At a long table in Greenwood Village’s Il Fornaio restaurant, Charlie McNeil sketched out a diagram showing how the technology of drilling for oil and gas is making it safer, cheaper and more productive than ever.

“It’s amazing what they can do now,” said the president and CEO of NexGen Resources, a Greenwood Village-based company with its corporate arms around many aspects of the fossil fuel industry.

Still, McNeil -- an alumnus and board member of Colorado School of Mines in Golden, the Harvard of holes -- said he couldn't confidently predict the outlook for coal, crude and natural gas in Colorado, as those running state government seek to accelerate the move toward renewable energy.

From boardrooms to statehouse committee rooms to the governor's office, no one knows for sure where the energy dollars will rise and fall.

“We’ll find out,” McNeil said, with a worried grin.

Those on both sides of Colorado’s energy divide -- rich fossil fuels versus emerging renewables -- agree on one major point: It’s too early to tell if the sky is falling as tradeoffs get made over cleaning up the atmosphere.

The irony for the state’s fossil fuel industry: At a time when it’s never been better to extract the underground riches of Colorado, the governor and state legislature are steadily and assuredly making it harder and more expensive.

In April, the Democrat-controlled General Assembly passed Senate Bill 181, a far-reaching oil-and-gas regulation overhaul that puts the industry's needs on par with environmental protection and the concerns of local government, skirmishes the industry in the past has consistently won in courts and on the ballot.

When Gov. Jared Polis signed SB 181 into law, he declared the war on oil and gas was over.

Still, the industry won't fold anytime soon, by even the most pessimistic industry forecast.

The fact is 90% of Colorado's oil is pumped in Weld County, and local officials there, with the current mindset, aren't likely to impeded its progress. Most of the state's natural gas comes from the Western Slope, where support remains strong, industry leaders say.

In communities where there could be trouble above ground, the industry is poised to support local candidates sympathetic to its cause. And last November's defeat of Proposition 112, a measure to greatly increase setbacks between oil and gas developments and buildings, showed the industry will spend money and activate its supporters to protect its economics.

That political will is not going away, either, industry leaders told Colorado Politics in a monthlong series of interviews.

And despite the winds of political change in Colorado, the rigs and wells are still churning out product at a gangbuster rate.

In March, the University of Colorado Denver Business School's Global Energy Management Program released a study, paid for by the Colorado Oil and Gas Association, that indicated that as of 2017 fossil fuels directly and indirectly supported 89,000 Colorado jobs, including 30,000 people directly employed by the industry and 8,600 working in the supply chain.

It also raised $1 billion in annual taxes and fees and added $13.5 billion to the state’s gross domestic product, the study said.

To help keep the juggernaut going, energy companies last year filed for thousands of well permits across the state, just in case Proposition 112 passed.

With that backlog, they can operate on schedule for several more months, but not indefinitely.

And while backers truthfully stated that Senate Bill 181 didn't impose any bans on drilling, almost a dozen local communities already have put moratoriums in place, while the state sorts out the rules. Those limits on future drilling will swiftly become a point of contention, when the current permits and drilling sites run dry. 

Energy demand is growing

A lot is at stake beneath this mountain of uncertainty.

After Colorado voters gave Polis a 10.6-percentage-point win last November while putting Democrats in charge of the state House and Senate, he came into the governor's office promising to remake the state’s power portfolio -- 100% renewable by 2040, he said -- as Colorado continues to do its part to combat climate change. In the end, electricity consumers and Colorado's economy will be better off, Polis says.

The question of how far Democrats and local governments will go, however, keeps oil industry officials up at night.

The question that should keep Polis up at night is how to pay for all his promises if the state starts hemorrhaging jobs and tax revenue, if the left is wrong about the riches of producing green energy.

Besides new energy and environmental plans, the governor’s other expensive promises include full-day kindergarten and more government help on health care, tax breaks and, eventually, transportation. Polis’ promises represent hundreds of millions of dollars that aren’t currently in the state budget or long-term revenue forecast.

“A healthy oil and natural gas industry, operating in compliance with robust regulations that protect our environment and promote economic growth, is good for Colorado,” argues Dan Haley, president and CEO of the 280-member Colorado Oil and Gas Association.

