Chicken Little Oil & Gas Ads Questioned

As The Associated Press reports:

An ad campaign by the oil and gas industry attacking “job-killing rules” proposed by Colorado regulators is drawing its own share of attacks.

Two trade groups bought ads in Colorado newspapers this week warning of a “looming threat to Colorado’s economy” from a proposed overhaul of the state’s oil and gas regulations.

The Colorado Oil and Gas Association and the Colorado Petroleum Association also have bought time on radio stations to make their case, saying the new rules would threaten the livelihood of more than 71,000 people who “go to work at good-paying jobs with benefits in Colorado’s oil and gas industry.”

The ads are a lead-in to weeklong hearings on the proposed regulations starting Monday in Denver. The rules would put in place laws requiring that more weight be given to public health, wildlife and the environment when approving oil and gas development…

…The figure of 71,000 oil and gas jobs comes from a 2007 state- funded study that also said the industry contributed nearly $23 billion in direct and indirect economic benefits in Colorado in 2005. The figure has been cited by industry officials, legislators and even Gov. Bill Ritter, whose “controversial political appointees” are criticized in the industry’s ads.

But state labor statistics for April list 27,700 jobs in natural resources and mining, which include the oil and gas industry.

The 70,779 jobs in the Colorado Energy Research Institute report include direct and indirect jobs as well as industries affected by oil and gas development.

“I think our economists would take some exception to how far that net is cast,” said Bill Thoennes, spokesman for the Colorado Department of Labor and Employment…

…the number of oil and gas jobs and earnings are eclipsed by government, professional and technical services, health care and other industries, said Pete Morton, an economist with The Wilderness Society in Denver.

He said it’s inaccurate to say that jobs in such industries as wholesale, real estate, management, government, food service that might benefit from energy development are in the oil and gas industry. “None of those people would say they work in the oil and gas industry,” Morton said.

Furthermore, using numbers from the U.S. Department of Commerce Bureau of Economic Analysis, Morton estimated that most of the $23 billion in economic benefits from oil and gas development in 2005 flowed out of state.

We’ve said here before that oil & gas industry claims that regulations would cripple them and hurt the state was just a huge bluff. Oil and gas is a finite resource – you can only drill for it where it exists. The oil and gas industry isn’t like a big manufacturing company that could pull up stakes and move its operation to another state.

But the big whopper could be that last line in the story: “…most of the $23 billion in economic benefits from oil and gas development in 2005 flowed out of state.” It’s hard to feel sorry for oil & gas companies anyway, but it’s darn near impossible when most of the money they make flows right out of the state they use to make it.

24 Community Comments, Facebook Comments

  1. ClubTwitty says:

    They apparently have no qualms peddling fear and telling BOLD-FACED lies

  2. ClubTwitty says:

    that the rules would not shut down all oil and gas for 90 days at a time.  But they keep selling their lies, in expensive ads, in viral emails to employees who legitimately worry about their jobs in tough economic times. Myself, I was taught lying is wrong.  I like to think of myself as someone with integrity.  The COGA crowd seems to have no such reservations.  Wait until Monday at the Paramount, I’m sure they’ll be up to it again.  Feeding lies to scare their employees, when as soon as the gas plays out they’ll dump them just like they did on Black Sunday.

  3. BlueCat says:

    is that if we’d just let them drill ANWR and off our Florida beaches and on our western wild lands everything would be great but somehow, even after all the years their pet pols have been in power, they’ve been blocked from doing this and supplying us with all the oil we need.  

    They don’t mention that they already hold leases to 65 million acres they could drill tomorrow with no special permission from the l federal government or anyone else.  With their record busting profits they could certainly afford to develop what they already have. But why? they love the high prices and huge profits.  

    This is ALL to distract us so they can continue to squeeze every drop of profit out of us for as long as they can. We’re supposed to let them drill wild lands and offshore and spend the next five to ten years waiting to see anything out of these projects and hoping that, when it finally comes on line, they really will give us a price break. Ha!

    In general, we’d be much better off with conservation that would do us some good starting today and spending the intervening years developing a whole new energy economy with a whole new supply of good jobs and innovations.  Why not?  we got to the moon, didn’t we?

    Here in Colorado, when the oil companies  start handing us their statistics we need to remember that these people will say anything to manipulate us into giving them the means  to milk us dry at the lowest cost to them possible.

  4. billkraich says:

    I’m sure everyone that has an opinion knows what the new regulations are and how they affect the industry.  I am also sure every one that has an opinoin also would not mind telling a guy that works in the oil field that he needs to find a new job, becuase it is better for the environment.  

    The new regs are BAD for the State of Colorado.  Mostly rural Colorado.

    Out of all the interests added to the conservation commission appointed by Ritter, not one is an economist.  Tell me how that has Colorado’s best interests in mind.  There was no impact study done to show how the regulations would damage or improve the oil and gas industry or Colorado communities.  Only opinions that the new regs would be better for the environment are offered as justifiation for the regs.

