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Ballot measure would cripple Colo. oil, gas drilling, study finds

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Ballot measure would cripple Colo. oil, gas drilling, study finds

AColorado ballot initiative to expand buffer zones around oil and gas drillingoperations would choke off production and cost thousands of jobs and billionsof dollars in economic activity, researchers found.

Ballotinitiative 78, which will be voted on in the November general election, callsfor a 2,500-foot setback from "the nearest occupied structure or otherspecified or locally designated area," which includes water sources. Thestate's mandated setback distance is currently 500 feet.

Areport by the University of Colorado's Leeds School of Business, using datacompiled by the Colorado Oil and Gas Conservation Commission, or COGCC,indicated that such a setback would have severe consequences for oil and gasdrillers.

"Basedon estimates provided by the COGCC, a 2,500-foot setback would curtailaccessible drilling locations by 90.2%," the researchers said. "Thecompounding economic consequence would result in a lower real GDP by an averageof $7.1 billion and 54,000 fewer jobs in the first five years, and a lower GDPby an average of $14.5 billion and 104,000 fewer jobs between 2017 and 2031."

"Thisstudy illustrates the dire effects of a full attack on an industry that hasbeen historically vital to our state's economy," said Tom Clark, CEO ofthe Metro Denver Economic Development Corp. "Companies simply would not beable to operate here. This initiative, were it to pass, would usher in theprobable demise of the oil and gas industry in Colorado." Thestudy was conducted for the Metro Denver Economic Development Corp., the DenverSouth Economic Development Partnership and the Common Sense Policy Roundtable.

Theenvironmental group Yes for Health and Safety Over Fracking, which supports theballot measure, said the bigger setback is needed to "better protectColorado's public health, safety and welfare from the impacts of what hasbecome hazardous industrial activity near homes, neighborhoods, schools,playgrounds, and drinking water sources."

"Theseare common-sense, down-to-earth proposals to keep our communities from beingoverwhelmed and harmed by heavy industrial oil and gas operations right next toneighborhoods and schools," said Tricia Olson, the group's executivedirector.

DougFlanders, director of policy and external affairs for the Colorado Oil and GasAssociation, told S&P Global Market Intelligence that the University ofColorado report makes the real purpose behind the ballot measure clear.

"Thisis just a ban in another name," he said. "It's a huge economic hitfor a state that is diverse, but you're talking about a lot of money gettingstripped out of state and local coffers."

Flanderssaid passage of the initiative would have a crippling effect in the state'slargest-producing areas.

"InWeld County, which alone has 25,000 wells and is one or two in terms of themost active counties in the nation, 85% [of land] would be off limits," hesaid. "In other top producing areas, as much as 95% would be off limits."

Passageof the measure, Flanders said, would have a painful effect on counties that arealready struggling to keep their budgets balanced due to the oil and gas pricecollapse.

"Localgovernments are already asking, 'How are we going to pay our bills?' Theslowdown has really hurt their budgets," he said. "When you ask theactivists how they're going to replace that revenue, they don't know and reallydon't seem to care."