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Colo. population shift putting oil and gas gains at risk, sector advocate says

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Colo. population shift putting oil and gas gains at risk, sector advocate says

As Colorado's demographics continue to shift, oil and gas operators in the state need to become more proactive and engaged with communities in order to sustain production gains, one industry advocate argued during a keynote speech at the LDC Gas Rockies and West forum.

Dan Haley, CEO of the Colorado Oil and Gas Association, zeroed in on the effects and implications of the state's Senate Bill 181, a recently enacted law giving local government new authority over the drilling permit process.

"This bill allows for unfettered, unprecedented local control," he said Aug. 6 at the conference in Los Angeles. "It allows for local governments to enact unlimited setbacks. It also changed the makeup of the Colorado Oil and Gas Conservation Commission, removing two of the members with a background in oil gas, an engineer and a geologist. It's very frustrating."

Rapid population growth over the past decade reshaped the voting base in Colorado, contributing to the passage of this legislation and shifting the state residents' dominant attitudes toward oil and gas development, he said.

"About 10 years our demographics were changing," he said. "We were an evenly divided electorate. About a third of our voters were Republican, a third Democrat and a third were unaffiliated. We were as purple as a purple state can get. It would swing back and forth depending on the election."

"Seven of our fastest-growing cities were located right on top of oil and gas production fields," Haley said. "We had an activists' movement growing. We left a vacuum. Our industry did not do a good job of explaining what we were doing, why it was important and why it was good for communities. When we didn't tell people that, the vacuum became dominated by activists."

Multiple cities and counties across the Front Range enacted bans and moratoriums on hydraulic fracturing, and the state has also seen its number of drilling permits slow, he noted.

Colorado currently ranks as the sixth leading oil and gas producer in the nation. Dry gas production in the Denver-Julesburg basin now sits at more than 2.1 Bcf/d, according to S&P Global Platts Analytics. With only 31 active drilling rigs, compared to 77 five years ago, the state continues to set production records. Platts Analytics production projects production to hit almost 2.5 Bcf/d by the end of 2020, based on current drilling patterns.

"This is a testament to the efficiency gains made by operators and how technology is changing our industry," Haley said. "We are a high tech and innovative industry. The technologies coming out of the Denver-Julesburg, the Permian and the Bakken rival anything coming of Silicon Valley. We have to translate that message to communities and our elected leaders. Engage with the media. We can't sit on the sidelines."

Brandon Evans is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.