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October 02, 2019 11:34 AM UTC

SB-181 Madness: Apology Time Yet?

  • 11 Comments
  • by: Colorado Pols

As Colorado Public Radio’s Ben Markus reports:

Six months after shouting that new legislative drilling regulations were an existential threat to their industry in Colorado, the state’s oil and gas producers are now whispering a different message to Wall Street:

No big deal.

The law was billed by both supporters and opponents as a sea change in how the industry is policed, giving local governments and state agencies greater authority to decide where and how drilling can occur. But in filings with the federal Security and Exchange Commission, some of Colorado’s largest drillers now express confidence that they can easily navigate the regulations spinning out of Senate Bill 19-181.

“We do not foresee significant changes to our development plans, as we have all necessary approvals of more than 550 permits to drill wells over the next several years,” Noble Energy representatives wrote to investors.

During the long debate in the Colorado General Assembly this year over Senate Bill 19-181, the landmark reform bill changing the relationship between state oil and gas regulators in the industry from “promotion” of more drilling to the protection of public health and safety first and foremost, the oil and gas industry’s PR armies warned of historic doom and gloom for Colorado’s economy. It would be nearly impossible, and we surely don’t have time to do it ourselves, to list out every time a Republican lawmaker or oil and gas industry press flack claimed with absolutely zero factual basis that SB-181 would “shut down oil and gas production in Colorado.”

The gospel-truth assumption that SB-181 was intended to and would speedily bring about the shutdown of oil and gas drilling in Colorado helped fuel the wave of irrational anger that Republicans deliberately sought to inflame during and after the 2019 legislative session, for the purpose of justifying recall attempts against opportune state legislative targets as well as Gov. Jared Polis. In Greeley, a town heavily dominated by oil and gas-friendly politics and politicians, the supposed threat of SB-181 ripping the local oil and gas industry apart provided cover to the attempt to recall now ex-Rep. Rochelle Galindo via a far nastier anti-LGBT “whisper campaign.”

But then a funny thing happened. Word started to leak out that despite all the weeping and gnashing of teeth over SB-181’s impending destruction, SB-181 wasn’t going to destroy the oil and gas industry at all. Energy producers started quietly telling their investors that they had all the permits they need for years of unhindered operations and were prepared to work with the new law’s additional protections. The gap between dire forecast and reality with regard to SB-181 isn’t the only reason the “summer of recalls” have sputtered out one after another in recent weeks, but it’s just not possible to maintain the level of public backlash required to pull off a recall without something to substantiate the allegations.

So the next time–and you can be assured there will be a next time–somebody tells you SB-181 is destroying/has destroyed past-tense the oil and gas industry in Colorado, here’s your rejoinder! And if you really want to irritate your conservative friends, follow that up with a brief lesson on the global energy economy, which as you and Gov. Polis already know dictates the fate of Colorado’s oil and gas industry far more than SB-181 ever could.

And yes, hopefully next time…nobody believes the hype to begin with.

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11 thoughts on “SB-181 Madness: Apology Time Yet?”

    1. The CPR story mentioned one firm going bankrupt:

      PetroShare, a small oil and gas driller that filed for Chapter 11 bankruptcy protection in early September, blamed the new regulations in Colorado.

      "Unfortunately, the collateral damage of Senate Bill 181 has manifested itself in the slowdown of the state's oil and gas sector, resulting in job losses,” said Stephen J. Foley, CEO of PetroShare, in a news release announcing the bankruptcy.

      The story continues with

      Wall Street has cut off what once was free-flowing capital for oil and gas, and investors aren’t wasting time with marginal drillers anymore. Oil and gas companies have struggled in the new paradigm across the globe, not just in Colorado.

      Natural Gas Intel quotes the company's spokesperson saying

      “We believe the Colorado oil and gas industry can work with all stakeholders in the implementation of the new regulatory rules,” PetroShare President Frederick J. Witsell said. “However, in spite of our quality asset base, our virtually zero-emissions facility design and our Shook pad production trending above our type curves, oil price volatility coupled with the delay in the new rulemaking process has created uncertainty in the current investment environment in Colorado oil and gas development.”

      1. Chapter 11 is some pretty sweet corporate welfare. You basically get to keep doing business exactly as before, except you don't have to pay your bills and you get access to financing that you never could have dreamed of getting before filing.

        The bad kind of bankruptcy – moral bankruptcy – compels the conclusion that anything falling from the dissembling maw of an O&G company exec is evidence that the opposite is true. Therefore, Mr. Foley's contention is evidence that 181 had nothing whatsoever to do "PetroShare's" bellying up to the welfare trough.

      2. Yeah, and the Petroshare claim is dubious, at best. Total BS is more like it. 

        Petroshare. Real question ought to be why Colorado is so eager to allow corporations on such shaky ground to be doing business here to begin with.Then to turn around and sing victim… Here's to #copolitics where media does this work rather than just parroting industry narrative. https://t.co/rRIXgbmEuT

        — PKolbenschlag (@PKolbenschlag) September 26, 2019

         

         

         

        Per SEC filings Petroshare was in default on $25M credit facility as of Dec. 31, 2018 had struggled during 2018 for liquidity, sold $15M in non-operational assets to pay down debt early 2019 — all before #SB181 was introduced #coleg #copolitics https://t.co/RZ1d83IwC4 pic.twitter.com/cMQ4J4fcMk

        — Reed Morris (@5280_Attorney) September 6, 2019

         

         

         

        "Since our inception in 2012, we have generated only nominal revenue related to the sale of oil and have never been profitable." — PetroShare prospectus [November, 2015 – BEFORE the crash] $PRHR #oilandgas #SB181 #copolitics https://t.co/M66oRZgCZt pic.twitter.com/txkGLElygq

        — Michael McIntyre (@FeverCityStudio) September 6, 2019

      3. My reply is awaiting moderation. Suffice it to say that Petroshare's claims are not borne out by readily available facts. It is a shame media just report nonsense without bothering to take 20 minutes to do some basic research. 

        One would think that from an industry with a long record of hyperbole and playing-the-victim-card there might be a higher fact-check standard for their claims. But there really isn't. They say things and it gets reported, often verbatim. 

  4. Whether they drill or not is a function of market price. When it goes down, as it has, they pull back. When it goes back up, as it will, they drill like crazy no matter what the rules are.

  6. The new approach to defending their oily ways seems to be a series of CRED ads portraying roughnecks as folk heroes, laboring on behalf of a needy nation, then returning home to their adoring children in their two story suburban home.

    They claim there are 230,000 of them. I haven't checked lately, but that number, of course, is fallacious. In my experience, fallacy is an operating system in the oil and gas business.

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