Energy Prospectus

U.S. News & World Report: Colorado Takes Fracking Restrictions to the Polls . .

Voters in Colorado next month will weigh in on what's shaping up to be the environmental showdown of the 2018 election cycle: whether to approve larger setbacks for oil and gas facilities that would make most of the state off limits to new fracking operations. The measure is one of a handful of environmental questions on state ballots this year, from a new carbon fee in Washington to higher renewable energy standards in Arizona and Nevada. But the Colorado proposal is the one that most directly pits residents against the oil and gas industry, potentially roping off 85 percent of non-federal land in Colorado from new drilling operations.

Cities along the Front Range, which includes Denver, Boulder, Colorado Springs and other destinations known for their proximity to hiking, biking, fishing, skiing and similar activities, have earned grades of D and F in the American Lung Association's "State of the Air" report. Much of the pollution has apparently come from oil and gas operations. Oil and gas groups, however, contend that the referendum has little to do with public health and instead is simply a campaign to hamper the fossil fuel industry. For example, Energy in Depth regularly rebuts studies on fracking, in a post in April pointed to a statement from Colorado's chief medical officer and director of the Colorado Department of Public Health and Environment who cautioned against misinterpreting correlation as causation.
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If Initiative 97 passes it will cost Colorado $31 Billion in tax revenues and it could bankrupt the state within five years.

With prop 112, there is a setup for a binary trading position in the following midstreams, among others:

NBLX
DCP
WES
TGE
NGL (one pipe out of DJ, but sig. revenue for them)

There are others, but I'm focused on these.

For the most part, these stocks are getting killed as they get dumped by those who don't want the risk of prop 112 (take a look at NBLX, topped at $55, now at $36).

If you think it fails, there's a big potential recovery, and the opportunity to get some good midstreams with nice growth outlooks and good dividend.

One problem is these propositions could keep showing up on Colorado ballots every couple years, and that risk could cause these stocks to permanently trade at lower multiples.

If you trade options, there are some risk/reward opportunities here.

The other issue for anyone investing in upstream or midstream - the anti-frac, anti-oil camps have figured out how to get these extremely restrictive measures on the ballot.

They can step and repeat it in other vulnerable states.

I guess the new Colorado slogan should be : "Burn cannabis, not oil or gas"

Just to be clear: Is Prop 112 the same as Initiative 97?

The solution to this stuff is that all of the Environmental Wackos should be forces to turn in their cars, trucks, boats and anything else that runs on a hydrocarbon based liquid fuel. They can drive a Tesla, but only if the electricity that it runs on comes from solar panels or windmills.

All of us should care about clean air & water. Trust me, everyone who works in the oil & gas industry wants a clean environment.

My definition of an "Environmental Wacko" is someone that lies about stuff like the danger of fracing and also ignores the significant improvement in human standard of living thanks to oil, gas and NGL based fuels and feedstock.

Eventually, the Socialists will take over. It sounds so good to have the government just take care of everything. I just hope I'm dead when it happens in the U.S.

Dan - prop 112 is the new name for Initiative 97. It's the same, just new name.