Energy stocks with exposure to Colorado's oil and natural gas extraction business are rallying Monday after word two anti-fracking measures failed to qualify for the ballot.
In a release issued Monday, the Colorado Secretary of State Wayne Williams announced initiatives 75 and 78 "aimed at adding more limitations on oil and natural gas drilling in Colorado failed to make the November ballot because supporters didn't collect enough valid voter signatures."
"We believe the announcement alleviates a significant uncertainty overhang for E&Ps leveraged to the DJ Basin," said FBR & Co. analyst Benjamin Salisbury. The Denver-Julesburg Basin runs from the northeastern part of Colorado and into several other nearby states.
Colorado's Initiative 75 would have given local government the authority to regulate oil-and-gas development, including banning, limiting or imposing moratoriums on such development. It sought to amend the state's constitution and give local officials more power to enact regulations that impact energy development and related companies.
Ballot Initiative 78 would have forced 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.
The Sierra Club, Greenpeace and a group Yes on Health and Safety were among those backing ballot measures 75 and 78. On August 8, backers of the two measures turned in the signatures to qualify for the November ballot.
"Despite the countless hours and the thousands of Coloradans who spoke in support of protecting the health and safety of Colorado communities, the movement faced an unprecedented flow of money from the oil and gas opposition that felt the need to spent $15 million to defeat us," Diana Best, Greenpeace USA Climate and Energy Campaigner, based in Denver said in a prepared statement. "We may be disappointed today, but tomorrow we get back to work empowering communities and keeping fossil fuels in the ground. This fight is far from over."
The energy industry and big business groups, such as the Denver Metro Chamber of Commerce, fought against the two measures and raised more than $15 million to defeat them. They considered ballot measures 75 and 78 a threat to the state's energy industry.
"Colorado voters recognized that these extreme measure would destroy the state's economy and take away private property rights," said Karen Crummy, communications director for Protecting Colorado's Economy, Environment, and Energy Independence, an energy industry supported issue group. "The voters read the petitions and declined to sign them because they understood the devastating consequences these initiatives would have on all Coloradans."
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.
According to Williams, the petition processing team on his staff identified a petition section for Initiative 78 "that contains several potentially forged signature lines. Although the Secretary of State does not conduct signature verification when reviewing petitions, our office has referred the questionable section to the Attorney General's office for investigation."