A campaign to restrict fracking in Colorado looks set to fall short, and the shale companies in the state are no doubt starting to breathe a sigh of relief.
An anti-fracking campaign underway in the state of Colorado has been pushing two initiatives, hoping to put them before the voters in November. One initiative would amend the state constitution to allow local governments greater authority to regulate oil and gas drilling within their borders. The issue stems from several years of fraught battle between a handful of cities that passed municipal bans on fracking, laws that were ultimately overturned at the state level. If that initiative were to pass, it would allow cities to once again restrict drilling, something the industry is keen to avoid.
Another initiative would increase the required setback for drilling from 500 feet to 2,500 feet. The zoning change seems innocuous at first, but it would ultimately render about 90 percent of Colorado off limits for fracking.
Fortunately for oil and gas drillers the initiatives may fail to even reach the ballot. Wells Fargo analysts wrote in a note to their clients that the setback initiative – known as Initiative No. 78 – has gone from “highly unlikely to extremely unlikely.” Related: Forget Driverless Cars – Driverless Air Taxis Are The Future
The stock markets appear to have digested the fact that the initiatives probably no longer present a threat to the industry. Several prominent drillers in the Niobrara shale in Colorado have seen their stock prices rise in recent weeks as the anti-fracking campaign looked increasingly like a longshot. Here are a few examples of gains made over the past month, as noted in an Aug. 25 article by Rigzone:
• PDC Energy (NYSE: PDCE) saw its stock rise by 31 percent
• Anadarko (NYSE: APC) saw its shares rise by 1 percent
• Whiting Petroleum (NYSE: WLL) enjoyed a 4 percent increase
Fracking in Colorado has been highly controversial for years, and the legal and political threats to drillers in the state are not over. But the industry appears to have dodged a major bullet this year.
By Charles Kennedy of Oilprice.com
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