SALZMAN: Drilling rules exonerated
By Jason Salzman, Rocky Mountain News (Contact)
Published January 16, 2009 at 6:18 p.m.
Spokespeople for the oil and gas industry are telling reporters that they're closing drilling rigs in Colorado because of the slacking economy and new drilling regulations that are pending final approval in the legislature.
The Rocky reported Dec. 12 that Encana was closing five rigs in Colorado and blaming "plunging energy prices and the Ritter administration's adoption of new drilling rules for its decision." The Rocky repeated the assertion Tuesday.
In a Dec. 11 Rocky report, Ken Wonstolen, counsel for the Colorado Oil and Gas Association, noted that the new rules will cost Colorado jobs and that "Colorado lost eight drilling rigs this month, while New Mexico picked up two and Wyoming picked up three."
The Rocky should have analyzed these figures. It turns out that, if you research how many rigs were shut during the past six months when the new regulations were being finalized, Colorado lost 11 rigs, New Mexcio lost 17, and Wyoming shed 7, according to rig counts on the Baker Hughes Web site, where Wonstolen said he got his numbers. The figures were about the same over the past three months. For January, Colorado lost one rig, Wyoming three, and New Mexico remained steady.
For perspective, reporters should also explain whether new regulations in other states have caused drilling-rig flight.
Asked if new regulations in New Mexico prompted oil companies to threaten to leave the state, Mark Fesmire, chairman of the New Mexico Oil Conservation Commission, told me, "Yes, they say they will move out of New Mexico, too." He added that this did not materialize as a result of new regulations in New Mexico, even though he acknowledges that increased costs can make wells uneconomical.
Fesmire's statement is consistent with multiple studies showing that, in opposing new rules, industries overestimate the increased cost of new environmental regulations.
Oil industry spokespeople quoted by the Rocky don't claim that proposed regulations are the only factor leading to rig closures. They say the bad economic situation also contributes. But journalists apparently aren't asking them about the relative importance of these two factors.
A reporter might ask, "On a scale of one to 10, what's the more important factor in causing rigs to be closed in Colorado, the economy or the proposed regulations?"
"I don't think anyone can give you a percentage breakdown," industry lawyer Wonstolen told me, not answering my question but adding that he's concerned about the negative business climate that Colorado's new rules could create.
In its reporting on the rig closure issue, the Rocky offered the competing view that the more influential explanation for the drilling slowdown in Colorado is decreased demand due to the economic crisis as well as a glut of natural gas in the region.
But reporters should question oil company spokespeople more aggressively about their assertions that rig closures are tied to the new regulations.
Caplis hypocrisy. KHOW talk show host Dan Caplis likes to trash The New York Times with sweeping condemnations about liberal bias there, yet Caplis and Silverman are promoting their own show by quoting a favorable Times story about them.
What gives, Dan? Maybe you should be a bit more nuanced in your critique of the Times if you're going to use the credibility of the Times to promote yourself.
Caplis did not return a phone call and an e-mail seeking comment.
Kopel misleads. Rocky media critic Dave Kopel needs to take another look at the headline of ProPublica's Nov. 13 article on hydraulic fracturing, a technique used in natural gas drilling. The headline read, "Is natural gas drilling endangering U.S. water supplies?"
Note, it was a question, not an assertion. The piece outlines evidence that hydraulic fracturing could be causing water contamination, but we don't know for sure in part because oil and gas companies haven't disclosed the types of chemicals used in the drilling process. So linking water contamination to hydraulic fracturing has been nearly impossible.
In its response on its Web site to Kopel's column of last week ("ProPublica's shaky facts," On the Media, Jan. 10), ProPublica states:
"Ask officials in New Mexico and Colorado: Are there any cases in which we can prove beyond a reasonable doubt that hydraulic fracturing caused water contamination? Answer: No, we've never studied that question.
"Ask those same officials: Are there hundreds of cases of water contamination in drilling areas, the vast majority of which use hydraulic fracturing? Answer: Yes."
ProPublica's reporter erred in writing a dismissive e-mail response to Kopel's questions about the article, and I agree with Kopel that parts of the piece are vague, particularly if taken out of context.
But ProPublica has now clarified the major questions raised by Kopel, and his reply to ProPublica, available on Volokh.com, is misleading.
