DENVER—Perhaps the most maddening aspect of Colorado’s current political situation may be that the oil and gas industry faces a bitter fight at the polls over use of a drilling technology that has been used for more than six decades.

“We have communities that have recently banned fracking,” said Kevin Williams, senior vice president of DCP Midstream LLC’s north business unit, at Hart Energy’s recent DUG Bakken and Niobrara conference. “We have a fight on our hands in Colorado to get the citizens to support our ability to continue to develop the state’s resources safely and responsibly.”

Among the numerous initiatives that, if passed, would change the state’s constitution is the Community Rights Amendment. It would allow individual government entities, such as counties, cities or “municipal subdivisions” to regulate hydraulic fracturing, mining or other “health, safety and welfare” issues. The proposals require 86,105 signatures to qualify for the statewide ballot. This particular measure is sponsored by the Colorado Community Rights Network, a group that claims it wants to codify local self-government “in the face of corporate exploitation.”

In spite of the idealistic prose in the group’s marketing effort that draws a parallel with the challenges faced by the original 13 colonies, the proposal is clearly focused on banning fracking. It was drafted by the Community Environmental Legal Defense Fund, based in Pennsylvania.

DCP Midstream, based in Denver, and other energy companies operating in Colorado have expressed concerns that decentralizing regulatory authority would wreak havoc on plans to quickly ramp up production in the state. The Niobrara Shale alone is estimated to contain 2 billion barrels (bbl) of recoverable crude oil.

“The state, the industry and even the Environmental Defense Fund have all agreed to the toughest [volatile organic compound] emissions standards in the country, [Air Quality Control Commission Regulation No. 7],” Williams said. “We are proving our commitment to being sustainable and responsible, but getting through to the general public is a big challenge that we have. This is a fight we cannot and must not lose.”

Williams expressed particular concern about semantics being employed by the anti-fracking movement.

“You go to the polls and you see, ‘Would you like local control to protect your children?’ People are going to vote yes for that,” he said. “So we need to understand what we’re dealing with. This isn’t just about getting the facts out to the community. The facts clearly speak in favor of the industry on fracking, on water use, on energy independence, and finally, on reduced carbon emissions.”

The DCP enterprise, which includes DCP Midstream LLC and DCP Midstream Partners LP (NYSE: DPM), is the country’s largest natural gas gatherer and processor, and largest NGL producer. It is also the top natural gas gatherer and producer in the Denver-Julesberg (D-J) Basin in Colorado’s Niobrara Shale with an eight-plant integrated system. The company is building a ninth plant, the Lucerne 2, and has a permit in process to build a 10th. When Lucerne 2 is completed this year, the company will have added about 450 million cubic feet per day (MMcf/d) of processing capacity since 2012.

Williams admitted that his company was somewhat unprepared for the sensational growth in the basin.

“When this whole thing took off in the D-J, we honestly weren’t ready,” he said. “The producers got out in front of us. So we’ve had to work very hard to try and compress our timelines. The way we’ve done that:

  • “We’re making early facility permit filings before we even know that we need to build a new plant and working with regulatory entities to prioritize permit applications.
  • “We’re also taking business risks by ordering long-lead equipment prior to receiving permits.
  • “One of the things we’ve been doing that’s been unique in the D-J is bringing compressor stations on in advance of new process and capacity to maximize the throughput on our system.”

“Let’s face it,” Williams said. “It’s all about the crude oil.”