CALGARY, ALBERTA— More stringent drilling requirements and other onerous regulations have cost Colorado its ranking as the most attractive destination worldwide for oil and gas investment, according to the Global Petroleum Survey 2008, released today by independent research organization the Fraser Institute.

Colorado was ranked as the 29th worst jurisdiction for upstream oil and gas investment out of 81 international jurisdictions by petroleum senior executives and managers who responded to the annual survey of upstream petroleum companies. The ranking puts Colorado in the same league as Ukraine, Pakistan, and Indonesia in terms of investment potential.

“Survey respondents were very concerned with Colorado’s changes to drilling permit requirements and other more stringent regulations,” said Gerry Angevine, Fraser Institute senior economist and coordinator of the annual petroleum survey.

“The Colorado Oil and Gas Association estimates the new rules could increase drilling costs by $60,000 to $600,000 per well.”

Other states rated as poor risks for investment include Alaska, California, Florida, Montana, Pennsylvania and West Virginia.

Arizona, Arkansas, Oklahoma, Alabama, and Ohio were ranked as the states with the lowest barriers for upstream oil and gas investment. They were joined by Texas, the US Offshore, Kansas, and New York, giving the US nine of the top 10 jurisdictions. Saskatchewan, which ranked sixth, was the lone Canadian province in the top 10.

“This year’s survey results and the poor showing for Colorado, Alaska and California can be directly traced to state government decisions to add layers of new regulatory requirements and increase oil production taxes,” Angevine said.

Alaska fell to the 22nd worst jurisdiction with California seen as the 11th worst, a ranking that groups it with other high-risk nations such as Russia and Sudan and with a worse ranking than nations such as Afghanistan, Pakistan and China. In 2007, Alaska was ranked 41st worst out of 54 while California was ranked 31st worst of 54.

“California’s expanded prohibitions on offshore drilling and concerns about environmental regulation are having a detrimental effect on the way the state is viewed by the petroleum industry, while Alaska increased its petroleum production tax,” Angevine said.

“Oil and gas projects require vast amounts of capital and long lead times. If governments are inclined to change the rules part way through the process, the risk for investors increases and they are likely to seek a more stable jurisdiction for investment,” Angevine said.

Internationally, Bolivia was ranked as the worst country for petroleum investment and development, followed by Ecuador and Venezuela. Other nations considered to be the least favorable include Chad, Iraq, Nigeria, Argentina, Sudan and Russia.

In most cases, jurisdictions that have imposed heavier tax and regulatory burdens during the past year received more negative scores than last year.

“Policy makers would do well to recognize the consequences and weigh the costs of big government in terms of foregone investment, lost jobs, and corporate flight,” Angevine said.

Modeled after the popular Fraser Institute Survey of Mining Companies, the Global Petroleum Survey 2008 is designed to help measure and rank the investment climate of various oil and gas producing jurisdictions.

A total of 396 respondents participated in this year’s survey. Companies represented in the survey account for more than one-third of the industry’s global spending on petroleum exploration and production.

The survey questionnaire sought the opinions of senior executives and managers on a range of issues, including royalties and licensing agreements; taxation; the cost of regulatory compliance; trade and labor regulations; and political stability, among others.