Hank Lohmeyer reports in the Delta Independent that a company based in Nebraska is seeking approval from the state and county to open a solid waste disposal facility on Wells Gulch Road in remote western Delta County.

The company proposes a facility that would accept “produced water” from oil and gas drilling operations. According to the company’s plan, oil would be separated from the water and stored in holding tanks for later sale to refiners. The resulting briny water would then be pumped into seven large, shallow, membrane-lined holding ponds for treatment by evaporation.

Wells Gulch Evap, Inc.’s plan received a recommended approval from the Delta County Planning Commission on June 25. The Board of County Commissioners held a public hearing on Monday and tabled consideration the company’s specific development application until July 13.

The company is negotiating to buy a 124-acre site that currently is used as winter sheep range. At final build-out, the seven membrane-lined evaporation ponds ranging from 2.5 to nine acres in size would cover 40 acres and have a total holding capacity of 64.2 million gallons.

The company’s specific development application to the county states, “The site will accept exploration and production (EP) water from oil and gas drilling operations. Drilling mud and cuttings will not be accepted at this site.”

EP or “produced” water contains high levels of minerals, salts and other chemicals classified as “non-hazardous.”

Wells Gulch Evap would accept EP water from around the Rocky Mountain region. There are two other EP water sites operating in the region; one at Cisco, Utah, and another at Baggs, Wyo.

Documents from the company state, “Treatment will consist of evaporation and will result in segregation of oil, salt, and water from the initial waste stream.” Inspection procedures will be in place intended prevent hazardous materials from entering the facility.

Patricia Gelatt, acting West Slope supervisor for the BLM stated that, “Disposal method (of the resulting) sediments is uncertain at this time. This may create an unacceptable, long-term liability for the county.”

The EP water handled at the site would be classified as a non-hazardous solid waste, the company says. According to the company’s regulatory filings, “Wastes accepted at this facility include drilling fluids, produced waters and other waters associated with the exploration, development or production of crude oil, natural gas, or geothermal energy. Wastes accepted at this facility will be defined as solid waste.”

Ponds will be fenced, and water in them will not contain oil, so danger to water foul is minimal, said Scott Myers of EnviroGroup, a Centennial-based consulting firm that is working on the project. The BLM’s Gelatt recommended that ponds be “netted” to prevent entry of migratory birds.

The company’s design and operation plan, available for public inspection at the county planning department, details numerous specifications including design, construction, operations, closure procedures, and post-closure monitoring. Myers told the county commissioners the facility would be constructed to operate a minimum of ten years.

The first phase of facility construction would include two evaporation ponds, a load-out facility, an oil/water separating unit, and holding tanks for separated oil that later will be sold to refiners.

The facility will bring an estimated 20 tanker trucks per day to the intersection of Wells Gulch Road and Highway 50 at Dominguez Canyon Road. Harker Holdings operations officer Heather Vanover told the county commissioners that when the phased construction plan reaches full capacity, up to 100 trucks per day will be transporting produced water to the facility. At peak activity the facility would accept tankers around the clock.

The facility needs to get final approvals from the county and state before sale of the 124 acres can go forward.

Delta County’s local government designee for oil and gas issues Bruce Bertram said if approved and built, the Wells Gulch facility will adhere to the state’s strict new regulations on oil and gas operations. Those new regulations include lining the evaporation ponds, testing, and on-site monitoring. Myers of EnviroGroup said the ponds will have a triple membrane lining with inter-membrane pumping systems installed to prevent leaking on- or off-site. Monitoring wells will also be installed. Myers said the company’s plans far exceed construction requirements currently in effect for the project.

The facility will be governed by state regulations, but the county has been advised to make its own “direct, unlimited access to the facility” a condition of specific development approval.

A Natural Gas Expansion Forum will take place Wednesday, July 22nd, at Colorado Mountain College - West Garfield Campus, in the Clough Auditorium of the EnCana Academic Center. The address is 3695 Airport Road in Rifle.

The forum is being sponsored by the Denver Metro and Southern Colorado Clean Cities Coalitions, and EnCana.

