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Mule Deer 1, Colorado's Energy Industry 0

By David Smith - Updated Apr 5, 2017 at 7:53PM

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Colorado's strict new drilling requirements could hinder a major industry in the state.

It's a rule that might have elicited screeches as recently as last summer, when our nation's biggest concerns had to do with escalating energy prices and Olympic medals. But now, with crude and natural gas prices having plummeted, a strict new set of rulings by Colorado's Oil and Gas Conservation Commission is receiving minimal attention at best across the nation.

Under the new standards, which were recently set out in a more than 175-page document, permission to drill for oil and gas will be subject to the best interest of critters like the pregnant sage grouse, bald eagles, and mule deer. Among the terms set out in the document, which followed an 18-month study, drilling will be curtailed -- and sometimes prevented -- near streams that provide drinking water.

The restrictions follow Colorado requirements that already are more stringent than those of most states. For instance, it currently takes an average of more than two months to gain a drilling permit in Colorado, compared with about a week in other states.

As might have been expected, the new requirements have drawn the ire of the Colorado Oil and Gas Association and some legislators. The COGA membership, whose chairman represents EnCana Oil and Gas (NYSE:ECA), also includes representative from the likes of Noble Energy (NYSE:NBL), Anadarko (NYSE:APC), Halliburton (NYSE:HAL), XTO (NYSE:XTO), and Weatherford (NYSE:WFT). The group contends that the new requirements will endanger the state's energy industry, which currently supports about 70,000 jobs.

Indeed, the strictures also come at a time when, at least partially because of declining energy prices, activity within the industry in Colorado has slowed. Further, because of lower-than-normal pipeline capacity, and less productive natural gas wells, Colorado's gas generally sells at lower prices than in other energy-centric states.

I suppose I'm as green as the next guy. But having been in or around the world of energy for many years, I'm also convinced that the industry is far more environmentally responsible than frequently is assumed by those who delight in taking the group to task as something of a global danger.

And as one who believes that slowly building energy investment positions makes eminently good sense amid current market conditions, I would hardly shy away from any of the companies listed above for environmental reasons. Beyond that, in this difficult world for energy, my favorite player remains ExxonMobil (NYSE:XOM). Colorado's excesses will be of minuscule consequence for this largest of the publicly held oil and gas producers and its operations around the globe.

Of the seven companies mentioned above, all but Halliburton, Exxon, and Weatherford -- which wear four stars -- have been accorded five stars by Motley Fool CAPS players. Why not cast your own thumbs-up or thumbs-down on these companies?

For related Foolishness:

Fool contributor David Lee Smith does own shares in XTO, but not in any of the other companies mentioned above. He does, however, welcome your comments or questions. The Fool has a disclosure policy.

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Stocks Mentioned

Ovintiv Inc. Stock Quote
Ovintiv Inc.
$47.63 (0.39%) $0.18
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
$91.38 (0.87%) $0.79
Anadarko Petroleum Corporation Stock Quote
Anadarko Petroleum Corporation
Noble Corporation plc Stock Quote
Noble Corporation plc
Halliburton Company Stock Quote
Halliburton Company
$28.41 (0.35%) $0.10
XTO Energy Inc. Stock Quote
XTO Energy Inc.

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