Two initiatives that would affect oil and natural gas extraction in Colorado could get on the state ballot this fall, and backers have until Monday to submit the required number of signatures.
Opposition has been fierce, with more than $15 million raised to fight the proposed measures, which are seen as a threat to the state's energy industry.
"The energy industry is very concerned," said David Tameron, an energy analyst at Wells Fargo Securities in Denver. "Essentially, it would grind drilling development to a halt in the state."
Ballot Initiative 78 would force mandatory setbacks for oil and gas development in Colorado, including requiring any development or fracking to be located more than 2,500 feet away from both an "occupied structure" or "areas of special concern" such as parks, playgrounds, public open space, lakes or rivers.
Big energy money raised in fight
Initiative 75 would give local government the authority to regulate oil-and-gas development, including banning, limiting or imposing moratoriums on such development. It would amend the state's constitution and give local officials more power to enact regulations that impact energy development and related companies.
Two energy companies, Anadarko Petroleum ($5.5 million) and Noble Energy ($5 million), are among those who have given millions to several issue groups opposed to the measures.
"This is bigger than any individual company, as these potential ballot measures would carry massive consequences for Colorado's economy, public education, public services and every consumer," said Anadarko spokesman John Christiansen, in an email to CNBC. Noble Energy didn't respond to a request for comment.
Other major contributors include Synergy Resources, PDC Energy, Bill Barrett Corp., as well as the Denver Metro Chamber of Commerce, according to campaign finance records from the Colorado Secretary of State's Office.
The setback initiative would reduce an estimated 90 percent of the surface areas in the state for future oil and gas development or hydraulic fracturing operations, according to an impact report from the Colorado Oil and Gas Conservation Commission. Also, around 85 percent of Weld County — an area with around 17,000 oil and gas wells at last count — would be unavailable based on their analysis.
Some analysts estimate the amount of money that will be used to fight the measures could double over the next few months if backers get enough signatures to put the measure on the Nov. 8 ballot. Supporters of the two current statewide initiatives need to obtain 98,492 valid signatures by Monday's deadline.
Proponents have raised less than $500,000, and it's unclear if they will get the required number of signatures to qualify for the fall ballot.
"Given catastrophic implications for these companies, certain downside persists, though given limited likelihood that initiatives pass based on rational behavior, we would expect rally relief to ensue," said David Deckelbaum, an industry analyst at Keybanc Capital Markets.
The Sierra Club is one of the groups backing ballot measures 75 and 78. On the group's website, they make the case that the measures "are aimed at protecting our health, safety, property values and environment from the harms of fracking."
Pro-fracking group says $217 billion at stake
"These measures are really backdoor fracking bans that would be economically devastating for our state," said a spokesperson for Protect Colorado, an industry-backed issue committee fighting measures 75 and 78.
Protect Colorado, which has received funding from Anadarko and other energy companies, claims the initiatives would cost the state 140,000 jobs and $217 billion in economic activity over the next 15 years.
"We see the worst-case-scenario (Initiative 78 being approved and passed) as a very low probability but because of the rapid transformation of Colorado's electorate and unprecedented nature of November's election, we believe that the low-probability high-impact risk event warrants investor concern until it can be ruled out," said FBR & Co. analyst Benjamin Salisbury in a note Thursday.
Fracking fight could go to courts
If the measures do eventually pass, there's no guarantee they would get implemented as the energy industry could take the issue to the courts.
"There's obvious avenues that people would pursue and they would try to get an injunction or try to fight it on the grounds that it's unconstitutional," said Wells Fargo's Tameron.
Anadarko, Noble Energy and Whiting Petroleum have the greatest acreage in Colorado's Denver-Julesburg Basin, according to the FBR analyst. The basin runs from the northeastern part of Colorado and into Wyoming, Nebraska and Kansas.
"This is an issue where the bar for getting something on the ballot in Colorado is low," said the KeyBanc analyst. "Proponents of these initiatives are using Colorado as a proving ground for other states."
This isn't the first time ballot initiatives have been proposed in Colorado to limit oil and gas development or eliminate fracking. There also have been local attempts to prohibit fracking.
Back in 2014, a compromise resulted in four energy-related measures staying off the Colorado ballot. The compromise came after the state's governor worried about the economic fallout to the state of clamping down on oil and has development. Also, there were reports at the time suggesting Democrats were concerned that energy industry efforts to fight the initiatives could help Republicans in the fall elections.