Panelists from The Governor’s Energy Office, Clean Energy, Fueltek Conversion Corporation, Westport Innovations and Denver Metro Clean Cities will discuss the environmental and
cost benefits, tax incentives, area initiatives and conversions (Fleet and Heavy Duty Trucks).

Registration and lunch will be from 11:00 AM to noon, with the panel and  presentation  discussion from 12:00 pm to 2: 30 pm, followed by a question and answer session.

Those interested in attending should RSVP to Margaret Linn at (303)369-6758 or mlinn@lungcolorado.org.

Reported by CEN Staff

The momentum for 2009 being called the year of  ”energy efficiency” was punctuated further this week when President Obama detailed stricter new lighting standards and promised the swift release of $346 million in Recovery Act funds to boost energy efficiency in new and existing commercial buildings and homes.

“I know light bulbs may not seem sexy, but this simple action holds enormous promise because 7 percent of all the energy consumed in America is used to light our homes and businesses,” Obama said of the new rules that set higher thresholds for energy efficiency in lamps and lighting equipment.

Issued last Friday, the standards call for products made in the U.S. or imported for use here  to meet the new parameters starting in 2012. According to the Department of Energy, the changes in lamps and lighting equipment would:

• Prevent the emission of as much as 594 million tons of carbon dioxide from 2012 through 2042, which is estimated as being roughly equivalent to removing 166 million cars from the road for a year.

• Save consumers $1 billion to $4 billion annually from 2012 through 2042.

• Save enough electricity from 2012 through 2042 to power every home in the U.S. for as many as 10 months.

• Eliminate the need for up to 7.3 gigawatts of new generating capacity by 2042, which the DOE says is equivalent to as many as 14 500MW coal-fired power plants.

The DOE’s release of $346 million in stimulus funds will go toward development and deployment of more energy smart buildings — and the technology and equipment to support them.

In the U.S., commercial buildings and homes account for about 40 percent of the energy consumption — more than any other economic sector — and for a similar percentage of CO2 emissions in the country. Existing structures present a ripe target for energy efficiency efforts and retrofits, the DOE noted, with three-quarters of the 81 million buildings in stock having been constructed before 1979.

The Recovery Act money for energy efficient structures will be allotted in five major areas:

• Advanced Building Systems Research, $100 million: Funding focuses on the development and design of integrated systems to control and manage the technology and equipment that enable structures to be more energy efficient. The goal is to accelerate progress toward zero-net energy buildings.

• Commercial Buildings Initiative, $53.5 million: Funds are to be used for expanding and speeding formation of partnerships among major companies and organizations with large building portfolios to make that property deliver “exemplary energy performance.” The DOE wants to increase the number of partnerships, now at 23, to about 75. Competitive applications for the partnerships will open in September.

• Buildings and Appliance Market Transformation, $72.5 million: Funding will be aimed at spurring the development of more energy efficient products through an expansion of Energy Star; preparing and educating various industries on how to implement commercial building codes that call for a 30 percent improvement in energy efficiency and take effect in 2010; and adapting the DOE Appliance Standards program to better address innovative technology.

• Solid State Lighting Research and Development, $50 million: The DOE’s Energy Efficiency and Renewable Energy department calls solid-state lighting “a pivotal emerging technology that promises to fundamentally alter lighting in the future.” The R&D funds in this area will be channeled toward work that will bring high-performance lighting technology and products to market more quickly.

• Residential Buildings Development and Deployment, $70 million: The money is to be devoted to projects that will provide technical training and assistance to residential builders and the workforce handling improvement and retrofitting of existing homes for energy efficiency, as well as the construction of new, energy-saving homes. Eligible projects include those run by municipalities, states and utilities.

Reported by CEN Staff

WEST SLOPE  COALITION OPPOSES
ANTI-FRACKING LEGISLATION

The Western Slope’s CLUB 20 sent a lettter to Colorado’s congressional delegation urging opposition to what they term  an anti-fracking, anti-energy production bill moving through Congress and that Reps. DeGette and Polis’ are supporting. The group describes itself as a coalition of people representing businesses, individuals, tribes and local governments in the state’s western counties, and it has been around for years.

