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Encana flags anti-fracking push in Colorado as a risk to business

CALGARY - Canadian energy giant Encana Corp. says its operations in Colorado could be hampered by a state ballot initiative that, if successful, would bring oil and gas drilling under local government control.

Groups concerned about the impacts of industry activity want to amend the state's constitution to give municipalities the right to limit energy development.

"Notwithstanding any other provision of law, local governments in Colorado may place restrictions on the time, place or method of oil and gas development, including but not limited to the use of hydraulic fracturing, that are intended to protect their communities and citizens," the amendment reads.

Language for the ballot measure was submitted to state officials late last week. If it's approved, the coalition — called Local Control Colorado — has until August to collect 86,000 signatures in order for the matter to appear on the ballot in November.

Encana flagged the initiative as a risk factor in its year-end disclosure documents.

"Though broad in nature, the ballot initiative is understood to be primarily intended to restrict oil and gas development in the state," the Calgary-based company said.

"This and other possible measures could make certain Colorado jurisdictions inaccessible to drilling in the future. Therefore, it is possible that the company's operations in Colorado could be impeded should such initiatives succeed."

Colorado is an important region for Encana, whose U.S. operations are based in Denver. Last fall, the company unveiled sweeping changes to its strategy, concentrating on five areas throughout North America instead of dozens.

Among the top five areas is the Denver-Julesburg Basin in northeastern Colorado, where Encana says it aims to drill 40 to 50 net wells this year.

"For our industry, like any, we require regulatory consistency in order to be successful and an initiative like this that gives local governments the right to veto our ability to operate creates an uncertain business climate and it puts Colorado at a disadvantage when it comes to energy development," said Encana spokesman Doug Hock.

"We believe it's bad public policy. It puts a sign in the window for Colorado that says 'closed for business.'"

To extract oil and natural gas from shale-rock formations, companies like Encana use a method known as hydraulic fracturing, or fracking. It involves injecting a mixture of water, sand and chemicals at high pressure deep underground to break the rock and free the resource.

Fracking across the continental U.S. has unlocked huge new fuel sources for a country that has long yearned for energy independence, but at the same time has raised concerns over impacts on the environment and public health.

Laura Fronkiewicz of Broomfield, Colo., said she started to become concerned about fracking almost a year ago when she noticed an oil and gas zoning sign near the school where she hoped to send her children one day. At the time, she was five months pregnant with her second child.

She belongs to a group called Our Broomfield that last year pushed for a five-year moratorium on fracking in her community, northwest of Denver. The measure narrowly passed in November but is being challenged by industry in court.

"It's really personal to me. This is about my kids," she said.

"I have so little free time right now that if this weren't something that I really firmly believe impacts the health of my children, I would not be involved."

The state ballot initiative, if passed, would "affirm" the right of local governments to limit oil and gas development and extend that right to municipalities that don't have what's known as "home rule" authority in Colorado.

Kelly Giddens, a mother of four, has been spearheading efforts in the northern Colorado city of Fort Collins to give municipalities more control over energy development.

"While oil and gas become more prevalent in our Colorado communities, the state legislature is failing to represent the will and best interest of our people. Colorado is home to diverse communities with our own unique concerns and so we kind of decided that a one-size-fits-all regulatory approach is inappropriate for everyone's needs," she said.

Giddens said there's evidence fracking can have "serious health effects" on those living near oil and gas operations.

"We have kids out running track with emissions happening literally right across the street. This is a heavy industrial activity that's now encroaching on densely populated urban areas."

Fort Collins residents also voted to impose a five-year fracking moratorium in November and it, too, is facing a legal challenge.

Jon Haubert, a spokesman for an industry-funded group called Coloradans for Responsible Energy Development, said a "vocal minority" is leading the anti-fracking charge, but that view isn't shared by most in the state.

Haubert said industry already works closely with local governments and that many municipalities have successfully addressed their concerns by signing memorandums of understanding with energy companies.

"That's good for the companies. That's good for the local government. That's good for the citizens and the residents. They're highly involved in the process already. So when you see a few folks coming forward, saying 'oh, we don't feel protected, there's no process in place, there's no regulation in place,' it couldn't be further from the truth," said Haubert.

"I don't think anyone's opposed to local governments and their role... But we have a process in place and the state is really the proper level of government to oversee oil and gas activity."

Follow @LaurenKrugel on Twitter

The Canadian Press

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