Sharpe: Colorado Proposition 112 – Oh the irony

George Sharpe
George Sharpe, Merrion Oil and Gas investment manager

If I were to ask you how close a well could be drilled to your home without sacrificing the health and safety of your family, what would you say?  Some 172,000 people in Colorado said, “Uhmmm… how about a half a mile away?”  

As a result, Proposition 112 has made the ballot in Colorado for the November elections, which if approved, would prohibit drilling within 2500’ of an occupied structure, playground, park, lake or river… effectively banning drilling on over 80 percent of the prospective land in the State.    

What an interesting way to create regulation; by popular guess. Why didn’t they guess a mile, or 10 miles?  

Ironically, Colorado Rising, the environmental group spearheading the movement, calls the proposed rules “common sense” protections from the dangers of oil & gas development and fracking. “Common paranoia” is more like it.  

Their website further states that “grave risks clearly linked to the toxic emissions from fracking include cancer, respiratory problems, birth defects, and more.” Yikes!  What is a mother to believe? If you already live near one of the some 80,000 existing wells in Colorado, you can relax. 

Here is the truth of the matter.    

Impacts of oil and gas development

Let me start by admitting that oil and gas production DOES impact the environment. Industry works hard to minimize the impact, but it will never go to zero. The question is, does our relentless need for energy justify the impact, and does that impact actually affect our health and wellbeing? Here are the primary impacts decried by Proposition 112’s proponents.

1. Climate Change — While this is not included in Colorado Rising’s laundry list above, it really is the driving issue in the anti-oil and gas conversation, and is the primary desire of Proposition 112… “keep it in the ground!”  

History, future of San Juan Generating Station

For the record, I believe that climate change is happening, man is contributing to it, and we should do something about it.  But that is not going to happen overnight. While there are emissions associated with oil and gas development, the real emissions happen when we use the oil and gas. With carbon energy comprising 80 percent of our energy use and with wind and solar, as fast as they are growing, still only at 2.6 percent, we are going to continue to need oil and gas to provide our energy for decades to come. So Coloradoans may vote to ban drilling in their state, joining New York, Vermont, and Maryland, who have all banned fracking.  But, ironically, like the East Coast hypocrites, they darn sure aren’t going to ban the USE of oil and gas. That would be barbaric.       

2. Fracking — This evil sounding underground process which is the poster child for the “anti” movement is actually the one area of development where there is no impact at all. How ironic. The absolute reality is that fractures only grow a few hundred feet from a well and do not penetrate through over a mile of rock into ground water. As a result, over a million wells have been fracked over the last 70 years, and there is not a single documented case of groundwater contamination due to the fracture itself. Don’t believe me? Then ask Obama’s EPA. In 2015, after several years of study, they issued their report concluding that “We did not find evidence of widespread, systemic impacts on drinking water resources.” 

They did identify the occasional contamination from surface spills or other activities, but concluded that “The number of identified cases was small compared to the number of fractured wells.”

3. Air Emissions  —  The health risks listed by Proposition 112’s proponents are primarily associated with a wellsite’s air emissions.  Industry is working hard to minimize the emissions, especially in Colorado, where the air emission regulations are as stringent as any state in the country.  However, there are ALWAYS going to be SOME emissions from the development of oil and gas. Like the emissions from your car, those emissions contain compounds that at high enough concentrations would be toxic, or cancer causing, or could contribute to breathing disorders.  And as long as there are ANY emissions, the environmentalists will be able to point to those compounds and claim that there is a health risk, without making any effort to quantify that risk or put it in perspective.  

Workers tend to a well head during a hydraulic fracturing operation outside Rifle in western Colorado.

So how close to a wellsite is it safe to live, play and breath? When the Barnett Shale started the shale revolution in the early 2000’s, Fort Worth, Texas was the epicenter.  The city worked with the EPA to commission the “Fort Worth Natural Gas Air Quality Study” to help them make setback rules based on science versus by popular vote. During the study, more than 15,000 air samples were taken in and around various oil and gas facilities. None, I repeat, none were above safe breathing standards.  As a result, Fort Worth approved a setback of 600 feet. 

The long and the short of It  

At 500 feet, Colorado’s current setback is already two and a half times what science has shown is safe.  Proposition 112 wants to increase that five more times, not based on science, but based on scaring a bunch of young mothers into signing an opinion poll.  It won’t improve the health of Colorado citizens, but it will cost them billions in tax revenues to their counties, royalty payments to their landowners, and jobs for their communities. In the meantime, they will continue to use oil and gas produced from somewhere else with much less stringent environmental regulations.  And Colorado Rising calls this proposition common sense?  How ironic.  

George Sharpe is an investment manager for Merrion Oil & Gas in Farmington.