Club 20 says it is “Organized for the purpose of speaking with a single unified voice on issues of mutual concern,” and coined the “Voice of the Western Slope,” the group wrote this to their federal legislators:

• By ignoring 35 years of successful state regulatory precedence in protecting groundwater supplies, the FRAC Act demonstrates neither “responsibility” for good public policy nor “awareness” of the facts related to this issue.?

• CLUB 20 believes that Colorado’s groundwater supplies are of critical importance and we applaud the decades-long work of the Colorado Oil & Gas Conservation Commission (COGCC) for providing an appropriate state regulatory framework to assure the protection of our groundwater supplies from unintended contamination by oil & gas development.?

• Hydraulic fracturing increases the efficiency and productivity of natural gas wells by 400-700%, especially in shales and tight sands which constitute the large majority of natural gas fields on the Western Slope of Colorado. Many of these wells would not be economically viable without the application of this technology.?

• The FRAC Act is an emotionally driven attempt to preempt existing state authority and add an unnecessary and costly regulatory burden on one of our state’s most economically important industries. It represents a costly solution for a problem that does not exist, and will only result in driving up the cost (and thus discouraging development) of one of the cleanest sources of energy (natural gas) that we have available to us.

REPUBLICANS TARGET MARKEY’S ENERGY VOTE

U.S. Rep. Betsy Markey’s vote in favor of last Friday’s clean energy bill is drawing the wrath of Republicans via a newly launched media blitz.

Yesterday, the National Republican Campaign Committee unveiled a robocall set to start ringing on telephones in the Fort Collins Democrat’s 4th District, part of a campaign aimed at Markey and a dozen of her House colleagues.

The NRC is also running a new generic Web ad featuring a clip from President Barack Obama, who said during the 2008 campaign that under his cap-and-trade plan, “electricity rates would necessarily skyrocket.”

According to the political website, Politico, the NRCC was “planning to air TV and radio commercials and unleash robocalls” in its campaign against “vulnerable” House Democrats. No television or radio spots will air in Colorado, just the robocalls, says Politico.

NRCC spokeswoman Joanna Burgos told The Colorado Independent the robocalls will reach “thousands” of households in Markey’s district but wouldn’t be more specific, during the next few days.

Markey’s office has not responded to the new media campaign as of yet. She did, however, release this statement following her vote on Friday:

After much consideration and input from businesses, families and farmers across Northern and Eastern Colorado, I supported the American Clean Energy and Security Act. As with any critical piece of legislation, I took my time to hear from constituents, study the bill and work to make key changes. After critical adjustments were made to protect the agriculture industry and an amendment that I offered to help connect Colorado wind farms to America’s wider energy markets was accepted into the bill, I made the decision to lend my support.

It’s time we get serious about reducing our country’s energy costs and saving American families money. We simply cannot afford to continue to send billions of dollars overseas to unstable governments, while we have our own vast energy resources right here in America. It is critical to our long-term economic health.

I was also compelled by the unique benefits this bill brings to Northern and Eastern Colorado. The renewable energy industry is a reality in the 4th Congressional District and this bill brings jobs directly to our community. Quite frankly, Colorado and the Fourth Congressional District in particular, stand to see greater benefits from this legislation than other areas of the country. Latest estimates project that 41,000 households in the 4th Congressional District would see a net income increase as a result of this bill. This was a reality I could not ignore.

I worked hard with my colleagues on the Agriculture committee to ensure that Colorado’s farmers and ranchers reaped the benefits of this bill. I felt that the cost of regulating emissions from farms across Colorado would be far too expensive for agriculture and would result in relatively limited reductions in greenhouse gas emissions. I was pleased to see the agriculture industry has been exempted from the emissions provisions in the final version of the bill—this was a critical compromise and without it I would not have supported the legislation. I believe it is vital to Colorado agriculture that ethanol producers, beef farmers and rural electric associations alike are protected from rate increases.

URANIUM MILL NEAR MONTROSE GETS HER PERMITTING APPROVAL

The Montrose County Planning Commission unanimously approved a special permit for the Pinon Ridge uranium mill at a re-opened public hearing late Wednesday following several questions from citizens.

