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GLENWOOD SPRINGS — A Canadian organization found that new regulations proposed for the state’s oil-and-gas industry has made Colorado a much worse place for energy companies to invest.
The Fraser Institute, which calls itself a non-partisan group, ranked Colorado as the 29th worst jurisdiction for “upstream” oil-and-gas investment out of 81 international jurisdictions, according to its Global Petroleum Survey 2008.
That’s because of the prospect of the new rules, according to the institute.
But others point out that the same organization determined Colorado was one of the best places in the world for drilling just a short time earlier and note that the energy companies are clammoring to increase their presence in the state.
The Colorado Oil and Gas Commission is drafting new rules regulating the oil-and-gas industry because of legislation passed last year.
But a swell of controversy has since consumed the process, with oil-and-gas industry representatives blasting the proposed regulations — especially 90-day seasonal-drilling restrictions on the Western Slope.
Several state legislators have also warned the COGCC of a possible rewrite of the rules.
The Fraser Institute based its report on survey results from industry senior executives and managers who responded to its annual survey of “upstream petroleum companies.”
“Survey respondents were very concerned with Colorado’s changes to drilling permit requirements and other stringent regulations,” said Gerry Angevine, Fraser Institute’s senior economist and coordinator of its annual petroleum survey. “The Colorado Oil and Gas Association estimates the new rules could increase drilling costs by $60,000 to $600,000 per well.”
But Mike King, deputy director of the Colorado Department of Natural Resources, said the report’s conclusions are not consistent with what “we are seeing in Colorado.”
He cited several recent energy-company investments in Colorado, such as Schlumberger’s purchase of 350 acres in De Beque.
He added that he was also skeptical of the Fraser Institute’s findings because of the short time frame between the release of its two reports.
About six months ago, the same institute said industry experts ranked Colorado and Thailand as the most attractive places in the world for oil-and-gas investment.
Meg Collins, president of the Colorado Oil and Gas Association, said the study indicated that Colorado Gov. Bill Ritter and his administration are “sending a clear message to natural-gas and oil companies that Colorado is closing its doors on them.”
“The Fraser Institute’s 2008 report accurately demonstrates the real concern Colorado’s natural-gas and oil producers are feeling, given the state’s complete rewrite of the rules that govern the industry,” she said.
Duke Cox, who has been involved in the rule-making process and is the former director of the Western Colorado Congress, said people should follow what companies say to their investors, rather than what industry may tell the Fraser Institute.
Cox specifically referred to what Williams Production RMT — one of the largest producers in Garfield County — is telling its investors.
Williams, in its most recent Securities Exchange Commission filing this week, said its recent acquisition of 24,000 net acres in the Piceance Basin and the associated increase in drilling activity are the primary drivers of the increase in company’s capital expenditure guidance in 2008 and 2009.
COGCC commissioners are expected vote on the new rules in mid-August.
Contact Phillip Yates: 384-9117 or pyates@postindependent.com.
The Fraser Institute, which calls itself a non-partisan group, ranked Colorado as the 29th worst jurisdiction for “upstream” oil-and-gas investment out of 81 international jurisdictions, according to its Global Petroleum Survey 2008.
That’s because of the prospect of the new rules, according to the institute.
But others point out that the same organization determined Colorado was one of the best places in the world for drilling just a short time earlier and note that the energy companies are clammoring to increase their presence in the state.
The Colorado Oil and Gas Commission is drafting new rules regulating the oil-and-gas industry because of legislation passed last year.
But a swell of controversy has since consumed the process, with oil-and-gas industry representatives blasting the proposed regulations — especially 90-day seasonal-drilling restrictions on the Western Slope.
Several state legislators have also warned the COGCC of a possible rewrite of the rules.
The Fraser Institute based its report on survey results from industry senior executives and managers who responded to its annual survey of “upstream petroleum companies.”
“Survey respondents were very concerned with Colorado’s changes to drilling permit requirements and other stringent regulations,” said Gerry Angevine, Fraser Institute’s senior economist and coordinator of its annual petroleum survey. “The Colorado Oil and Gas Association estimates the new rules could increase drilling costs by $60,000 to $600,000 per well.”
But Mike King, deputy director of the Colorado Department of Natural Resources, said the report’s conclusions are not consistent with what “we are seeing in Colorado.”
He cited several recent energy-company investments in Colorado, such as Schlumberger’s purchase of 350 acres in De Beque.
He added that he was also skeptical of the Fraser Institute’s findings because of the short time frame between the release of its two reports.
About six months ago, the same institute said industry experts ranked Colorado and Thailand as the most attractive places in the world for oil-and-gas investment.
Meg Collins, president of the Colorado Oil and Gas Association, said the study indicated that Colorado Gov. Bill Ritter and his administration are “sending a clear message to natural-gas and oil companies that Colorado is closing its doors on them.”
“The Fraser Institute’s 2008 report accurately demonstrates the real concern Colorado’s natural-gas and oil producers are feeling, given the state’s complete rewrite of the rules that govern the industry,” she said.
Duke Cox, who has been involved in the rule-making process and is the former director of the Western Colorado Congress, said people should follow what companies say to their investors, rather than what industry may tell the Fraser Institute.
Cox specifically referred to what Williams Production RMT — one of the largest producers in Garfield County — is telling its investors.
Williams, in its most recent Securities Exchange Commission filing this week, said its recent acquisition of 24,000 net acres in the Piceance Basin and the associated increase in drilling activity are the primary drivers of the increase in company’s capital expenditure guidance in 2008 and 2009.
COGCC commissioners are expected vote on the new rules in mid-August.
Contact Phillip Yates: 384-9117 or pyates@postindependent.com.
