Colorado Gov. John Hickenlooper announced a deal with environmental groups and the energy industry he said would prevent ballot measures from curbing oil and gas development in the state.
The governor said he created a special task force that would outline ways to develop energy resources safely.
"Colorado is fortunate to have an abundance of energy resources, and we have an obligation to develop them in a way that is safe for our residents, supports jobs and the economy, respects private property rights and protects our environment," he said in a statement Monday.
Oil from Colorado accounts for one out of every 50 barrels produced in the United States and output is on the rise because of operations in the state's Niobrara shale basin. The state is home to nine of the largest 100 natural gas fields in the country.
Jack Gerard, president of the American Petroleum Institute, said Hickenlooper's decision would support an industry that's already created hundreds of thousands of jobs in the state.
"Colorado has some of the strongest oil and gas regulations in the country, and our industry has a history of working collaboratively with state regulators and local communities to protect the environment while promoting economic growth," he said in a statement Monday.
The regional chapter of the Sierra Club said it was standing beside communities in Colorado wary of the hydraulic fracturing that is in part responsible for the rise in oil and gas production.
"Public and environmental well-being should always come before the interests of the oil and gas industry," regional director Joshua Ruschhaupt said in an emailed statement.