If county commissioners go on to approve the permit for Energy Fuels, the company will be allowed to site a uranium and vanadium mill roughly 12 miles from Paradox. Already zoned for agriculture, milling activity in the area requires the special use permit.

Local permitting approval may be the easy part for Energy Fuels, as it must still seek state approval for its operations, which will likely be a long process.

Opponents, which on Wednesday included actress Darryl Hannah, are fearful of the health risks they say are posed by uranium ore. Some also question whether a special use permit can be granted under an exemption for mining, which, they say, does not specify milling.

At the public meeting, opponents of the uramium mill expressed concern regarding the potential health risks they believe that uranium ore poses. Actress Darryl Hannah, who grew up in the area and still maintains a home in San Miguel County, told reporters, “I’m pretty concerned about short-term thinking leading to a disaster. It’s a regional issue, not just a county issue.”

Other locals, however, said they support the mill because it will create jobs.

DESPITE LOCAL OBJECTIONS, DRILLING PUSHES CLOSER TO RULISON BLAST SITE

After decades of controversy, natural-gas drilling rigs are moving closer to the 1969 Rulison atomic blast site south of Rifle.

Last week a proposal from the U.S. Department of Energy opened the way for drilling sites with radiation monitoring, to push closer to the town of Rifle. The Colorado Oil and Gas Conservation Commission has already issued 84 drilling permits within 3 miles of the site, including 11 within a mile.

In 2008, Noble Energy Production Inc. drilled 21 wells in the area last year and said it is considering drilling within half a mile of the blast zone. “There may be enough of a buffer,” said Judy Jordan, oil and gas liaison for Garfield County, “but without a real assessment of where the contamination is, we are all operating in the dark.”

State and federal officials say that continuing monitoring has turned up no traces of radioactivity. “We are requiring stringent monitoring on these permits,” said David Neslin, the director of the state oil and gas commission.

None of this sits well with nearby residents of the nearby Battlement Mesa development as well as other locals. Their main concern is tritium. Back in 1969, an atomic device was detonated 8,426 feet below Rulison to fracture the rock and boost recovery of natural gas. The explosion did produce nearly 500 million cubic feet of natural gas, but all was useless because it was radioactive. A 40-acre parcel above the blast was declared a no-drill zone.

“Ever since then, it has been a struggle,” Kristy Koeneke told the Denver Post. Her family owns about 300 acres next to the blast site. “We were told not to worry, but when we wanted to drill on our land, we were told it would be a problem. What’s the truth?”

Over the years no radioactive contamination has been detected during tests run by the EPA and U.S. Geological Survey, according to reports filed with the state oil and gas commission.

The DOE estimates the cavity left from the ‘69 blast to be about 518 feet in diameter.

Reported by Staff

Greenopia, an online directory of eco-friendly retailers, services, and organizations, has released a “green” ranking of 50 United States governors. Topping the list is Col0rado’s own Bill Ritter followed closely by Governor Arnold Schwarzenegger of California. The entire ranking results are listed below.

The designation as the greenest Governor in the nation wraps up a notable month of June for Ritter. Earlier he received the Father of the Year Award from the American Diabetes Association, and was  profiled on the www.coloradodads.com website during the month.

“We looked at all 50 governors in the US and compared their policies, transparency, and interest group ratings and ranked them. It was a monumental task,” said Doug Mazeffa, Greenopia’s director of research. “People want to know which Governors are the eco-leaders or laggards, and especially identify those making repeated eco-gaffes.”

Data for this study was collected from each governor’s own web pages and cross-checked against credible sites such as VoteSmart and OnTheIssues. Energy and emission data was collected from the Department of Energy and the environmental platform data for each political party was collected from either the DNC or RNC’s main site.

Greenopia says that as part of its mission to keep consumers (and voters) informed on issues of eco-friendly importance, the Greenest Governors project reveals which state governments are most dedicated to preserving the environment. The U.S. Constitution preserves the notion that America is a federation of sovereign states and legal powers not specifically granted to the federal government are retained by the states. This means that Governors and state legislatures hold significant sway over state-based green initiatives and policies.
 
