How to Claim Your Spoils from Shale's Latest Victory

There’s a land battle going on in Colorado’s shale patch.

Unlike oil and gas industry-friendly states like Texas and North Dakota, Colorado has seen a battle pitting environmentalists against oil and gas companies. The crux of the matter is regulation on hydraulic fracturing, or “fracking.”

Let’s take a step back, though.

Fracking, by the way, is a process used by the oil and gas industry to unlock shale formations. By pumping a mixture of water, sand and chemicals down the well bore, the oil formation is pressurized, allowing oil and gas to flow to the surface.

Enviros contend that fracking contaminates groundwater.

However, the “anti-fracking” crowd has grown to mob-like status. You’ll see “Stop Fracking Now” bumper stickers in your neighborhood. Ironically, those bumper stickers are attached to cars. And those cars run on the very same oil that these folks claim to hate!

Long story short, the “anti-fracking” mob has gotten a little too loud for my liking — their bright torches are hurting my squinty little eyes.

Fact is, the shale oil industry here in America, with thousands of fracked wells under its belt (a practice that’s been around since the late 1940s, by the way), has proven to be a responsible and safe industry. There has not been one single case of a hydraulically fractured well affecting groundwater supply — not one.

OK, so back to Colorado…

There was a heated debate between enviros and the oil and gas industry about local regulation for fracking. The debate bubbled up, prompting a ballot initiative to be added to the voting form in November.

At first, you’d think it would be good to let the public vote on the fracking issue. But if you take a step back and look at the politicking going on — you’ll soon realize otherwise!

The most recent debate I heard was about the wording of the ballot questions. Because whoever gets to control the wording of the ballot has a strong wind at their back.

Consider if an anti-fracking ballot question were worded like this:

“Do you support a bill that allows local governments and municipalities to control their economy, education and business regulations in a manner that keeps the community safe?”

I completely made that wording up. But most people that read that statement would likely answer yes.

In other words, a ballot “word spin” could highly sway voters one way or another.

Add it all up and Colorado’s ballot initiative was gaining steam and looking to head closer toward November’s vote, which could have put the state’s booming shale plays in jeopardy.

Until this week.

“Colorado Fracking Opponents Losing Local Control Fight,” reads a Bloomberg headline.

“Colorado Governor Aims to Strike Deal on Fracking,” The Associated Press reports.

“Dem Pulls Anti-Fracking Support at Last Minute for Colorado Ballot,” says The Hill.

Long story short, the ballot initiative lost steam earlier this week, and now it appears there won’t be any questions about fracking regulation on the voting card.

You see, Colorado’s governor was worried about the effect these regulations would have on the local economies — which are absolutely buzzing with activity.

The governor asked both sides to stop their ballot campaigns, “avoiding a messy ballot fight,” according to The Associated Press.

The Democratic side, led by U.S. Rep. Jared Polis, agreed to compromise and will likely scrap the anti-fracking initiatives.

I’ve said it before, but it’s worth saying again….

America’s energy boom is an UNSTOPPABLE trend.

In fact, it’s so unstoppable even Democrats are scrapping their anti-fracking agenda!

This story out of Colorado also means great things for Noble Energy (NYSE:NBL).

Noble’s shares rose some 6% on Monday, as it’s not a purely Colorado-based shale play.

However, Noble is the biggest acreage holder in the state, and this pro-energy decision could mean great things for the company’s long-term profit potential.

Shares of Noble have pulled back over the past month or so and are sitting at a good entry level.

Colorado’s shale is a “buy.”

Keep your boots muddy,

Matt Insley
for The Daily Reckoning

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