    You can beat up the industry for making money and using numbers that dont match one source.  But dont start thinking the people of this industry deserve to be treated like this or think that our State will be better off because of these new regulations.

    • ClubTwitty says:

      And I know that 10,000 jobs are not going to be lost because of this rule-making.

      There in fact has been substantial economic analysis done on how economies function in resource-extractive dominated communities, and how a more measured pace (rather than drill, drill, drill) is better for rural economies in the long run.  

    • The Commission has long been dominated by O&G industry appointees; having a balancing voice on the Commission may not sit well with an industry that was used to getting its way, but it is good for the farmers and other residents of Colorado.

    • DavidThi808 says:

      It is the purpose of government to determine what the appropiate level of constraints are. So when you complain that there should be no constraints – I suggest you move to Somalia.

      Now if you want to talk about what constraints are appropiate – I’m all in favor of that. But if we want to increase employment, lets add lots of environmental requirements because the O&G companies will have to hire more people to implement them.

    • bmenezes says:

      Instead of just parroting talking points that your boss gave you. How, in detail, are the new regs bad for the state of Colorado?

      • ClubTwitty says:

        because there is no credible analysis to show it.  same with bringing Colorado’s severance tax in line with our neighboring states.  sure, they’ll name mysterious companies (like our fine GOP state senators do) that are leaving the state, but ask them to name some companies.  

  5. DavidThi808 says:

    …total number of drilling rigs in the state over time? My guess is it has increased here which shows that the industry does not find what’s coming a major problem.

    • ClubTwitty says:

      as have all other measures of how much the industry is invested in Colorado.  Several majors companies–Chevron, Exxon, Schlumberger–as well as the current players, Williams, Bill Barrett, have all announced or are in process of building new facilities, opening new facilities, developing new fields.  The idea that oil and gas companies are fearful that they will have to leave the state is bullshit.  Read their investor pages and learn how eager they are about drilling in Colorado.  Its all rosy scenarios and bullish projections–no discussion of pending doom.  SO the companies are either guilty of do disclosing risks to potential investors or are lying to Coloradans and their workers.

    • bmenezes says:

      As Colorado Media Matters has noted, in Colorado alone the active oil and gas well count has increased nearly every month since January 2002, and the state has “experienced a sixfold increase in drilling permits since 1999,” according to a May 18 New York Times Magazine article.

      Here’s the link to the state’s well tally:

      http://oil-gas.state.co.us/Lib

      Want to bet the number doesn’t flatten out after the new rules take effect, with oil at $125+ per barrel?

      • ClubTwitty says:

        but you’re right, it won’t flatten out.  massive new national pipelines have recently been installed and other ones are on the way.  millions of dollars in new infrastructure have gone in in the last 8 years; they’re not going anywhere until they Drain Colorado First, and then they’ll be gone in a flash.

      • Hotspur says:

        Billy, Billy, Billy

        I’m sure you know the difference between oil and natural gas. Hint: One ends up in your car, the other one doesn’t.

        We’ve already increased drilling rates sixfold since 1999, and still the price of our home heating bill goes up. Why? Because of all those fancy new pipelines taking natural gas to the east and west coast.

        They drill more, we pay more, they make a lot more. I’m sure that sounds fair to you.

        Note: If those noble, patriotic gas companies could make a couple more bucks selling our gas to the commies that lurk in Dick Cheney’s fantasies, you know they would.  

        As for the rate of growth flattening, that’s a good thing if you consider what’s best for Colorado.

        Unrestricted growth is the war cry of the cancer cell. We’ve got 34,000 wells in this state and industry tells us they’re aiming to drill 120,000 more over the next 30 years. Now is the time to take a hard look at what’s happening and update a rule book that’s been overwhelmed by your industry’s success.

        How about a little balance? About rules that allow you to make money but protect the Colorado that the rest of us love?  

  6. ClubTwitty says:

    that should read. I cannot type today.  

  7. ClubTwitty says:

    An Embarrassment of Gas

    By Toby Shute June 20, 2008 Comments (0)

    The Piceance Basin has nothing to be embarrassed about. This corner of Colorado, when combined with its Utah neighbor, the Uinta, is home to the second-largest accumulation of natural gas in the country. Having that much gas is a good thing, with fuel prices going through the roof.

    …Anyway, the first notable deal was Williams’ pickup of SandRidge Energy’s (NYSE: SD) acreage in the area. Williams, along with ExxonMobil and EnCana, is already a heavy hitter in the Piceance. The acquisition boosted the integrated natural gas company’s proven and probable reserves in the play by a staggering 42%.

    • ClubTwitty says:

      Energy firms mix message

      Investors told of riches, public of rule hardships

      Energy companies are bullish on Colorado’s future, at least when speaking to investors and business audiences.