“This industry generates $1 billion annually in local and state taxes, which is a significant amount of public revenue," Haley said. "It goes to water projects, parks, rec centers – things we value in this state.”

He doubted Polis could keep free all-day kindergarten, which the legislature passed this spring, without the $600 million the industry provides to education in Colorado.

“Are we going to start taxing the wind and the sun in the same manner to provide that kind of revenue?” Haley asked. “I haven’t seen that in anyone’s plans. The public revenue from Colorado’s oil and gas industry makes programs like all-day kindergarten a reality. Colorado does not have the capacity to backfill $1 billion in taxes – let alone replace the broader $19 billion in economic impact from our workforce – so the state needs to walk a real careful line here.”

Haley said COGA shared Polis’ concerns about a changing climate, “and we believe industry and cleaner-burning natural gas must be part of any long-term solution.”

Last month, Polis opted out of a multi-state pact to move Colorado’s abundant supply to natural gas for export, ultimately selling a cleaner source of energy abroad. His predecessor, Democratic Gov. John Hickenlooper, had been a supporter of the coalition. 

“The fact is, global energy demand is growing and will continue to grow, especially as more developing countries get access to the affordable energy that’s needed to improve their quality of life, drinking water – even life expectancy,” Haley said.

“Renewables and batteries will not meet all of that demand for energy, and a narrow focus on energy supplies will do more public harm than good," he said. "Thoughtful strategies around energy generation and energy consumption -- strategies that work the problem rather than forcing answers -- would be a far better approach.”

Weld County is where the oil fields are mostly located, but Denver is where the best-paying jobs exist.

In 2015 the Downtown Denver Partnership released a report that indicated 10,446 oil-and-gas industry jobs were located in downtown Denver, 11% of the area's private-sector workforce. Downtown Denver industry workers earned $156,005 a year, which was 180% more than the average wage of other private-sector jogs in the city.

The Metro Denver Economic Development Corp. reports that in 2017 the average annual clean-tech industry job paid $81,630 in the nine-county metro area. The fossil fuel industry in Colorado paid, on average, $107,410.

Fossil-fuel supporters warn over-regulation could ruin Colorado's economy, while renewable advocates argue that laying out the welcome mat for solar and wind industries will lead to sustainable green jobs.

Polis: 'I'm for all jobs'

As Polis and state regulators work to steer Colorado's energy future, politics come into play. In 2014, Polis proposed a pair of state ballot measures that would have sharply restricted oil and gas operations -- measures he later withdrew. Now there’s a recall effort taking shape against the new governor, partly because of his positions on renewable energy and climate change. He’s viewed by those on the right as a liberal ideologue. 

“There are a lot of folks who are ideological in any industry, and I think there are some in the oil and gas industry, so I think they’re partisan and ideological rather than assessing whether our policies are pro-business or good for the state," Polis said in an interview with Colorado Politics. "It’s more just a lens of how can we make it look bad, no matter what the policy is.”

You can look at any subject and find the good and the bad, and the state’s oil and gas future is no different, Polis said.

“Whether it was under [former governors Bill] Owens, [Bill] Ritter, [John] Hickenlooper, when you have that kind of regulatory authority, you’re not going to make everybody happy, nor should you,” he said.

But if he could flip a switch and make fossil fuels vanish from Colorado, would he? Most, at least on the right, assume the green governor would.

“Of course not,” Polis said, raising the pitch of his voice and sounding genuinely surprised by Colorado Politics’ suggestion he would. “I’m for all jobs in Colorado. With Senate Bill 181 we finally provided more regulatory stability around oil and gas activities. [But] it’s an industry that relies on commodity prices, so the biggest driver of how many jobs we have are whatever oil and gas is trading at.”

He returned to that theme in the conversation, arguing that the price of renewable energy is stable and continually getting cheaper, while fossil fuels over the long term are anything but stable and predictable.

How soon consumers see a net savings from phasing out coal and hooking up to renewables isn’t clear.

Polis said the Public Utilities Commission -- whose members he appoints -- will have an eye toward making sure ratepayers get a fair shake in the interim and see a savings on their monthly bills eventually.

He said Xcel Energy, which serves much of Colorado, already is a low-cost provider partly because “they are ahead of the curve on low-cost renewable energy. They have a lot less in coal assets and they embraced renewable energy early on.”

