CHEYENNE – A measure on Colorado’s general election ballot could have positive implications for the energy sector in Wyoming.
Colorado voters will decide on Proposition 112, which would impose 2,500-foot setback rules on oil and gas drilling operations in a slew of instances. A study by the Colorado Oil and Gas Association showed the proposal would restrict drilling on 85 percent of the non-federal land in the state.
A recent poll showed that with only two weeks until Election Day, the proposition had popular support. If it does pass, oil and gas companies have claimed it will decimate the energy industry in Colorado.
One study, conducted by the Colorado School of Mines, showed the proposition would lead to more than $230 million in lost revenue and the elimination of more than 43,000 jobs, most outside of the energy sector, in the first year of passage.
“It’s an existential threat to the oil and gas industry in Colorado. It’s literally a ban on new development,” said Kathleen Sgamma, president of the Western Energy Alliance. “So Wyoming would probably immediately see an increase in interest in the Powder River Basin. There’s already quite a lot of interest in the Powder right now.”
While developers and industry advocates believe they will be able to defeat Proposition 112, if it is approved at the ballot box, Sgamma said there will be a mass migration of capital from Colorado. Considering Wyoming’s proximity to the state and that energy developers have investments both here and in Colorado, Sgamma said it made sense that Wyoming would see both a short- and long-term gain in development.
“There’s lots (of development) already going on in Wyoming, but if Colorado basically shuts its door to new development, I do think you’d see even more investment going into Wyoming,” Sgamma said. “I’m already hearing from some companies that are disgusted with Colorado, and want to abandon Colorado and put money elsewhere.”
While the changes in Colorado could be a windfall for Wyoming’s energy sector, some industry experts don’t know if a straight line can be drawn between restrictions in Colorado and a massive uptick in investment and activity here.
John Robitaille, vice president of the Petroleum Association of Wyoming, said there’s a possibility Wyoming could see increased investment from companies that already operate in both states. But as for a huge bump in production in Wyoming, Robitaille said he didn’t know if a change in Colorado’s rules would have a massive impact here.
“A lot of companies operating in Colorado operate in Wyoming, as well, so I don’t know for sure how that would affect things here. It could easily push some of the capital out of Colorado into Wyoming, or other places, for that matter,” Robitaille said. “It’s really going to be based on an individual decision by that particular business on where they’re going to put their capital.”
While Wyoming has a friendly environment for energy development, along with plenty of resources, a main issue with extracting them is where they’re located. More than 60 percent of all minerals in Wyoming are owned by the federal government. Robitaille said that puts up extra roadblocks for development when compared to privately owned lands.
That could affect where companies looking to leave Colorado might move their capital. So instead of moving up north, they could turn to private lands in states like Pennsylvania or Texas, Robitaille said.
“With the federal government comes various other actions that have to be taken when drilling a well, and sometimes it can be very time consuming,” Robitaille said.
Mark Watson, director of the Wyoming Oil and Gas Conservation Commission, agreed with Robitaille.
“I’m not so sure these other companies coming from Colorado would be looking to come to Wyoming or not. There’s a lot (of energy development) going on in the United States. There are a lot of places they could go,” Watson said. “I think maybe people might make it a bigger deal than what it is, as for as it being a benefit to Wyoming. It will be interesting to see how people vote in Colorado and what that does with the rest of the country.”