“Over the past few years we have begun to see certain states emerging as environmental leaders,” remarked Gay Browne, Greenopia founder and CEO.  “Those states enacting environmental laws stricter than federal guidelines have gone to greater lengths to protect the environment and to create more sustainable development, including green jobs.”

The Top Ten Greenest Governors

1. Bill Ritter of Colorado

2. Arnold Schwarzenegger of California

3. Ted Kulongowski of Oregon

4. Christine Gregoire of Washington state

5. John Baldacci of Maine

6. Martin O’Malley of Maryland

7. Bill Richardson of New Mexico

8. James Douglas of Vermont

9. Jon Corzine of New Jersey

10. Jodi Rell of Connecticut

Reported by Staff

BOULDER – The University of Colorado and ION Engineering, LLC, have finalized an exclusive licensing agreement to develop and commercialize technology enabling efficient and economical capture of CO2 and other contaminants from natural gas wells and coal-fired power plant emissions. ION’s breakthrough technology, developed by CU-Boulder Department of Chemical & Biological Engineering researchers Jason Bara, Dean Camper, Richard Noble and Douglas Gin, is the first to successfully integrate ionic liquid solutions into carbon capture and emissions control technology.

The viability of ION’s proprietary solvent systems has been demonstrated in the laboratory, and the company is currently optimizing their solvents for specific gas compositions and completing their engineering design for larger scale laboratory and field pilots. “The potential for ION’s technology is exciting, both with the advantages it offers natural gas processors and the opportunity to advance the effective capture of greenhouse gases in power generation,” said Dr. Alfred “Buz” Brown, the company’s CEO. Partnerships are being developed with companies around the world to demonstrate the technology and bring it to market. 

ION Engineering recently received a $100,000 Proof-of-Concept Investment from the CU Technology Transfer Office and the CU-Boulder Energy Initiative after optioning rights to the technology in December 2008. Based in Boulder, ION Engineering was formed in 2008 by Bara and Camper, along with Christopher Gabriel, a research associate at CU, and by Dr. Brown, who brings more than 30 years of technology commercialization and venture creation experience. “We believe that ION Engineering is poised for considerable impact based on this outstanding technology platform,” said David Allen, CU’s Associate Vice President for Technology Transfer.

Reported by Ann Rascalli

LAS VEGAS – Under initiatives announced Monday by Secretary of the Interior Ken Salazar and U.S. Senator Harry Reid (D-NV), federal agencies will work with western leaders to designate tracts of U.S. public lands in the West as prime zones for utility-scale solar energy development, fund environmental studies, open new solar energy permitting offices and speed reviews of industry proposals.

By Gus Nicholson, Examiner.com/Denver 

The House in Washington on Friday passed by a vote of 219-212 a bill that addresses global warming. At the heart of the bill is a system of caps and trades that will enable pollution emitting businesses to purchase credits and trade them on an exchange. The estimated opening price for a permit to emit a ton of carbon dioxide is expected to be $13.00. Experts believe that price should rise in future years as pollution limits are decreased. But, the bill contains a provision to keep the cost from rising too quickly in any one year.

The bill would grant a majority of the permits free in the early years of the plan to keep costs low and prevent users such as utilities, industrial companies and others from passing on too much of the cost to consumers. Estimates from the Congressional Budget Office put the cost for the average American household at $175.00 per year by 2020, while the poorest households would receive credits of up to $40.00 a year.

Republicans were joined by 44 Democrats in opposing the legislation. Republican Congressman Joe Pitts of Pennsylvania said, “No matter how you doctor it or tailor it, it is a tax.” Nevertheless, eight Republican congressmen supported the measure.

The challenges for Americans are several. First, most are not experts in pollution, merely victims of it. Second, a majority are well aware that something needs to be done and that we have lost precious time on the sidetrack on which the previous presidential administration put the issue.

