Energy companies hold money for now in Rifle
Glenwood Springs Correspodent
Vail, CO Colorado
RIFLE, Colorado ” A rule-making process for the oil and gas industry and a proposed ballot initiative has left area energy companies tentatively uncommitted about helping to reconstruct the Parachute Interstate 70 interchange.
County leaders and many others are proposing that natural gas companies put up the entire cost of a $30 million long-term fix for the interchange. In return, companies would receive severance tax credits that would reduce their severance tax bill by up to 50 percent each following year.
Parachute, county and area leaders are also considering using the credits to help build another interchange west of the current one, which is estimated to cost about $12 to $15 million. That interchange would lead to a proposed bypass that would later connect to County Road 215, which leads north to several companies’ natural gas operations.
However, energy companies aren’t willing to commit to any Parachute project until they see the results of the Colorado Oil and Gas Conservation Commission’s rule-making for the state’s energy industry and a proposed ballot initiative that would remove a property tax credit that allows companies to significantly reduce their severance tax bill, said Jesse Smith, a former assistant Garfield County manager and who is working for the county.
“I am really hoping that we don’t have to wait until November to move forward,” said Parachute Mayor Roy McClung.
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Garfield County Commissioner John Martin said work to reduce congestion in the Parachute area has to be done now.
“We have to do something to take care of our pressure,” Martin said.
The future of traffic at the I-70 Parachute interchange and in the area was the focus of a meeting in Rifle on Wednesday. Several state legislators ” including Rep. Bernie Buescher, D-Grand Junction, Rep. Al White, R-Hayden, Sen. Jack Taylor, R-Steamboat Springs, Sen. Josh Penry, R-Grand Junction ” were at the Wednesday meeting.
Some legislators said the use of severance tax credits for the Parachute projects could cause controversy for other energy producing areas. That’s because the proposed use of a large amount severance tax credits for them could potentially reduce the total pool of severance tax money that is distributed to other entities across Colorado.
Buescher said that using the severance tax credits for a major project in Parachute could generate opposition from other energy-impacted counties and areas.
“That is where it gets dicey,” Buescher said.
The county is proposing a solution where that depletion of severance tax revenue could be limited to about 3 percent each year if the companies pay for the project by raising bonds and paying them over a 10-year period, Smith said.
Penry said he had called several companies in anticipation of Wednesday’s meeting to get a sense of their willingness to participate in the long-term, $30 million interchange project.
“I got a loud and clear signal that they are still committed to this project and being a partner in it,” Penry said. “I don’t know if it is needed to put pressure on the companies.”
Penry said that with the cost of a permanent fix to the current interchange and a new one west of it estimated to be $50 million, area legislators and leaders need to ask themselves whether they want the energy companies to “play the credit game or come in” with some cash.
“What percentage are we going to ask them to chip in, because they are using (these roads)?” Penry said.
Garfield County Commissioner Tresi Houpt said the county, which has seen drilling permits for wells in the area skyrocketed by 220 percent from 2004 to 2007, has a schedule for upgrading county roads and that if a company needs to have a road rebuilt to service its business, the company should have to help pay for it.
“It is important they realize it is a cost of doing business,” Houpt said.
Construction for a $2.1 million interim fix to the currently congested interchange is expected to start soon, Smith said. Those fixes will include new traffic signals and lane widening to give 18-wheelers a larger turning radius. That project is just a phase in preparation for the later permanent fix for the interchange, Martin said.
Another meeting about the interchange and fixes in the area will have energy company representatives in attendance.
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