Guv: Energy 
self-reliance close at hand

BEAVER CREEK - An end of American reliance on overseas energy sources may be just a few years away, but engaging in a fact-based dialogue on how to develop domestic oil and gas safely remains a big hurdle, Gov. John Hickenlooper said Saturday.

“Certainly in terms of North America I don’t think it’s outlandish to say that we could be energy independent in just three or four years,” Hickenlooper said at the Vail Global Energy Forum, where he gave a keynote address and spoke in an interview with The Daily Sentinel.

He told the audience he bases his projection on energy companies’ increasing efficiencies in recovery of oil and gas resources, and on the actions in Colorado alone by large companies such as Anadarko Petroleum and Noble Energy as they pursue oil and gas reserves.

“They are increasing their investments, and ... (projecting) dramatic increases in what they think they’re going to get back from those investments,” Hickenlooper said, explaining that higher investments usually lead to higher estimated reserves.

Techniques such as hydraulic fracturing and horizontal drilling have led to huge increases in domestic oil and gas reserves, leading to an estimated 100-year supply of natural gas, he said.

Such discoveries have a bearing on “world security and the ability to temper some of the intensity and disruption that we see around the world that are either directly or indirectly related to energy,” he said.

But Hickenlooper also acknowledged the disruption domestic drilling has caused for an increasing number of residents as drilling has neared them thanks to technology that has made oil and gas development possible in places never previously envisioned.

Hickenlooper contends Colorado is addressing their concerns through recently adopted regulations requiring disclosure of hydraulic fracturing chemicals while protecting trade secrets, mandating testing of nearby groundwater before and after drilling, and expanding minimum setbacks between homes and wells to 500 feet, with the ability to drill closer under certain circumstances.

“We’re not there yet in getting our full regulatory framework, but we’re getting pretty close,” he said.

He said Colorado also needs to look at how to further ensure wellbore integrity to prevent leaks, and the capture of so-called “fugitive” methane leaks during fracturing and gas processing and transmission.

FACTS ARE CHALLENGE

He said the debate over oil and gas production needs to be fact-based and respectful, and reflect some willingness to compromise.

“The real challenge is getting everybody on the same facts,” he said.

He said he’s probably spent as much time looking into the facts surrounding drilling and fracking as he has exploring any other issue, and started out with a good knowledge base thanks to his work in the industry.

“I think we can do (oil and gas development) safely and in such a way that it doesn’t impair people’s quality of life,” he said.

In terms of Colorado’s rules, “I think a good chunk of the environmental community has made real compromise and I think a good chunk of the oil and gas industry has made compromises. Of course, there’s a portion of the environmental community and a portion of the oil and gas industry that hates my guts, but that’s usually when you’re getting pretty close to a good compromise.”

The Colorado Oil and Gas Conservation Commission’s new setback rules drew substantial criticism from both the industry and conservation groups, albeit for different reasons, and there has been speculation that issues such as setbacks and local regulatory control might be addressed by the legislature this spring. Hickenlooper has advocated against having a patchwork of local regulations, and his administration has sued the city of Longmont over rules it believes go too far. Longmont voters last fall also banned fracking, which prompted a suit by the industry. Fracking is used in most modern-day drilling.

BANS ARE WASTE

“Once you ban fracking you’re essentially saying all the mineral rights beneath our town are essentially useless. It’s a massive taking,” Hickenlooper said, noting that people paid to acquire those rights.

The ability to access mineral rights was one of the things that had to be considered in expanding setback minimums, he said.

He said he would hope not to end up in a position where he’d have to veto an oil and gas bill this year.

“Every time I have to veto I view it as a failure, that we didn’t have good enough communications or that I wasn’t good enough at persuading (others) why I thought this was important.”

Hickenlooper is a Democrat, and his party controls both the Colorado House and Senate this year. Asked whether oil and gas might be the issue where there’s the greatest separation between him and some members of his party, he at first joked, “I refuse to answer that question on the grounds it might incriminate me.”

He then said that more generally speaking, he thinks government can be smaller and yet do more.

“You want a rigorous regulatory environment but you always want to be trying to diminish red tape. Not every Democrat agrees with that.

“I am pro business. I think you need a robust business economy if you want to improve education or health care or reduce poverty. You need to be creating wealth to do that. Not all my friends in the party agree. Some do.”

Before going on to open brewpubs and serve as Denver’s mayor, Hickenlooper worked as a geologist in the 1980s in several western states, spending a lot of time in the Piceance Basin, where he was employed with Buckhorn Petroleum.

PICEANCE PROGRESS

He said it has been “unbelievable, unbelievable” to see the amount of growth in natural gas development in the Piceance, where companies eventually used hydraulic fracturing to unlock vast reserves in sandstone formations.

“We used to joke about all that gas ... that there was some way, ‘ha-ha,’ that we’d ever get it out, ‘ha-ha.’”

He said all the geologists he worked with were environmentalists too, and he talked fondly of the two summers he got to spend in the Beartooth Mountains north of Yellowstone National Park while earning his master’s degree.

“One of the great attractions of geology is you got to go out and live in the most beautiful places on Earth, and all the geologists I knew felt the same way,” he said.

He said he doesn’t see himself as just supporting the industry.

“I support a balance to getting inexpensive energy because that’s a way of supporting people, especially low-income people,” he said.

OTHER ISSUES

On other issues, Hickenlooper:

■ Said there needs to be an ongoing commitment to wind, solar and geothermal research, and that the current horizontal drilling/hydraulic fracturing revolution benefited from some $6 billion of federal investment in research.

■ Predicted the Keystone XL pipeline for transporting oil from Canadian tar sands will receive federal approval. He said oil will be burned either way, but the pipeline will reduce how much energy is used to transport it around the country and world. “So it’s ultimately a more environmentally friendly solution,” he said.

■ Said the U.S. should help China take advantage of drilling technologies to develop its own gas reserves and reduce coal consumption, as a way of fighting climate change.

■ Said he doesn’t think the oil and gas industry should continue receiving some of its current exemptions from federal environmental laws, but that it would likely fight hard against any changes unless it can negotiate other legislative benefits in return.



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