Study Says Untapped Front Range Oil, Gas Worth Nearly $180 Billion

Jun 13, 2018

An oil and gas advocacy group is warning Colorado taxpayers they could face billions of dollars in compensation claims if voters approve tough new restrictions on where wells can be drilled.

The Colorado Alliance of Mineral and Royalty Owners (CAMRO), which represents individuals and corporations that own oil and gas rights, wants to kill a proposal that would increase the minimum distance between new wells and occupied buildings to 2,500 feet. The current minimum is 500 feet.

The industry's latest effort came June 12, when CAMRO released a commissioned cash-flow analysis of untapped minerals in Colorado's Wattenberg Field. The study valued future oil and gas production at nearly $180 billion - $26 billion of which would come in royalties for private mineral owners alone.

The Wattenberg Field lies under portions of Weld, Adams and Boulder counties.
Credit U.S. Geological Survey

The report was completed by Netherland, Sewell & Associates, a Texas consulting firm that analyzes petroleum assets.

Neil Ray, president of CAMRO, said in a statement the study means cities and counties within the oilfield could be liable for more the $26 billion - and possibly more - as "just compensation" for the public use of private property.

"If the seizure of private property rights in Colorado is codified through the local control initiatives or statewide ballot measures, all property rights throughout the state are under attack," Ray said. "(The study) represents funds taken from tax coffers that fund schools, roads, and other community services that we all value.".

'Just a scare tactic'

Technological advances including hydraulic fracturing, commonly known as fracking, and directional drilling have spurred an oil and gas boom in Colorado, but they also roused strong vocal opposition because many drilling rigs and wells have been placed near schools and houses.

The dispute is the latest skirmish in Colorado's long-running battle over who should regulate the oil and gas industry, and how much.

The debate is especially intense in the urban Front Range corridor north of Denver, where the Wattenberg Field overlaps fast-growing communities in Boulder, Adams and Weld counties.

Drilling applications with the state have risen about 70 percent in the past year. That's fueling new conflicts between residents and operators everywhere from Greeley to Longmont and the rest of Boulder County .

Colorado Rising , the primary backer of a statewide initiative trying to create a half-mile buffer zone between homes and schools, has until Aug. 6 to submit nearly 98,500 signatures to get the measure on the November ballot.

The proposal states it would apply only to new wells, but CAMRO's Ray said it could force oil and gas companies to shut down some existing wells if they need major maintenance.

Anne Lee Foster, a volunteer organizer with Colorado Rising, dismissed that notion.

"It very explicitly states new oil and gas development," Foster said.

Colorado Rising called the report on the Wattenberg Field's value "just a scare tactic."

"Keeping wells out of neighborhoods may cost the industry more, but it is clearly the right thing to do in order to protect Colorado families from deadly explosions and toxic emissions," the group said in a written statement.

CAMRO also said the longer distances could leave most of the state off-limits to drilling, citing a 2016 study by Colorado regulators that said an earlier proposal for a 2,500 feet setback would prevent future drilling in 90 percent of the state.

Foster said that study doesn't apply to the new proposal. The 2016 regulations would have covered the entire state, but the new proposal exempts federal land, which covers 30 percent of Colorado.

The dispute is the latest skirmish in Colorado's long-running battle over who should regulate the oil and gas industry, and how much.

Drilling applications with the state have risen about 70 percent in the past year. That's fueling new conflicts between residents and operators everywhere from Greeley to Longmont and the rest of Boulder County.

Follow Dan Elliott at @DanElliottAP. His work can be found online.

Additional reporting by Matt Bloom.

Copyright 2018 Associated Press. All rights reserved.