Colorado Fracking Bans Could Cause Billions of Dollars in Compensation Claims

Bans on hydraulic fracturing (fracking) in Boulder County, Colorado, could result in enormous destruction of wealth, states a study commissioned by The National Association of Royalty Owners (NARO). According to the Niobrara News, NARO;

…released a report that estimates the future cash flows related to expected horizontal well results in the Wattenberg Field in Boulder County. Boulder County could be on the hook for over $1 billion from successful takings claims, or just compensation for the public use of private property, such as a ban on developing minerals in the Wattenberg Field.

The president of NARO-Rockies, Michelle Smith explained;

If the seizure of private property rights to appease clamoring special interests in Colorado is codified through the local control ballot initiatives, all property rights throughout the state are under attack…these estimates represent a staggering value that could be taken without compensation from mineral owners by proposed ballot initiatives.

One particularly disturbing aspect of ballot initiatives to ban fracking, is that they attack private mineral ownership, a right so rarely protected that its recognition and defense is practiced almost solely in America. Travel to any country in Europe, Africa or Asia and ask a resident who owns the subsurface minerals below their feet, and the answer will be some variant of “the state”, unlike in US, were individuals, families and other private entities can own subsurface property.

The incentive to develop and profit from resources, and the legal framework derived from private ownership, is a fundamental reason why the majority of wells drilled in the world are in the US. The role of private minerals in motivating development can by demonstrated by contrasting the many tens of thousands unconventional oil and gas wells drilled in the US over the last decade, with the handful that have been drilled in the UK−even with the urging of the countries prime minister.

The consequences of fracking bans should not be underestimated. The Niobrara news warns of the cascading destruction that would follow bans in Boulder;

 Local control advocates have failed to address three secondary effects of taking away property owners’ rights: compensation for removing the right to develop property, the possible resulting patchwork of regulation, and the impact of the loss of revenue on Colorado families.