Beneath the Surface

The United States holds enough oil and gas to power the country for hundreds of years, and Colorado is at the center of the search for energy resources. Using a controversial process called hydraulic fracturing—better known as fracking—and new drilling techniques, oil and gas companies are able to extract these previously inaccessible fossil fuels. These technologies may be the biggest step yet toward securing our energy independence. But at what cost?

December 2012

Fort Lupton, USA

The town that oil and gas built. 

fort lupton, population 7,500, sits 16 miles east of Erie in the heart of the oil and gas boom in Weld County. Grannies Diner has a prominent spot on the main drag, Denver Avenue. Across from the diner, there’s a bar called Station Three Inc. A sign on the door says the bar opens at noon, but on a recent weekday morning around 11 a.m., there are two people inside sipping on frosted mugs filled with yellow beer. The Fort Lupton town hall is a few blocks south. Four large flags representing the United States, Colorado, the U.S. military, and Fort Lupton tower over the modest single-story brick building. Next to the town hall, there’s a parking lot, which has one reserved space. A placard claiming the spot reads “Mayor Tommy Holton.”

Holton has a tall and commanding presence, with a bushy gray mustache that turns down and stretches toward his chin, like any good hero in a Western flick. It’s immediately clear that Holton likes the $10-a-day gig as mayor. He grew up in this town, and his wife was raised here. They were high school sweethearts. Holton’s parents own a farm just outside of Fort Lupton, where he lends a hand to supplement his mayoral salary. The Republican mayor is finishing his second two-year term and intends to run a third and final time. As he started his second stint two years ago, Holton decided to bet the house—and perhaps the fate of Fort Lupton—on the oil and gas business. That decision is paying off today. 

For the past 40 years, Halliburton, a major oil field services provider, has operated a small facility just south of Fort Lupton. In 2010, the company announced it was looking to expand, and that it was considering moving to Greeley or Cheyenne, Wyoming. The problem was that the Fort Lupton site had been operating on a septic system. The company needed water and sewer to accommodate a bigger facility, and the town had yet to build the infrastructure. The way Holton tells it, when he heard Halliburton was thinking of leaving, he dialed a company executive and coaxed him into flying in from Houston for a meeting. “Basically on a handshake,” Holton says, the two parties struck a deal: Halliburton would fund the $2.4 million extension of water and sewer lines, and Fort Lupton would make sure the project was done in six months. 

The new $40 million Halliburton facility is nearing completion, and Holton says the impact on the town has been noticeable. Halliburton has already added more than 700 jobs. Home values are up more than 60 percent, Holton says, while business in town has increased around 20 percent. An Italian restaurant with an unexpectedly trendy storefront opened down the street from Grannies Diner. Much of this, in Holton’s opinion, is thanks to Halliburton. “It’s been huge,” he says. “It has kept us from feeling a lot of the economic pushback.” In fact, Fort Lupton’s economy largely hinges on the oil and gas industry. Of the 25 largest employers in town, 10 are oil and gas related companies, and those companies have created at least 1,500 jobs—well-paying jobs. “It’s not inconceivable to make six figures with a high school education,” Holton says. 

By some accounts, the oil and gas industry employs more than 100,000 Coloradans and pays a mean wage of $72,000 a year, which is 51 percent higher than the average Colorado salary. “If it hadn’t been for oil and gas,” says Holton, an appointee to the COGCC, “I think the economic downturn would have hit the Front Range a lot harder than it did.” 

As for the controversy surrounding oil and gas development and hydraulic fracturing, Holton is convinced that the current regulations imposed on the industry are more than enough to keep the town safe. The way he sees it, it’s simple: “This is the most regulated industry in the state,” he says. “There are rules in place and we need to follow them. You can drill, but you need to do it right—if you screw up, take care of it.” Besides, he says, we’ve been fracking for years; after a while, you just don’t see it. “Being from here in Weld County—we don’t pay attention to that part of the landscape.”


 Quenching the Thirst

How much water does fracking use?

Hydraulic fracturing isn’t just about chemicals. In Colorado, the process consumed 13 million gallons of water a day in 2011—enough to supply up to 60,000 families for a year. Sounds like a lot, but, in reality, it’s less than one tenth of one percent of Colorado’s total water usage. The greediest sector? Agriculture, which sucks up 85 percent of the state’s water. Yet oil and gas companies have even begun to outbid Colorado farmers during water surplus auctions. Where else does the water come from? Operators will often purchase from a provider such as the local municipality. But towns have the right to set their water prices higher for oil and gas companies. For example, operators in Erie now pay the town a premium over what other consumers pay for the same water. By 2015, projections say the state’s frack jobs will require daily water use that’ll roughly double what a 1,000-megawatt coal-fired power plant consumes every day.