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Colorado Carbon Copy

January 22, 2020

Matt Lepore and I were on the opposite sides of the Colorado situation for years, and today we agree on this: much of the hostility to oil and gas development in Colorado could have been avoided. 

Certainly not all of it. Yet the remainder offers lessons for our entire sector today. 

Matt was the head of the Colorado Oil and Gas Conservation Commission (COGCC) – the state’s oil and gas regulatory body. I led the state’s oil and gas trade association, COGA. A typical day saw dueling quotes from each of us in the newspapers, responding to public, legislative, and judicial pressure.

Today we work together at Adamantine to synthesize our experiences from each side of the divide — and use this knowledge to prevent history from repeating itself here in Colorado and across North America. I provide a very personal account of my 5 ½ years at COGA in Accidentally Adamant.

There are tens of thousands of Coloradans with front row seats to the sea change of the last decade, and each has their own story. In this five-part series, I’ll share with you what we at Adamantine think we can all take away from the Colorado story to prevent, mitigate, and maybe even transcend the copy-cat environment setting up elsewhere.

Both of these things are true:

  • In the most recent of an annual survey on places to do oil and gas business, Colorado was ranked worst.
  • Oil and gas companies who have future-proofed their business to be successful in Colorado have future-proofed it for the rest of North America as well.

The problem

If you’re doing oil and gas business in Colorado, you probably allowed yourself a quick moment of satisfaction when you read the latest Fraser Institute survey of business-competitiveness climates for energy in North America. We know it’s hard here – it often feels that its heading toward damn-near impossible, and so the Fraser Institute survey is affirming. See, it is that hard!

I suggest you allow yourself only that moment and no more. No ground was ever gained by wallowing. Instead, let’s look at what we can learn from Colorado’s 10-year transition from a proud oil and gas producing state to a hostile one. This recent history provides important lessons for both Colorado’s current producers and oil and natural gas companies across North America.

Next week, Adamantine will be releasing a data-driven analysis of the demographics behind the political shift. Here I’ll hit the high-level trends, which we will dive into in the subsequent four installments of the Colorado series: 

  • Issue 1: Democrats in Colorado used to reliably be counted upon to support oil and gas. With a 150-year history of oil and gas development and several regions of the state deeply intertwined with the resource, Democrats outside of Boulder had to have a pragmatic relationship with Colorado’s oil and gas industry. But over the last 10 years, it has become increasingly difficult for Colorado Democratic candidates for office to support, or even take a nuanced position on oil and gas. Some states such as Alaska, New Mexico, and Louisiana still maintain this pragmatic center, but the political calculation is becoming increasingly challenging everywhere, as we will see further in Issue 4.
  • Issue 2: Colorado’s population has become younger and more liberal. Colorado is blessed by a talented, diverse, young, and well-educated work force. That work force also happens to be increasingly liberal and concerned about climate change. Millennials creating families along Colorado’s Front Range have high expectations of their community and quality of life, and this is increasingly at odds with Colorado’s oil and gas development.
  • Issue 3: Property rights, economic development, and hubris. Over the last 10 years, all of us in industry spent too much time, energy, and good will making the legal and economic case for oil and gas development. We had the law as well as the numbers on our side, but while we pushed our advantage, we alienated our stakeholders. This topic is worthy of a good soul-searching edition with plenty of room for future improvement.
  • Issue 4: The rise of climate change. Ten years ago I could not foresee how all-encompassing concern about climate change would become. Ten years ago I was working on water quality, habitat connectivity, and well pad restoration as the mission-critical areas of conflict around oil and gas. It’s a new day with new rules of the game – Colorado just got there on the early train.

Discerning Colorado historians will note that I skipped one of the most significant trends in Colorado’s transition to a state increasingly hostile to oil and gas development: the unfortunate coincidence of Colorado’s newly technologically and economically feasible world-class basin overlapping with the hottest area of the state for suburban growth. While this overlap is overwhelmingly significant, it doesn’t provide a likely-to-repeat trend for other areas of North America – so we will leave that part of history to others.

Colorado political operatives will also correctly note that in 2018, Colorado’s oil and gas industry successfully defeated an anti-oil and gas ballot initiative. The industry’s will is mighty. 

I’m focused on our future.

It matters because:

The changes that happened in Colorado could affect development anywhere, as our forthcoming research report will show.

Even in Texas.

The critical mistakes companies are making: 

Shaking their heads at places like Colorado, California, and British Columbia – without studying the history underway and its potential to impact oil and gas development areas considered politically safe.

Seize the day.   Take your thinking one step further. I recommend: 

  • Study the trends in opposition to oil and gas development. What can we understand about both the drivers and success of Colorado’s oil and gas opposition movement? What can we learn?
  • Imagine a world… where your communities do not support oil and gas development and use. In this world, they have the final say. You have 10 years before this reality comes to pass — so what will you do differently today?

The next four installments will take on these four trends in more detail. I’d like to hear your impressions of Colorado’s last 10 years, from within or outside of the state.

If this post was forwarded to you, you can subscribe to Both of These Things are True here.

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