Travel to many first and second world countries show that Americans have been well aware for decades of the importance of preserving the quality of the nation’s environment when President Woodrow Wilson signed the Rocky Mountain National Park Act in 1915. But, that was a sweeping gesture of the national will, something that today might be criticized as “socialist.” Since the nation’s founding the balance between the public welfare and private capital interests has led to a national government that, depending on who’s footing the bill, swung the pendulum first in favor of business, then back the other way.

Today, there are practical as well as aesthetic reasons for preserving the environment. Witness the collective shock when one of the first acts of the former administration was to abandon the Kyoto Protocol regarding global warming in 2001. Here in Colorado, where tourism is the state’s second largest industry and coal generates the bulk of our electricity, voters endorsed Gov. Bill Ritter’s energy policy by sending him to the state’s highest office on, among other things, his promise that 20% of the state’s energy should be generated from renewable sources by the end of his first term.

So is cap and trade the answer? Industrial interests seem to favor it because it buys them time, literally, to spend the real money that reduces the real pollution, or perhaps avoid it altogether by figuring out how to trade off their liability. Government, meanwhile, seems willing to take the matter in small steps that preserves industry’s competitiveness while still showing constituents its commitment to finding solutions to a problem that exists, but has no obvious solution.

By Richard Martin, Contributing Editor

In what will go down as one of the messier compromises in U.S. political history, the House of Representatives passed the  American Clean Energy and Security Act, better known as the Waxman-Markey Bill, on Friday. Designed to reduce emissions to 17 percent under 2005 levels by 2020, the legislation passed 219-212 – a tally far closer than the Obama Administration would have liked, and that included 44 “No” votes from Democrats including Rep. John Salazar of Colorado.

This baggy piece of back-room dealing unquestionably includes some flaws, like allowances for $2 billion in carbon offsets, plus provisions to mollify lawmakers from coal-producing states that, according to the EPA, will result in more coal being burned in 2020 than in 2005. What’s more, many experts believe that a straight carbon tax (a political non-starter) would be both more effective and more economically beneficial than the complicated cap-and-trade scheme provided for by Waxman-Markey.

“To oversimplify just a bit,” remarked political analyst Michael Barone of the Washington Examiner, “the one-third of the nation that doesn’t depend on coal for its electricity passed this over the less unanimous opposition of the two-thirds of the nation that does.”

Republicans, naturally, are claiming that the bill is a giant machine for eliminating American jobs, and one that will cost U.S. taxpayers thousands of dollars each. That claim became harder to support last week when the independent Congressional Budget Office produced a report saying that the bill, which will shift a huge proportion of U.S. energy production to renewable sources, will cost the average household just $175 annually  – and, for poorer households, will actually provide a net gain.

Republican opposition is to be expected; Salazar’s no vote is a bit harder to explain. By creating a market for carbon-emission permits, the bill will almost certainly favor states with large installed bases of renewable energy capacity – which Colorado, under Gov. Bill Ritter’s New Energy Economy program, will soon be.

Think of it this way: by forcing big emitters to obtain permits, a cap-and-trade system assigns value to every kilowatt of energy produced from renewable sources, a a cost to every kilowatt produced from carbon-based sources. As the caps become more stringent, the value of “replacement” energy from renewables increases. That means centers of renewable energy generation will benefit – and become more attractive to businesses and industries under the Waxman-Markey provisions.

According to the U.S. Energy Information Administration, in 2007 (the most recent year for which figures are available) Colorado ranked 13th in summer renewable generation capacity, and only 26th in total renewable capacity. That’s changing rapidly as new renewable capacity, particularly solar and wind, comes online in the state.

There’s another consideration: Waxman-Markey will create a financial market for carbon permits, along with, undoubtedly, derivatives based on those permits. Eyeing the financial meltdown of the last year, plenty of observers think that’s a really bad idea: “It’s not too hard to imagine that there are some Wall Street bankers already dreaming up some newfangled ‘green-friendly’ investment product that will capitalize on this trade, which can then be peddled to retail investors,” observed Reuters columnist Matthew Goldstein.

 Given what happened with the last flowering of exotic derivatives, that’s a scary prospect. In a strictly provincial sense, however, it’s likely to be a good thing for the financial capital of the Mountain West: Denver, Colorado.