For Kopel to trash the credibility of the article, and of ProPublica itself, is a disservice to readers and journalism.
Jason Salzman, president of Effect Communications, is the author of Making the News: A Guide for Activists and Nonprofits. Reach him at salzmanj@RockyMountainNews.com.
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January 16, 2009
7:23 p.m.
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Oliver2 writes:
A new report out today actually shows Colorado's rig count up slightly while NM and WY have decreased slightly. There are no new rules being proposed in Wyoming.
This fact, however, has not kept the Senate Republicans from carrying COGA's water--spreading misinformation (some might say outright lies):
"Right now the fossil-fuel industry is shuddering [sic] its businesses left and right in Colorado, taking its jobs and money to neighboring states. We can't afford these losses anymore." CO Senate Republicans news release 1/16
Far from 'shuddering' its businesses left and right, 2008 set another all time record for drilling permits. Which neighboring states Brophy and his cohorts are referring to is unclear as NM and WY are two of the lead O&G states bordering CO.
Maybe they think Texas is our neighbor? Oh wait, drill rigs have been decreasing there too.
Personally, I'd be ashamed to tell such bold-faced fibs, but I guess its all in a days work if you're a Colorado Republican.
January 17, 2009
1:18 a.m.
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Clarence_Boddicker writes:
What report?
January 17, 2009
6:22 a.m.
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Mike_In_Hartsel writes:
Jason's favorite expressions appear to be along the lines of
"A reporter might ask..."
"...reporters should question..."
"...journalists apparently aren't asking..."
He then goes on to fault others for their methods without first resolving the headline issue. Asking questions is not the same as confirming the facts claimed in the answers. Vaguely referring to "multiple studies" supporting one's contentions without naming the studies?? And did Jason look into the studies to confirm their reliability before embracing them?
I think this piece would have been better if Jason had stayed on topic, giving more depth, instead of veering off to attack KHOW & Kopel.
January 17, 2009
8:34 a.m.
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Oliver2 writes:
From report published yesterday (1/16/2009) by Baker Hughes...
"The number of drilling units actively exploring for oil or gas in Oklahoma dipped by one this week to 154, Baker Hughes Inc. reported Friday.
"The net rig count is 17.6 percent below the year-ago level, which was 187.
"Meanwhile, the nationwide number of active drilling units fell by 21 this week to 1,568, said Houston-based Baker Hughes. The U.S. rig count is down 9.4 percent from a year ago, when the tally was 1,732.
"Of the rigs running nationwide this week, 1,235 were exploring for natural gas and 324 for oil, the report said. Nine were listed as miscellaneous.
"Of the other major oil- and gas-producing states, Texas lost 14 rigs this week, Louisiana lost four, Wyoming lost three, New Mexico and North Dakota each lost two, and Arkansas and Alaska each lost one. Colorado added four rigs, while the number for California was unchanged.
"Baker Hughes, an oil-field services company, has kept track of the rig count since 1944."
January 17, 2009
10:44 a.m.
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Achilles writes:
What a bizarre column this is. He's got all the usual suspects lined up: oil companies, talk radio, and a conservative writer.
Ah, but the twist is that he's attacking them under the guise of being a "media critic". I see. Very clever.
In two weeks, we'll see another attack piece on either business, talk radio, or a conservative writer. And in four weeks, we'll see another column that is either an attack on business, talk radio, or a conservative writer. But it will all be done in the name of critiquing the "media", not Salzman's ideological opponents.
By the way Salzman, you really showed your class by publicly arguing with your boss. As I said in your last piece of junk column, you think the world owes you something. So, when your boss tells you your column is not good enough to print, you publish it anyway on your silly little "blog". Very mature. Very classy.
http://blogs.rockymountainnews.com/te...
January 17, 2009
1:12 p.m.
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Oliver2 writes:
And his use of the incorrect oilfield term disproves his thesis how? Oh, never ind, it doesn't. But rather than address the point of his post and refute it (if you can) you criticize him for something else entirely. Good work there FRN4U, unless you are trying to employ logic and reason.
January 17, 2009
2:08 p.m.
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Hank writes:
John_II sez:
"What a bizarre column this is. He's got all the usual suspects lined up: oil companies, talk radio, and a conservative writer.
Ah, but the twist is that he's attacking them under the guise of being a "media critic". I see. Very clever."