Polis said he couldn’t foresee more Colorado laws and regulations that could drive out fossil fuels, such as coal and diesel, to clear the path for renewable sources.

When the prices are right and the supply is in the ground, he expects jobs to follow. He said Colorado has been all too familiar with that curve.

“Certainly we want to be positioned to do well when the prices dictate that,” Polis said.

His pledge to move the state to 100% renewable power by 2040 excludes oil, because it’s not powering the grid now. Coal and natural gas, however, are still the leading sources

“Coal is kind of the workhouse, but it’s being phased out. And solar and wind are the growth areas with some hydro,” Polis said.

Regulation won’t be the root cause of the industry’s demise, he assured.

“What makes their business boom or fail, will be the price of oil it gas,” the governor said, adding: “Jared Polis has nothing to do with the price of oil and gas.”

Polis said that if fuel prices go down, however, it helps other parts of the economy, namely those that depend on fossil fuels.

“Everybody who uses fuel does better,” he said.

'An existential threat'

The potential loss of oil field jobs is a frightening proposition for the tens of thousands of Coloradans who depend on those paychecks, as the renewable energy sector ramps up.

Realizing that, last session lawmakers passed House Bill 1314, called the “just transition” bill, to help local economies as they switch from coal to cleaner sources of electricity generation.

The bill was sponsored by House Speaker KC Becker, D-Boulder, who also carried the state’s new Climate Action Plan to reduce greenhouse gas emissions, a prime ingredient of climate change.

Representatives of Ceres, a Boston-based advocacy group that contends "sustainability is the bottom line" for businesses, were in Denver recently meeting with policymakers and businesses about the wisdom and economics around green energy.

“Colorado is ahead of a lot of places,” spokesperson Helen Booth-Tobin said over coffee at Starbucks, a Ceres network member, along Denver’s bustling 16th Street Mall.

With a cooperative governor and legislature, the state is expected to go even farther, she said.

As technology gets better and cheaper, and because of economies of scale, distribution and storage, renewable energy will be an increasingly smart business decision, said Ceres state policy manager Jennifer Helfrich, a former utility analyst for the San Francisco Public Utilities Commission and then an Environmental Defense Fund Climate Corps fellow in the New York City Mayor's Office of Sustainability.

“Businesses see that there are savings in the long run, but there are savings in the short run, too," she said. 

In the bigger scheme of things, climate change is running up a costly tab for Colorado, Helfrich argued. Ceres members worry about the effects on the planet, but often specifically the impact on the goods or services they provide, she said.

For Colorado, that includes winter sports, the load-bearing pillar of the state’s tourism economy.

Colorado Ski Country USA, the coalition of nearly all the state’s resorts, has made the fight against climate change not just a fixture of their brand but also a desperate mission to do no less than save the state’s winters.

“Climate change is an existential threat to Colorado’s winter recreation economy, and more broadly to our forests and water resources,” Melanie Mills, president and CEO of Colorado Ski Country USA, told Colorado Politics.

“Colorado Ski Country USA’s 23 member ski areas urge policymakers and utilities to bring more clean, renewable energy sources onto the grid and implement smart policies and regulations to reduce carbon emissions and mitigate the impacts of climate change. There is so much untapped potential in Colorado to reduce energy costs and have cleaner air, so we are supportive of the governor’s policies that move things in this direction.”

In northern Colorado, Hewlett Packard Enterprise Co. has been a presence for four decades and remains one of Fort Collins' largest employers with a staff of 860, down from a peak of more than 3,000.

HPE -- created in a 2015 spinoff from the former Hewlett Packard Co. -- is moving at super highway speed toward green tech and energy conservation, a move that's vital to everyone's economic future, said Christopher Wellise, HPE's chief sustainability officer.  

Renewables help reduce HPE's carbon footprint, but it also helps the company spend its operating budget more wisely, he said. IT currently consumes about 10 percent of the world's energy, and that's expected to double by 2030, he said.

"We're going to have to do something," Wallise said. "Business as usual is not sustainable."

The company is on track to get half its energy from renewable sources by 2025, and cover the rest as soon as it can afterward to give HPE some price certainty as renewables come down in price.

"We believe in the science" around climate change Wellise said, adding, "but we also believe there's a business opportunity associated with that issue."

