Analysis by a Colorado School of Mines researcher says that while a drilling setback measure on this fall's ballot would allow drilling on only 15 percent of nonfederal land in the state, nearly three times as much nonfederal subsurface area might still be accessible through the use of directional drilling.

Peter Maniloff, an assistant professor of economics studying energy and environmental policy, conducted the analysis. He estimates that drilling down and then out horizontally a mile from locations in that 15 percent of nonfederal land that would remain accessible if Proposition 112 passes would result in the ability to reach 42 percent of the subsurface.

"I think the key takeaway from this analysis is that the ultimate impact of Prop 112 on the oil industry would be much less than a total ban or 85 percent reduction" on drilling on nonfederal lands, Maniloff said.

Still, he said, the impact if the measure passes "would be very substantial."

Proposition 112 would require 2,500-foot setbacks between drilling and homes, as well as vulnerable areas such as streams and recreation areas.

Some critics have said it would effectively ban drilling on private land. The measure wouldn't apply to federal land. A Colorado Oil and Gas Conservation Commission analysis estimates that it would prevent drilling on 85 percent of nonfederal land in the state.

In a news release this week, the group behind Proposition 112, Colorado Rising, seized on Maniloff's analysis as evidence supporting passage of the measure.

"This is proof of the industry's use of wild exaggerations and fear-mongering to avoid even the most common sense protections for our communities," Anne Lee Foster of Colorado Rising said in the release. "Oil and gas has chosen to use a misleading map, based on outdated technology, to convince the public that 112 is a ban, when in fact they would be able to access significant reserves, at least three times what they falsely claim."

Maniloff said he thinks the analysis done by the COGCC is "quite defensible."

"I just think it's not quite the right question" that the agency's analysis addressed, he said.

"… The right question is how much of the subsurface will be reachable," he said.

He said the approach the COGCC took is understandable in terms of minimizing the number of assumptions it makes, whereas the analysis he undertook makes such assumptions and the 42 percent estimate is just that. But to him what's important when it comes to the impact of Proposition 112 on oil and gas development and associated jobs and tax revenues is how much of the subsurface would be off-limits to access.

"That's going to be smaller than the amount of surface — potentially substantially smaller," he said.

Maniloff said his analysis contains some important limitations. For one thing, companies often drill out horizontally farther than one mile.

"That would mean even more of the subsurface would be available," he said.

On the other hand, he said his analysis doesn't account for variations in the richness of the resource. In a written commentary for the School of Mines Payne Institute in which he laid out his analysis, he wrote that the sweet spot in the Denver-Julesburg Basin "largely coincides with the densely populated areas which would be generally inaccessible under Prop 112."

Maniloff's analysis also may be generally inapplicable to the natural gas sweet spot that is western Colorado's Piceance Basin. The COGCC research found that 99.8 percent of nonfederal land in Garfield and Rio Blanco counties would be off-limits to drilling if Proposition 112 passes, meaning there would be little private land left to do horizontal drilling.

Countywide, 37.7 percent of Garfield County and 26.6 percent of Rio Blanco County couldn't be drilled on, when taking federal land into account.

In Mesa County, 27 percent of total land would be unavailable to drilling, the COGCC estimates. But that's virtually all the nonfederal land in the county.

Also of note is that horizontal drilling occurs far more widely in eastern Colorado than locally. In the Piceance Basin, most natural gas development involves directionally drilling down, out at an angle and then down again vertically through gas-bearing sandstone formations. Those wells have far shorter lateral reaches than horizontal wells, and companies locally have dabbled only to a limited degree in horizontal drilling in the deeper Mancos shale formation.

Looking at things from a statewide basis, Maniloff says limiting access to 42 percent of nonfederal subsurface still would be a considerable impact.

"I think by any analysis that this would be a substantial impediment to drilling and cause a substantial loss of tax revenue and employment in the sector," he said.

"It's just a lot less than 85 percent."

Said Scott Prestidge with the Colorado Oil and Gas Association, "According to the COGCC, in order to determine mineral access, extraction and production, you have to include geology, drilling methods, reservoir analysis, production engineering, mineral leases, surface use agreements, land use and economics to provide a true sense of whether a location can be drilled or not.

"The Payne Institute analysis appears to assume utopia, in that all of these variables can be achieved within one mile of the remaining 15 percent accessible surface location, which is a significant theoretical assumption."

Said Foster of Colorado Rising, "This analysis shows the industry can and will continue to operate in Colorado, all while protecting public health and safety with a common sense buffer zone, based on health studies, from this toxic, industrial activity."

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