Well, yeah and that surprises you?
Kopel also uses "the guise of being a "media critic"" but from the right instead of the left like Salzman. That's why the RMN alternates them - to provide "balance".
But hey - at least Salzman provided facts to support his position. All we hear from you John_II is so much blather and not so much fact (or reality for that matter).
January 17, 2009
3:21 p.m.
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mmannino writes:
The new regulations are a strong signal that the current Colorado regime does not support energy exploration. The regulations may not have much impact now with the current economic situation. At the margin, these regulations and the general negative attitude in the current Colorado regime will discourage energy exploration. I predict that when energy prices rebound, the current regime will enact additional barriers to energy exploration.
January 17, 2009
6:31 p.m.
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HopiMedicineMan writes:
Obama and his puppet, Ritter, have placed all their eggs in the alternatives basket. Oil pollutes forever, as we know from the Boulder oil field of 1905 that ruined forever, the pristine valley that makes crazy all who pass through. I'm just this side in favor of drilling.
January 18, 2009
9:03 a.m.
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Oliver2 writes:
FRN4u--I am merely pointing out that rather than address any of the claims and arguments made in this piece--or my comments--you attack straw men. That is clearly the sign of a very, very weak mind.
Address the arguments, or sound like an ignorant fool. I don't mind the latter, but if you had any respect for yourself you might.
January 18, 2009
12:58 p.m.
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Oliver2 writes:
FRN4U-Que?
Perhaps address something substantive rather than level insults, my point. Not sure what you are referring to re: pit liners, don't see them mentioned in the Salzman piece. In NM new regulations were/are being implemented requiring pit liners. Again, the issue here is that O&G companies are misrepresenting the effects of regulations, when economics is the primary culprit behind the decline in drilling ACROSS THE NATION (not just or even overwhelmingly) in Colorado.
January 18, 2009
1:03 p.m.
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Oliver2 writes:
FRN4U-OK, I think I see your point. My understanding is that fraccing could occur at various times, although in the Piceance it is often done during the well-completion phase.
Leaking pits is a problem and might also be contributing to the rising contamination of water wells and other sources in the region.
But much of the activity is fairly recent in the Piceance--at least the spike of activity (certainly there has been some activity for decades). Thus the actual drilling process is fingered by many who watch the activity.
Public health should trump private profits--companies should be required to disclose the potentially toxic chemicals they are using to inject into the ground. Emergency rooms and responders absolutely should know what these chemicals are. Setbacks from water sources (especially, but not only, drinking water sources) should be required. Wildlife habitat should be protected and maintained.
January 19, 2009
9:39 a.m.
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Cwillyrun1 writes:
What's interesting is that the Colorado Supreme Court has told Summit County that they can't set rules to prevent any drilling inside Summit County.
It's possible even the state legislature can't make rules to stop it, especially when the drilling takes place on federal land. In that event, the legislature has no power to do anything.
January 19, 2009
9:49 a.m.
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bobby_b writes:
So now Salzman is an expert on oil and natural gas development, huh? It sounds like he needs a very basic economics lesson. Why is it hard to believe that if the government makes it more difficult and expensive to do something then people will do it less? The natural gas companies won't make is much money because of these new rules, so they are going to drill less. That's just econ 101, Jason!
What he fails to mention is that "ProPublica" is a "enviromental news organization." They are a front for the wacko-enviros and have no credibility. The Denver Post has even expressed its regret in running their "article" since they now no they were fooled into thinking ProPublica is a legitimate news source.
January 19, 2009
11:17 a.m.
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Oliver2 writes:
The Summit County decision involved hardrock mining, totally different set of laws and resources. But nice try.
So far most of the drilling in Colorado has happened on private (non-federal) lands. So again, wrong. The federal government can easily enter into a Memorandum of Understanding (MOU) agreeing to honor the state's regulations.
Finally, it is Economics 101: natural gas prices have collapsed in the last few months--hence the rigs being removed (idled) all across the nation, in virtually every oil and gas state.
Drillers control supply--when prices are low they slow drilling, when they are high they increase it. Regulations that have not even been put into effect yet have nothing to do with the current decrease in oil and gas activity in the state. When the price of the commodity increases again, drilling activity will pick back up.
January 19, 2009
11:26 a.m.
