August 6, 2021

Greeley Journal: Supporting Oil and Gas, but Resisting Encroachment

In the depths of the recession, a new wave of drilling took hold across farm fields and the high plains, helping to revive the city’s straggling economy. Unemployment is still stuck at 7.5 percent, but is down from highs of more than 10 percent. And local officials estimate that one in nine jobs is somehow tied to the drilling boom. Homes are selling again, and hotels are nearly full.

“We had better occupancy than Vail did during the ski season,” said Greeley’s mayor, Tom Norton.

But this spring, an energy company proposed sinking 16 wells next to a neighborhood of winding cul-de-sacs, pastel homes and the Family FunPlex recreation center. And in this energy-friendly town, an unlikely resistance was born.

“These wells are going to be here for a long time,” said Wendy Highby, a librarian at the University of Northern Colorado who joined a group of residents to oppose the project. “They’re what we’re leaving to our children.”

The wells in the Fox Run neighborhood on Greeley’s western fringe would hardly be the first ones drilled here. Energy companies have drilled in northern Colorado for more than three decades, and Greeley is ringed by about 20,000 oil and gas wells.

About 425 wells are tucked within the city limits, along roadsides and near industrial parks and commercial strips, and that number is expected to grow to 1,600 in coming years. Empty lots near strip malls are scheduled for drilling, and a vacant patch of grass near graduate-student housing on the city’s east side bears this sign: “Future Drilling Site.”

As companies here and across the energy-rich West look for new places to drill, they are increasingly looking toward more densely populated areas, and bumping into environmentalists and homeowners. In a study last year, the environmental advocacy group Western Resource Advocates found that 32 schools in northern Colorado were within 1,000 feet of a well.

“These cities are the last open bastions where they can drill,” said Mark Schreibman, who created a community group to oppose the drilling in Greeley. “They’re the only places left. Now they’re finding themselves under siege.”

As wells have sprouted in cities across northern Colorado, some towns have pushed for bans on the drilling technique known as fracking, in which highly pressurized water, sand and chemicals are pumped into the ground to crack open rock formations and pull out the minerals. Last week, the liberal college town of Boulder passed a one-year ban on fracking.

Others have embraced the boom’s royalty checks and tax payments, crediting drilling for the new grocery store in Platteville, the huge lunch crowds in Ault or the reopened Tumble Weed Café in Nunn.

Greeley and drilling have a complicated history. In the mid-1980s, the city banned drilling inside its borders, a move that was overturned by Colorado’s highest court after a long and expensive legal battle with energy companies. Since then, the city has passed rules to manage drilling and has learned to coexist with the industry, and even embrace it.

Last year, Greeley collected $3.3 million from oil and gas operations, and it estimates that energy production will generate $429 million in tax revenue over the next 25 years. The University of Northern Colorado and school districts inside Greeley have leased out their drilling rights, and this spring huge “thumper trucks” rolled through the streets, sending seismic jolts deep into the ground to see where mineral deposits might lie.

This winter, when Colorado’s oil and gas commission passed new rules requiring 500-foot setbacks between new wells and homes, Mayor Norton publicly opposed the changes. He argued that they would hurt development and city planning and would undermine local governments.

Last year, a drilling rig rose like a beanstalk about 1,000 feet from Mr. Norton’s home. The nights were filled with clanking and thudding as trucks came and went and as workers bored into the ground and pumped fracking fluid into the well. It was not bliss, he said, but he and his neighbors got by.

“It’s not that you want them there,” he said, “but you’ve got to put them someplace.”

Residents are fiercely divided on that point. At a packed meeting last month to discuss the drilling project in Fox Run, some spoke in favor of the economic benefits of oil and gas development. Dozens of others urged city officials to reject the proposal, saying the flurry of new wells would forever damage their city of parks and walking paths.

Logan Richardson, the vice president of the energy company Mineral Resources, promised to do everything possible to keep the noise down and mask the drilling near Fox Run. He said the company would build a fence and plant trees and was making extensive efforts to protect the environment around the well sites.

Despite strong public objection, city officials unanimously approved the new wells. And now, inside the house that she and her husband built six years ago, Karen Janata is bracing for what comes next. The couple moved to Greeley from Illinois to be close to their children and grandchildren, and loved their home’s mountain views and sunny suburban charm. She wonders whether all that will survive after the drilling rigs arrive.

“I’m just devastated by this,” Ms. Janata said. “I would move out of Greeley tomorrow if I could.”

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DealBook: Behind the Surge in Energy Deals

As the deal-making steadily returns from the depths of the financial crisis and the recession, energy companies are leading the way. Oil, natural gas, and utility players are rapidly consolidating. On Thursday, Energy Transfer Equity bid $4.2 billion for Southern Union Company, a deal that will create one of the largest natural gas pipeline operators. DealBook’s Andrew Ross Sorkin and Adrienne Carter talk about what’s fueling the strong activity.

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Stocks & Bonds: Earnings Optimism Checked by Oil Prices

Worries increased over the costs of raw materials and the effects from Japan’s earthquake.

“Companies are going to be trying to dampen expectations for the second quarter,” said Subodh Kumar, chief investment strategist at Subodh Kumar Associates in Toronto. “The market focus is more internal as to whether it’s gone up too fast.”