      But oil and gas firms often sound a worried note when talking to regulators and the public.

      Why the mixed message?

      and (same article)

      But Colorado’s state geologist, Vince Matthews, who spent more than two decades in the oil business, said that despite the rhetoric, energy companies are eager to get in on Colorado’s underground bounty.

      “This is where the action is: Colorado, Wyoming and New Mexico,” he said. “I think the companies that aren’t in, want in badly. The problem is, the acreage is all tied up” by companies already in the game.

      “People have large investments here that they’re not going to walk away from. And if they did, some other company would come in and pick them up and develop the gas,” he said. “I can’t see that rule changes are going to cause a mass exodus.”

      it goes on…

      Oil and gas industry’s alternating tempo

      The oil and gas industry is upbeat when describing its Colorado prospects, called “plays” in energy parlance, to investors and in news releases to business media. But it sounds far more pessimistic when talking to regulators or local reporters about the potential effects of proposed state environmental regulations on energy companies.

      Here’s a sample of upbeat and downbeat statements by companies operating in Colorado.

      Pioneer Natural Resources (PXD)

      * Upbeat: “Our resource- rich Permian and Raton Basin (Colorado) acreage is expected to generate strong returns . . . This new resource potential further expands our inventory of low-risk drilling locations supporting consistent, repeatable production for years to come.”

      Company press release, April 2008

      * Downbeat: “Our projects in Colorado must compete with projects in other states for capital investment. Additional regulations and related costs will make Colorado projects less competitive and less likely to be funded.”

      Kimberly Mazza, Pioneer’s Western Division senior public relations adviser, as reported by the Craig Daily Press, April 2008

      Williams Companies Inc. (WMB)

      * Upbeat: “Northwest Colorado is really a mecca for this type of operation. There’s a lot of acreage to be drilled. We’ve barely scratched the surface. It’s a world-class play that’s going to be around for a long, long, long time.”

      Dean Tinsley, senior staff petroleum engineer, speaking at Fueling Thought Energy Summit, as reported by the Craig Daily Press, May 2008

      * Downbeat: “The draft rules could result in shutting down industry operations for up to 90 days. Potential consequences could include the scaling back of industry operations and capital expenditures, resulting in serious economic impacts to the communities on the Western Slope.”

      Williams statement to media, April 2008

      EnCana Oil and Gas Inc. (ECA)

      * Upbeat: “The Piceance Basin (in northwest Colorado) is one of EnCana’s highest potential resource plays in the U.S. . . . Thick gas accumulations primarily in the Williams Fork formation . . . make this an ideal resource play – an area where technology can be methodically applied to increase recovery and reduce costs.”

      EnCana Web site, 2008

      * Downbeat: “By creating uncertainty in the permitting process, the proposed rules could impact EnCana’s capital investment decisions in Colorado.”

      Letter to Western Slope nonprofits, December 2007

      Chevron (CVX)

      * Upbeat: (Citing the Skinner Ridge Field, Piceance Basin) “Total project will eventually cover up to 40,000 acres . . . Initial facilities designed to produce up to 50 million cubic feet gas/per day, to grow over time . . . Project expected to have a 50-year life.”

      Presentation to Northwest Colorado Oil and Gas Forum, June 2007

      * Downbeat: “These production operations are cost sensitive and the costs attributable to increased regulation will likely have a significant chilling effect on Chevron’s continued operations and future investment in Colorado.”

  8. billkraich says:

    1.  I do not work in the oil and gas industry, and do have a boss giving me talking points.

    2.  I know that oil means crude oil and gas mean natural gas.

    The two issues I am concerned with are:

    1.  The tax rate is increasing by about 4x the current rate, and the fees for new permits are going up by about the same amount.  Forcing some well owners to simply not put their wells into production – reducing the amount of work for the people that make that happen.  Multiply that by a few thousand wells that translates into a few thousand less jobs.

    2.  The new regulations state that all the equipment used to extract oil must be updated to meet new enviromental standards.  Not a problem, except for the equipment must be updated the day these new rules take affect.  Translation:  Many wells will be shut down, 1/2 of all active wells in Northeastern Colorado according to most estimates.

    Everyone knows what happens when you cut an industries growth, they cut jobs.  Everyone knows what happens when you cut an industries production by 1/2, it cuts jobs.  Alot of farmers own oil wells, so these new rules are not good for farmers in general.

    • parsingreality says:

      …is just a bigger pittance.

      If your state gasoline tax was a penny, and it became four cents, would you really be all that concerned?

      The severance tax, first, should be many times what it is.  Gas and oil are natural resources that the governments all but give away so that companies can make a profit.  Yes, we need the products, but let’s tax it enough to cover all the public expenses incurred, at the least.

      The companies don’t like the severance tax because with a market price for their products, it’s their cost.  Tough poops, boys.  

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