conversation isn’t going away.”
Moving toward solar power and renewable energy
While participants in Monday’s roundtable agreed that the industry is moving toward more renewable sources such as solar, the transition away from carbon-based fuels can’t happen overnight.
“We are in a changing industry,” Wadsworth said. “But I’ve heard people wiser than me say that change is slow — until it isn’t.”
Energy providers must strike a balance between renewable sources of power and reliable sources, he said.
“Our first focus is reliability,” he said. “People want light, people want air conditioning, people want a cold beer.”
United Power is in the process of installing a 4-megawatt solar battery storage system in Firestone using technology supplied by electric vehicle-maker Tesla. Construction on the project is expected to be finished later this month, Parker said.
“We decided about three years ago to do it,” he said. “We figured this was the upcoming technology in the industry and somebody ought to start learning about it.”
Both Parker and Wadsworth agreed that they had not seen significant impacts from tariffs applied earlier this year to certain solar panels.
“The cost of solar panels has dropped so precipitously over the past few years, but it is starting to level out,” Parker said.
Is the grid ready for more electric vehicles?
Like solar power, electric cars are becoming increasingly popular. However, energy industry officials say the electricity infrastructure will require large-scale upgrades before the grid can handle a car charger in every driveway.
“We’re a little bit concerned about the impact (of electric car proliferation) on our distribution network,” Parker said. “If you’ve got a bunch of guys in the same neighborhood who all start charging at the same time, that’s an issue for the transformer.”
Last year Colorado joined with Arizona, Idaho, Montana, Nevada, New Mexico and Utah as signatories to the Regional Electric Vehicle West Plan. That memorandum of understanding between the states’ governors aims to promote electric vehicle adoption by making reliable charging stations more accessible.
“The purpose of this is to help make the electric vehicle charging infrastructure more consistent across the West,” Staks said.
This sort of cooperation is crucial in this region because population centers are much more spread out than on the coasts, she said.
“We’ve got big open spaces and different terrain and much different challenges,” Staks said.
One challenge is integrating solar panels and storage capabilities into the charging stations so existing electricity infrastructure isn’t overtaxed, she said.
Of the states participating in the Regional Electric Vehicle West Plan, “Colorado is really leading the way,” Staks said.
“Probably within the next couple of months we are going to be making some grant awards to put fast-charging stations along many of our interstate corridors,” she said.