After the bell, the aluminum maker Alcoa reported a first-quarter profit that beat estimates and said its outlook for the rest of 2011 and beyond remained positive. But revenue of Alcoa, the first Dow component to report quarterly results, missed forecasts. Shares fell less than 1 percent in regular trading, to $17.77, then fell more than 3 percent in after-hours trading.

Shares of energy companies dropped as oil prices slid on profit-taking. Occidental Petroleum fell 3.2 percent, to $100.42, while the Standard Poor’s energy index was down 1.9 percent.

Profits for companies in the Standard Poor’s 500-stock index are likely to be up 11.4 percent from a year ago, according to Thomson Reuters data, but much of that may be priced into shares.

Optimism over earnings contributed to recent gains, despite turmoil in oil-producing regions and the disasters in Japan. Despite the S. P. 500’s gains this year, light trading volume has prompted questions about the strength of the rally.

The Dow Jones industrial average rose 1.06 points, or 0.01 percent, to 12,381.11. The Standard Poor’s 500-stock index fell 3.71 points, or 0.28 percent, to 1,324.46. The Nasdaq composite index lost 8.91 points, or 0.32 percent, to close at 2,771.51.

Oil futures ended lower after a recommendation from Goldman Sachs to take profits after the recent rally led to a sell-off.

In corporate news, Tenet Healthcare said it had sued a rival hospital operator, Community Health Systems, claiming that Community had admitted patients for unneeded stays to overbill insurers, including Medicare. Shares of Tenet sank 14.7 percent, to $6.44, while Community slumped 36 percent to $25.89.

NYSE Euronext on Sunday rejected a joint buyout bid from Nasdaq OMX Group and Intercontinental Exchange and said it was sticking with an earlier bid from Deutsche Börse. Nasdaq reaffirmed that its offer was higher than Deutsche Börse’s offer.

NYSE shares fell 2.9 percent, to $37.59, while Nasdaq OMX fell 1.5 percent, to $28.03.

Endo Pharmaceuticals, meanwhile, said that it would buy American Medical Systems Holdings for about $2.6 billion while Level 3 Communications agreed to buy Global Crossing for $1.9 billion in stock.

Endo rose 0.5 percent, to $41.06, while American Medical jumped 32 percent, to $29.50. Level 3 rose 18.1 percent, to $1.70, and Global Crossing surged 69 percent, to $24.97.

Biogen Idec rose 7.2 percent, to $78.55, and was the top percentage gainer on the Nasdaq 100 after the company’s experimental multiple sclerosis drug met the main goal in the first of two important late-stage studies.

The dollar firmed against the euro after Congress reached a last-minute budget deal Friday night that avoided a government shutdown. However, a focus on the debt ceiling could limit any gains, traders said.

“The euro’s drop is nothing more than white noise and the pullback should prove shallow,” said Jessica Hoversen, foreign exchange and fixed-income analyst at MF Global in New York.

The Treasury’s 10-year note fell 1/32, to 100 11/32. The yield was unchanged from Friday at 3.58 percent.

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Stocks and Bonds: Tech Stocks Bolster Market, Following Cisco Higher

Cisco rose nearly 5 percent, the most of any stock in the Dow Jones industrial average. The chief executive, John T. Chambers, said in a memo to employees that recent missteps were “unacceptable.” Analysts say the company is overly reliant on revenue from state and local governments. Mr. Chambers promised that major changes were coming, though he offered few specifics.

Other technology companies also rose. Hewlett-Packard rose 2.2 percent, while Microsoft and the chip maker Qualcomm each rose more than 1 percent. Broadcom gained 3.9 percent after an Oppenheimer analyst said the semiconductor company would benefit from higher sales of mobile phones.

Chip stocks were still a big focus for investors since Texas Instruments said Monday that it would pay $6.5 billion in cash for National Semiconductor.

Materials and energy companies fell. Monsanto, the seed company, lost 5.7 percent after it issued an earnings forecast for the year that fell below analysts’ expectations.

Energy companies fell the most of any group within the S. P. 500 index. Halliburton and Baker Hughes each lost more than 2 percent. The Energy Information Administration said crude supplies in the United States grew more than expected last week, rising by two million barrels. Analysts expected an increase of 1.3 million barrels. Gasoline demand also dropped by 112,000 barrels a day.

The Dow Jones industrial average rose 32.85 points, or 0.27 percent, to 12,426.75. The Standard Poor’s 500-stock index edged up 2.91 points, or 0.22 percent, to 1,335.54. The Nasdaq composite index rose 8.63 points, or 0.31 percent, to 2,799.82.

Oil prices rose, passing $109 a barrel at one point, as the dollar mostly weakened against major foreign currencies. The euro climbed to a 15-month high a day before the European Central Bank was expected to increase interest rates.

Traders want to see how higher prices for oil, gas and other raw materials are affecting corporate profits. They will get their first glimpse next Monday, when Alcoa reports its first-quarter earnings, providing the unofficial start of earnings season.

Abercrombie Fitch rose 3 percent after several analysts raised their price targets on the company, citing the retailer’s strong 2012 earnings outlook and international prospects.

Interest rates rose. The Treasury’s benchmark 10-year note fell 17/32, to 100 21/32, and the yield rose to 3.55 percent from 3.48 percent late Tuesday.

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