'Devil is in the details'

Rich Frommer is president and CEO of Great Western Oil & Gas Co., which has about 150 Colorado employees in offices in Longmont and Denver. He’s also the chairman of the Colorado Oil and Gas Association.

“The bill is done; the key followup is how the [Colorado Oil and Gas Conservation Commission] actually implements it,” Frommer said of Senate Bill 181, this year's oil-and-gas regulatory revamp. “They gave them some broad directions, but the devil is in the details, as always. We’re trying to help them understand, and we’re trying to be advisers to them, because we have a board made up of people who really don’t know our business. ”

Jeff Robbins, the commission's new director, is a “very smart man,” but the former private attorney has never had to handle a bureaucracy as large as the one he’s facing, Frommer said.

“We’re seeing quite a bit of slowdown in getting new permits issued,” and the backlog of permits won't last long, Frommer said.

Great Western expects to drill 130 wells with the company's two rigs this year. They gave the oil-and-gas commission a priority list of which wells it would like to do next, “or we have to lay our rigs down, and that’s the last thing we want to see happen. That means we lay people off, and nobody gets the benefit of drilling.”

He said Senate Bill 181 was much more amendable to the industry in the final version than in the early drafts.

"We were able to get 18 amendments to make it more workable," he said. "It still has its issues, but at least we think it’s workable.”

There's no real fight about the value of public safety, however, Frommer said. People in the industry have always been about doing everything within reason to operate safely.

“We’re going to do everything and have always done everything we can to protect the public,” he said.

Five years ago, Great Western created a template for others when it worked out a memorandum of understanding with Adams County, promising restrictions above what the state required. He thinks local government will be where most issues are settled in the future.

“It’s absolutely a model for what local governments should be thinking about,” Frommer said. “We have a great working relationship with the Adams County Commission, and working with the staff we minimized the impact.”

The industry began a seismic shift about five years ago with vast improvements to horizontal drilling, allowing greater setbacks and increasing production while reducing the industry’s footprint in the field. That replaced the old norm of an oil pump every 40 acres with one site up to three miles away serving numerous wells.

“The technology is really amazing, and most folks haven’t had an exposure to how incredible the advances this technology is creating,” Frommer said. “It’s what’s created, basically, energy independence for our country.”

'It just creates pressure'

McNeil, the NexGen Resources CEO we met at the top of this story, was joined for a lunch of fish and pasta by Earl Wright, the founder of Denver-based AMG National Trust Bank who chairs the Common Sense Policy Roundtable, a pro-business Colorado coalition and think tank.

The same night in late June, Democrats running for president fretted in their first debate about corporate consolidation and monopolies.

The more regulations -- and delays -- the state puts between the oil and producers, then fewer producers will be able to afford to be in the waiting game that requires more and more capital, they said.

“It just creates pressure for consolidation and fewer and fewer companies with more money and power,” Wright predicted about the current course of regulation. "The smaller operators won't be able to stay in it. I don't think Democrats are thinking about that."

Financial damage done by over-regulation then trickles up to lenders and investors, putting oil and gas business in Colorado at a competitive disadvantage, he said.

McNeil is as Colorado as a snow-capped mountain. Born in Greeley and raised in Estes Park, he founded NexGen in his home state in 1993.

The good fortune that this state has bestowed on him and his family he has returned in kind. He married his wife, Judy, in Cherry Hills Village 47 years ago, and still call the south metro community their home.

The couple were named “Villagers of the Year” in 2010, and honored for their support of a drug treatment facility and the honorees for the 25th Anniversary Children’s Diabetes Foundation Carousel Ball. He is the board president for the Craig Hospital Foundation Board and a trustee for Denver Area Boy Scouts.

McNeil’s business supplies all of the coal requirements for Xcel’s Texas power plants, shipping it from Wyoming. NexGen and its affiliates also help companies commercialize alternative fuels and clean coal technology.

“We’ve never been more regulated or operated more safely and efficiently,” he said over lunch. “It’s still too early to tell if the sky is falling. But time is money.”

A fourth-generation Coloradan, McNeil said he’s transitioning his company away from energy development and more toward its real-estate development, following Colorado's recent boom in home prices and sales.

But don't blame Polis.

“We’ve been going that way for awhile,” McNeil said.

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