As Colorado energy producers look forward to a new year, low oil prices are on their mind. That means companies are making choices about where to invest, said Stan Dempsey, president of the Colorado Petroleum Association.
"What we are seeing, though, is companies evaluating their projects in Colorado and comparing them with projects in other parts of the country and the world to decide if Colorado is the right place to make an investment of capital or are there other projects that will fetch them a better return on their investment," Dempsey said.
Those decisions can vary greatly depending on operators and the portfolio of options they have. For example, Encana Corporation, which operates in Colorado, is focusing its growth mostly in Texas and Canadian oil fields, while PDC Energy has already announced it will double down in Colorado while cutting back elsewhere.
"Lower oil prices will affect each company differently, and it's just depending on their operations," said Doug Flanders, director of policy and external affairs for the Colorado Oil and Gas Association.
On the flipside of the coin, consumers in Colorado and nationally are seeing the benefit of fracking in the low gas prices that are saving them money at the pump and with the overall cost of energy, Flanders added.
Fines Decisions An Issue In The New Year
Another issue coming to the forefront is that of penalties for energy companies that violate regulations. Some conservation groups are pushing to end the Colorado Oil and Gas Conservation Commission's ability to waive fines. They say mandatory fines act as a deterrent to companies who might violate the rules.
The COGCC is meeting Jan. 5, to decide this issue.
Dempsey, whose group has provided input on the rulemaking, said most of the larger companies are not motivated by fines, but rather by their corporate culture and desire to "keep Colorado beautiful."
"So we think in some cases there is too much emphasis on fines and penalties and we ought to be finding ways to encourage good operators to go the extra mile and to lead by example."
Task Force Having Difficulty With Local Control Issue
Energy companies in the state are also closely tracking the governor's oil and gas task force. The 21-member group has yet to come to consensus on key issues, notably the degree local governments can control oil and gas activities.
"I don't think we've agreed on anything," task force member Russ George, said at a recent meeting in Western Colorado.
Flanders, of the Colorado Oil and Gas Association, said that Colorado has a history of local control, but the courts have been clear that does not mean the ability to ban oil and gas within a municipality.
The task force is scheduled to release recommendations in February so the state's legislature can use them in lawmaking.
"They've got a long road ahead," said the Colorado Petroleum Association's Dempsey.
Energy companies were happy to avoid a ballot initiative fight in 2014 because of the compromise that created the task force. But 2016 is likely to see another initiative push by fracking opponents, said Dempsey.
"I don't think that's the end of the story."
