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Colorado High Court Ruling Gives Corporate Customers a Sigh of Relief

Some Colorado towns have always tried to think outside the box. But their thinking on fracking has landed outside the Colorado Supreme Court’s definition of state law. There, the high court struck down the ability of local governments to prohibit hydraulic fracturing.

The ruling is significant beyond legal circles. Within the corporate ranks, it could help keep the current low fuel costs associated with the burning of electricity. Already, the state has made a switch from coal-fired electricity to natural gas, which has helped reduce emissions and lowered rates for corporate customers.

“This is not just a win for the energy industry but for the people of Colorado who rely on affordable and dependable energy and a strong economy,” says Dan Haley, chair of the Colorado Oil and Gas Association. “It sends a strong message to anyone trying to drive this vital industry out of the state that those efforts will not be tolerated. Bans and moratoriums on oil and gas are not a reasonable or responsible way to address local concerns.”

According to the US Energy Information Administration, Colorado ranks sixth and ninth nationally when it comes to natural gas and oil production, respectively. That equates to jobs and to tax revenues. But from the vantage of the corporate customer, it means an abundance of fuels to run their operations.

At the moment, though, there’s a plethora of oil and gas on the market there, which means that added production in the state will probably need to wait. The state now has more than 50,000 active oil and gas wells, the trade association says.

Specifically, Colorado’s high court upheld a lower court ruling that two communities there — Longmont and Fort Collins — could not ban hydraulic fracturing and that doing so violated state laws. It is a matter of state law and not a function of federal jurisdiction. Therefore the matter is settled, although the green movement will seek to limit drilling in environmentally sensitive and populated areas.

The state has been the first one to regulate such heat-trapping emissions from the development of oil and gas, which make up a healthy share of the economy there. Essentially, Colorado’s Air Quality Control Commission had polished up a proposal that would require producers to install the tools to capture 95 percent of methane gas leaks coming from wells and pipes, while also limiting the volatile organic compounds that lead to smog.

“It’s reasonable to expect drilling practices will continue to improve, and that leakage rates will continue to go down,” says Michael Shellenberger, a scholar at the Breakthrough Institute in Oakland, Calif., an environmental think tank.

Despite the progress, the oil and gas industry there and elsewhere has been under attack because of the hydraulic fracturing technique used to recover the unconventional natural gas. Polluted drinking water is one issue. And so is escaping methane that is a lot more powerful than carbon dioxide when it comes to trapping heat, although its lifespan is 20 years compared to 100 years for the latter. In addition, the mining technique is adding to smog levels around the state.

Beyond the control and capture of the vast majority of methane releases, energy producers must also regularly inspect their sites and patch leaks within 15 days. Business, generally, said that they would foot the bill for the effort.

Environmentalists, though, will alter their approach and have said that they will get the necessary signatures needed to limit drilling within a certain distance of 2,500 feet of waterways, buildings and public space.

That would appear to be a reasonable compromise — one that alleviate the fears of local communities while still preserving jobs and affordable power rates for corporate customers.

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