Ask an oil industry top guy: Jack Gerard on Colorado drilling and local control
Author: John Tomasic - March 10, 2017 - Updated: March 10, 2017
Jack Gerard is bullish on the oil and gas industry and its role in the the energy and manufacturing future. He would be, of course, because he is president and CEO of the American Petroleum Institute, the oil and gas industry’s comprehensive trade group and lobby shop.
Gerard was in Denver this week to touch base with Colorado, one of the top ten oil and gas producing states in the nation, an anchor state of the American west and a top conservation and clean energy state. Colorado is a laboratory of innovation in energy production, use and regulation. It’s also a political swing state. A man like Jack Gerard can’t stay away too long.
Gerard was one of the featured guests at a power lunch hosted by the Institute’s local division, the Colorado Petroleum Council. Gerard shared the stage with Gov. John Hickenlooper and Denver Mayor Michael Hancock. The three fielded questions on Trump-era energy policy, state regulation of the industry, job creation and the thorny issue of resident anger and the battle for local control over drilling activity in the era of expanded hydraulic fracturing across the suburban Front Range.
Gerard and sat down with Colorado Petroleum Council Executive Director Tracee Bentley and The Colorado Statesman after the event and shared thoughts on local control. The following Q&A answers have been edited for length and clarity.
The Colorado Statesman: As you know, the question of how much control cities and towns in Colorado can exert over drilling activity is the top energy-and-environment issue in the state. Drilling in neighborhoods has alarmed residents, many of whom may be new to Colorado and perhaps had never seen a drilling rig in their lives until one went up at the end of their street. Political and legal battles around the issue erupt at a steady clip. How is the problem evolving from your perspective?
Jack Gerard: The prominence of the production of the industry in your state, there’s a lot of volume, a lot of economic activity here, so— Colorado is number six in oil production and number seven in natural gas production.
I mentioned this earlier [at the lunch], but I was talking with county commissioners here and they talked about [memorandums of understanding] that some areas have signed with the companies. They said that the MOUs establish a framework and that once you have a framework, then it’s just a matter of being responsive to the residents. There’s a mechanism which you can use to reach out to companies. And that clears up a lot of tension… So there might be a best practice to be followed there.
Drilling bans are unnecessary and don’t contribute to the energy equation. So we’ll oppose those. Our approach is one of collaboration. We live in these local communities, you know. We want our own real estate values protected as well.
[The American Petroleum Institute] was originally founded as a standards organization, so we’re always still pushing best practices — What’s the latest technology that helps you protect this or that and be more efficient? To be accredited, you have to invite everybody into the conversation. It’s a collaborative process where industry technicians, academics, regulators, critics — everyone comes in and you come to agreement: Here’s the best way to drill a well; here’s the best way to reach out to a community.
So, again, the idea is, let’s collaborate. You want to talk about issues, then let’s talk about issues. We won’t agree to a ban because it’s bad public policy, but for those who want to talk, we’ll talk and we’ll look at the issue you want to address.
Tracee Bentley: Can I add a Colorado nuance? In Colorado, we have one of the most rapidly growing populations and we’re also top ten in oil and gas production, as Jack mentioned. So, what we have is our companies, many of them, have owned those mineral rights for a long time, sometimes 30 or 40 years, log before anyone thought there would be a neighborhood on top of them. The population boom in Colorado in so many cases came to us.
So we need to get better at it — the collaboration and getting the time right for communication. We have to be insistent on it.
But doing bans and drawing hard lines in the sand isn’t the answer because it’s not going to solve the problem.
Gerard: There’s a balancing act — a way to find a note that everyone can agree to. One of the county commissioners recommended that we go into the community to talk to residents much earlier than we have been, when companies are still doing planning and say, Here’s what we’re thinking.
Statesman: In the gas patch communities, there’s a sense that there are different kinds of companies and that some are particularly aggressive, the impression being that maybe aggressiveness toward residents and local governments is just this or that company’s business model. Are there tensions around that in the industry, and what can anyone on your side do about that, where you see how things are going down and you think, Well, I wouldn’t have done it that way?
Gerard: I think the public discourse is addressing that. I think public interaction has changed some of that, in that more and more companies are looking to understand the best practice within different contexts — what kind of neighborhoods they’re working and so on. I think you see change already. What I mean is… people say that the rig is a visual obstruction or a nuisance at night if you’re drilling around the clock. Well companies are learning.
They talk about gas-fired engines versus diesel combustion — a difference in noise levels. So it’s back to best practices that, over time, you are refining approaches and you’re getting better and better at it. We as an industry have to make sure we’re providing the outreach to make more of that happen and that we get feedback.
Bentley: It’s common practice to collaborate with communities. We only hear about the places where there’s conflict. Ninety-nine percent of the time collaboration is the model.
Gerard: County commissioners told us that what we need are before and after pictures. I thought they were talking about mitigation — No, they want the difference between what a drill rig looks like when you stand it up versus when you’re all done with the drilling and you’re gone and the thing will be gone. People say, Oh, OK. Well, we can put up with the rig for a month or two. It’s a different conversation.
Some of us would overlook that or take it for granted. We don’t anticipate where the anxiousness is coming from on the part of the neighborhood.
Statesman:So you have seen practices evolve and those practices are continuing to evolve, you would say?
Gerard: I think companies are becoming much more sensitive and interested in spending time and resources up front to have the conversations, to welcome conversation and engage in conversation.
It’s natural to resist change. But simple things, the companies will do those in a heartbeat. We’re getting better and better all the time. We keep learning. It evolves.