By Don McClure, Vice President, Government, Stakeholder Relations and Legal, EnCana Oil & Gas (USA) Inc.

Colorado is blessed with many natural resources, including an abundance of natural gas reserves. The nation, in fact, has experienced a profound change in the supply of natural gas.

Recent studies, most notably one by the U.S. Department of Energy, have determined that the recoverable natural gas resources in this country are enough to last for the next 90 to 100 years based on the current rate of production. Last week,
the Potential Gas Committee, a leading authority on gas supplies,
reported that the nation’s gas reserves jumped 35 percent between 2006 and 2008. There is now a common understanding among experts that the North American natural gas industry has changed materially and permanently.

Just a few years ago, many thought natural gas supplies were peaking. Quite the opposite has occurred. Over the past two years continental natural gas production has grown nine percent due solely to new shale gas discoveries in states such as Texas, Louisiana, and Pennsylvania. Advanced, proven technologies such as horizontal drilling and hydraulic fracturing provided the impetus to make these new “shale plays” viable.

And the new production is just beginning. As of last year, shale gas accounted for nearly 5 billon cf/d of natural gas. In ten years, this new production is expected to increase five-fold to 25 billion cf/d.

Perhaps more importantly, from a business standpoint, this new gas supply comes from wells with high rates of production in markets in close proximity to major pipeline infrastructure. As a result, these wells provide a strong return on investment.

Rocky Mountain producers face near-term challenges in terms of constrained pipeline capacity and, in general, higher cost structures, relative to some of the newer sources of natural gas production across the country. According to analysis by investment banks, the break-even costs for producers operating in areas such as the Piceance Basin of Colorado and the Powder River Basin of Wyoming are in the range of $7 MMcf to $9 MMcf versus a breakeven in Louisiana’s Haynesville of $3.25 MMcf.

How can Colorado compete and take part in this new era of abundant natural gas supply?

Let’s be clear: natural gas basins in Colorado are among the best resources in America. Technological advances helped the Rocky Mountains become a leading source of natural gas supplies and continual process advancements will lead to solutions for the near-term challenge in reducing overall cost structures. Technology also provides opportunity to tap into new resources. There are shale gas formations across Colorado and technology, given the opportunity and as the economy recovers, will unlock these opportunities. 

In addition, Colorado can utilize more natural gas intra-state and help lead the nation in “moving the needle” on climate change and reducing our dependence on hostile foreign sources of oil. We can do this by increasing the utilization of natural gas for power generation and transportation.

Colorado is a net exporter of natural gas. It has historically used its natural gas exclusively for home heating and some peak power generation, leaving it with an excess of supply.  By using the excess supply within the state to replace some coal generated base load electricity and as a substitute for some gasoline and diesel in transportation, we can maintain well-paying jobs and improve air quality.

Natural gas is the cleanest of all fossil fuels. It emits just over half the CO2 of coal, less than 20 percent of NOX and virtually no SOX or particulates and no mercury. This switch could occur quickly since Colorado is using only about 30 percent of the capacity of its natural gas-fired power plants.

In the case of transportation, at an estimated long-term North American price of less than $8 /MMbtu, or the equivalent of $50 per barrel WTI oil price, natural gas is about 30 percent cheaper than current North American gasoline or diesel prices. In addition, independent studies have shown natural gas tail pipe emissions are about 30 percent lower than diesel or gasoline.

Unlike power generation, however, in the case of transportation further infrastructure is needed. Currently, for example, there are seven publicly available fill stations in Metro Denver, but none between Denver and Grand Junction. Some states, such as Utah and California, are farther along the curve on this and have begun efforts to add infrastructure and encourage the use of natural gas-particularly for fleets.

North American natural gas supplies are abundant, affordable, and clean. They can play an integral role in reducing greenhouse gas emissions and our dependence on hostile foreign oil sources. While regional producers will struggle in the near-term until technology provides an opportunity to reduce cost structures, the supply that is currently exported can be utilized to help meet these needs right here in Colorado.

Mr. McClure is the 2009 chairman of the Colorado Oil and Gas Association.