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Cwillyrun1 writes:
oliver, it doesn't matter when it comes to federal land. It "belongs" to the federal government, not the state or county it resides in. That means the federal government sets rules on it's uses....... so nice try on your part, but what I said was correct. The state nor the county can set rules where they don't have jurisdiction.
If you'd like to provide proof that most drilling in the state has taken place on private land, it might make part of your post legitimate.
January 19, 2009
11:40 a.m.
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Oliver2 writes:
Look it up, it's well documented (as far as where drilling activity has occurred in the state to date).
"The state nor the county can set rules where they don't have jurisdiction." Yes, but if the state and Feds enter into an MOU whereby the Feds agree to honor the state's regulations, as I pointed out, then the effect is the same.
January 19, 2009
12:54 p.m.
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Rich66 writes:
As to where the drilling is taking place, I provide the following passage from Aspen Times (Nov. 29, 2007):
"Wisely said most people associate energy development in Colorado with the BLM, even though only 13 percent of the oil and gas wells statewide were drilled under BLM permits. The other 87 percent were drilled under permits from the Colorado Oil and Gas Conservation Commission.
In western Colorado, 24 percent of well applications are made to the BLM and 76 percent to the state."
(You may recall that Sally Wisely is the Colorado Director of the BLM. She ought to know.)
January 19, 2009
2:39 p.m.
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Oliver2 writes:
And...
The difference in federal law between fluid and hardrock minerals does mean that local/state jurisdictions have significant more authorities over regulating certain issues related to oil and gas development, such as in regards to wildlife, water, and public health...all primarily state/local jurisdictions, and the three primary targets of the new regulations.
January 21, 2009
7:23 a.m.
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schnauzer writes:
Please can they announce the closing down of the Rocky soon? Put this guy out of a job! Let him get hired by "Mother Earth" or another lefty rag. Business bad, conservative/Republicans bad, every week its the same lefty based rant. I never thought my favorite paper in Denver would sink so low as to print crap like this. End it soon!!!!
January 21, 2009
11:18 a.m.
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bobby_b writes:
Oliver-- the new rules weren't in effect in 2008, so your argument that they had no effect on drilling doesn't hold water.
Basic economics and common sense tell us that if the government makes it more expensive to do something (in this case drill for natural gas), then people are going to do less of it. It ain't rocket science!
January 21, 2009
1:06 p.m.
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anderson writes:
"Basic economics and common sense tell us that if the government makes it more expensive to do something (in this case drill for natural gas), then people are going to do less of it. It ain't rocket science!"
No. That's like saying if the govt raises the tax rate for my income bracket, that I'll work fewer hours.
January 22, 2009
9:31 a.m.
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bobby_b writes:
Not really. But your lack of logic and understanding of basic economics is pretty amazing.
A better analogy might be if they raised the gasoline tax people would drive less.
I'm not making this stuff up. Did you ever take Econ 101? These are very basic economic principals we're talking about. Again, it's not rocket science.
January 22, 2009
11:39 a.m.
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anderson writes:
You can claim you know "basic economics" all day long, while the rest of us don't, but I think your understanding is limited. Others can draw their own conclusions. Your analogy is flawed (1) people can purchase gasoline almost anywhere; cos. can drill for gas only in certain places (2) people don't earn income from purchasing gasoline; cos. make their living from drilling for gas.
January 22, 2009
1:04 p.m.
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bobby_b writes:
huh? I'm not even sure where to start with the logical fallacies in your last post! Again, this is pretty basic, common sense stuff we're talking about here.
Are you claiming that that no matter how many regulations the government puts on companies it will have absolutely no effect on their business activities? That's just absurd.
Do you use natural gas and oil? If so, are you willing to pay more for it so that the Governor can score some political points with enviro groups? What about the poor people who already have trouble paying their energy bills? What do you say to them? "Tough-- the governor needs these votes?"
January 22, 2009
1:30 p.m.
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anderson writes:
"Are you claiming [insert straw man]...?"
No. I was just pointing out a problem with your prior claim:
"that if the government makes it more expensive to do something (in this case drill for natural gas), then people are going to do less of it."
It doesn't follow.
"are you willing to pay more for [gas and oil] so that the Governor can score some political points with enviro groups?
