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SALZMAN: Drilling rules exonerated

Published January 16, 2009 at 6:18 p.m.

Spokespeople for the oil and gas industry are telling reporters that they're closing drilling rigs in Colorado because of the slacking economy and new drilling regulations that are pending final approval in the legislature.

The Rocky reported Dec. 12 that Encana was closing five rigs in Colorado and blaming "plunging energy prices and the Ritter administration's adoption of new drilling rules for its decision." The Rocky repeated the assertion Tuesday.

In a Dec. 11 Rocky report, Ken Wonstolen, counsel for the Colorado Oil and Gas Association, noted that the new rules will cost Colorado jobs and that "Colorado lost eight drilling rigs this month, while New Mexico picked up two and Wyoming picked up three."

The Rocky should have analyzed these figures. It turns out that, if you research how many rigs were shut during the past six months when the new regulations were being finalized, Colorado lost 11 rigs, New Mexcio lost 17, and Wyoming shed 7, according to rig counts on the Baker Hughes Web site, where Wonstolen said he got his numbers. The figures were about the same over the past three months. For January, Colorado lost one rig, Wyoming three, and New Mexico remained steady.

For perspective, reporters should also explain whether new regulations in other states have caused drilling-rig flight.

Asked if new regulations in New Mexico prompted oil companies to threaten to leave the state, Mark Fesmire, chairman of the New Mexico Oil Conservation Commission, told me, "Yes, they say they will move out of New Mexico, too." He added that this did not materialize as a result of new regulations in New Mexico, even though he acknowledges that increased costs can make wells uneconomical.

Fesmire's statement is consistent with multiple studies showing that, in opposing new rules, industries overestimate the increased cost of new environmental regulations.

Oil industry spokespeople quoted by the Rocky don't claim that proposed regulations are the only factor leading to rig closures. They say the bad economic situation also contributes. But journalists apparently aren't asking them about the relative importance of these two factors.

A reporter might ask, "On a scale of one to 10, what's the more important factor in causing rigs to be closed in Colorado, the economy or the proposed regulations?"

"I don't think anyone can give you a percentage breakdown," industry lawyer Wonstolen told me, not answering my question but adding that he's concerned about the negative business climate that Colorado's new rules could create.

In its reporting on the rig closure issue, the Rocky offered the competing view that the more influential explanation for the drilling slowdown in Colorado is decreased demand due to the economic crisis as well as a glut of natural gas in the region.

But reporters should question oil company spokespeople more aggressively about their assertions that rig closures are tied to the new regulations.

Caplis hypocrisy. KHOW talk show host Dan Caplis likes to trash The New York Times with sweeping condemnations about liberal bias there, yet Caplis and Silverman are promoting their own show by quoting a favorable Times story about them.

What gives, Dan? Maybe you should be a bit more nuanced in your critique of the Times if you're going to use the credibility of the Times to promote yourself.

Caplis did not return a phone call and an e-mail seeking comment.

Kopel misleads. Rocky media critic Dave Kopel needs to take another look at the headline of ProPublica's Nov. 13 article on hydraulic fracturing, a technique used in natural gas drilling. The headline read, "Is natural gas drilling endangering U.S. water supplies?"

Note, it was a question, not an assertion. The piece outlines evidence that hydraulic fracturing could be causing water contamination, but we don't know for sure in part because oil and gas companies haven't disclosed the types of chemicals used in the drilling process. So linking water contamination to hydraulic fracturing has been nearly impossible.

In its response on its Web site to Kopel's column of last week ("ProPublica's shaky facts," On the Media, Jan. 10), ProPublica states:

"Ask officials in New Mexico and Colorado: Are there any cases in which we can prove beyond a reasonable doubt that hydraulic fracturing caused water contamination? Answer: No, we've never studied that question.

"Ask those same officials: Are there hundreds of cases of water contamination in drilling areas, the vast majority of which use hydraulic fracturing? Answer: Yes."

ProPublica's reporter erred in writing a dismissive e-mail response to Kopel's questions about the article, and I agree with Kopel that parts of the piece are vague, particularly if taken out of context.

But ProPublica has now clarified the major questions raised by Kopel, and his reply to ProPublica, available on Volokh.com, is misleading.

For Kopel to trash the credibility of the article, and of ProPublica itself, is a disservice to readers and journalism.

Jason Salzman, president of Effect Communications, is the author of Making the News: A Guide for Activists and Nonprofits. Reach him at salzmanj@RockyMountainNews.com.

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