Responses to some common misconceptions about oil and gas drilling and the industry, courtesy of Mary Ellen Denomy, a CPA, an APA (A ccredited Petroleum Accountant), CMM (Certified Mineral Manager), CFDA (Certified Fraud Deterrent Analyst) and CFFA (Certified Forensic Financial Analyst) …all of which makes her a hyper-qualified accountant and someone who really understands the oil and gas industry.
Myth: Gas prices are high so we need more drilling to bring them down.
Fact: You have to look at this historically. We have more permits today and more wells in production in Colorado than ever before, yet we’re paying record prices. Drilling more is not the answer.
Myth: We have to reduce our dependence on foreign oil.
Fact: The companies th at are doing the drilling will get the best dollar possible for the oil being produced in Colorado. They have no interest in selling to us when they can ship the oil to China and sell it for $140 a barrel. Local production does not mean local consumption.
As an example, people in Florida pay the same price for oranges that we do even though our oranges are shipped across the country. Floridians pay the same price that the orange companies can get for oranges anywhere else in the world.
Myth: Oil companies are not making record profits or that their return on investment is not as big as we say.
Fact: According to their own presentations to stockholders and investors and their own financial statements, the oil and gas companies that drill in Colorado are making record profits.
And their ROIs are enviable in any industry. The cost to take oil and natural gas out of the ground is the same whether companies receive $25 per barrel (as they were 10 years ago) or $140 per barrel (as they are today).
Myth: The additional drilling is good for Colorado because it brings jobs.
Fact: Drilling does create jobs but those jobs are not being done by Coloradans who have been part and are staying in our communities. We are enticing people from elsewhere to come here earn money and spend it in other places. The additional drilling (and the additional workers) create an economic detriment to the local communities because the communities do not have the money to accommodate the extra people who are using local services like schools, roads, health care, etc. Ask any local mayor if the boom has been good for their town and every mayor will say no.
Myth: The market will correct for high oil and gas prices.
Fact: Oil and gas is a limited resource. Once it’s gone, it’s gone. What matters is not whether we drill more or less–there is a finite amount of drilling that can be done. What matters is that we make sure it’s done right and that we get our fair share. Coloradans have been undervalued. Why shouldn’t we get at least as much from the oil and gas industry as Wyoming or New Mexico or Alaska?
THE FACTS
Colorado is in the middle of the largest oil and gas boom in history. Since 1990, oil and gas drilling has increased by 500%. [1]
Colorado’s oil and gas producers are raking in record profits. [11][12][13]
Colorado has the friendliest environment for oil and gas drilling in the entire world, on par with Qatar, Malaysia, Romania and Thailand. [2]
There are currently more than 37,000 wells in Colorado. If the current growth of drilling continues, Colorado could have as many as 120,000 wells in the next 30 years.. [3]
Current regulations allow for gas wells to be located as close as 150 feet from a home. [4]
Oil and gas companies don’t have to disclose the chemicals they’re using in their operations…chemicals that have been know to leak into the local creeks and streams that feed our water supplies. [5] There have been close to 1,000 spills reported since 2002. [15]
Oil and gas development is the most significant human-caused source of ozone forming compounds in several major gas-producing western Colorado counties. [6]
Oil and gas prices are not affected by environmental protections - they are created because of speculation on Wall Street and the exportation of oil and gas from Colorado. [8]
Oil and gas development has a significant effect on Colorado’s wildlife. [10]