That has nothing to do with your prior claim, but why ask a question to which you already hold the answer? You don't want my opinion. You just want to validate your own with a loaded question.
January 24, 2009
7:09 p.m.
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Achilles writes:
anderson,
I think Bobby_B wanted an explanation on your position.
Bobby said this:
"Basic economics and common sense tell us that if the government makes it more expensive to do something (in this case drill for natural gas), then people are going to do less of it."
And you followed with this:
"No. That's like saying if the govt raises the tax rate for my income bracket, that I'll work fewer hours."
Your response did not exactly match his premise. The basic premise is that the higher the cost of doing business, the fewer businesses that will enter the market. This is basic stuff.
Your reference to working less hours is incongruous to the main argument. Work hours are pretty much standard at 40 per week. But, the type of work you choose to do is what counts.
Also, it depends on who you work for. Do you own your own business? You may choose to limit your hours. I owned my own business at one point and taxes are what made me abandon the business. Every time I toy with the idea of starting my own company, I remind myself of what a pain in the butt dealing with taxes are.
If you are married, you might not find a benefit in having both spouses work. My tax bill each year since I have been married is unbelievable. She does important work. But that extra income puts us into a new tax bracket. We are seriously talking about being a single income family because of the taxes we are forced to pay.
So, your point about reducing hours is not quite accurate. Yes, eliminating hours is the same as reducing them. But it's not like you can tell your boss, hey, I'm going to work 30 hours instead 40 because taxes were raised. It doesn't quite work that way.
Taxes are a penalty on business, period. There are no two ways about it. Either the tax is passed onto the consumer or the business decides to not enter the market.
January 24, 2009
7:10 p.m.
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Achilles writes:
is
January 25, 2009
8:40 a.m.
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GunnyBob writes:
Salzman, as we all do, likes to complain about hypocrisy and bias in the Denver media. I wonder if he will write about how he and other columnists have not touched the story of the Obamessiah ordering an illegal attack on Pakistan shortly after being sworn in that killed 21 people, 16 of whom were civilians and some of whom were incinerated and dismembered children inside their homes. How the attack was on a peaceful, sovereign country. How the kids never saw the Hellfire missiles coming, nor did their parents. The NY Times and many other media outlets reported the sickening attack.
Why do you suppose the leftist columnists in this paper, who surely voted for Obama, have not already written on this subject? Why are they not calling for Obama to be captured, charged and tried for crimes against humanity and mass murder at the ICC? Salzman has appointed himself overseer of all political pundits in Denver, yet he ignores the carnage being ignored by his buddies because Obama is their man who can do no wrong and can never kill enough Pakistani kids to warrant a complaint.
Telling. Very telling.
Perhaps a paper mache statue should be constructed of Obama hugging a large Hellfire missile and that statue could be hauled around town on a flatbed with Jason in the passenger seat.
January 27, 2009
7:38 a.m.
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Ike writes:
Whew, GunnyBob! Talk about an off topic post, yours should be an shining example for the rest of us.
The point is, and one that has been made repeatedly in this forum is the number of regulations implemented being good or bad for business or the environment. Having taken the time to review these new regulations some make sense but the rest are from Wack-A-Doo land. There is one truth that is always apparent regarding the environmentalist movements in their various stripes and colors is they can never agree on anything, even with each other while championing the same cause. Drilling regulaltions doublely so.
Now there is motion to delay implementation of these new rules and can't wait to see how that issue plays out, better than a sitcom! My money is on the oil and gas industry coming out ahead simply because they can out spend their opponents. (Gasp! Politicians for sale still?) One more true statement to make is save your pennies and dimes now from lower natural gas and gasoline prices because it will sure as death not last very long.
January 27, 2009
6:12 p.m.
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GunnyBob writes:
Work on your reading skills, Ike. In this very column Salzman complains about those complaining about media bias.
Ouch.
January 28, 2009
7:07 a.m.
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Ike writes:
My point remains, GunnyBob. The discussion went from oil and gas drilling regulations to a paper mache Obama holding a missile? Just missing your coorelation and deductive logic on this one I guess. Typically read Salzman for comic relief and saw his point about bias but still, Colorado oil and gas industry to deaths in Pakistan are related how?
All we need now is for someone to chime in with the number of oil and gas workers who are illegal and a drain on what few jobs still exist to make this a true standard off topic rant.