Roan gas leases on sale
Rocky Mountain News
Vail, CO Colorado
DENVER, Colorado ” Today’s sale of gas leases on the Roan Plateau could generate hundreds of millions of dollars for new state funds for cash- strapped colleges and towns reeling from the West Slope drilling frenzy.
However, one state lawmaker and some industry officials said bid prices may fall short of expectations because of pending protests on drilling in the scenic wilderness area and federal and state restrictions.
The Bureau of Land Management this morning will culminate years of controversy when the agency auctions 31 leases totaling 55,186 acres on the Western Slope plateau.
“It’s one of the largest contiguous blocks of land that’s known to have natural gas potential to be sold at one time,” said BLM spokesman Steve Hall.
Environmental groups and Gov. Bill Ritter have filed protests against holding the auction now, while energy companies have decried drilling restrictions imposed as part of the leases.
Legislation passed this year sets aside all state money from bonus and lease payments from the auction of federal lands for two permanent funds, said state Sen. Josh Penry, R-Fruita, one of the bill’s sponsors.
Half the money will be put into a fund for higher education and the other half will go to a second fund for projects such as roads to mitigate the impacts of drilling on Colorado towns and counties, Penry said.
The state could spend only the interest generated from the funds for university or town projects, he said. The higher education money could be used for operating expenses or capital projects.
“The idea was that this was a one-time manna from heaven, and we didn’t want to go on a spending spree,” Penry said.
Colorado was one of the Western states without a permanent fund created from oil and gas revenue. Surrounding states have saved billions of dollars in such funds. Instead, the state spent much of the money on pet projects such as recreation centers.
Initial estimates by an oil and gas group said the auction would generate as much as $2 billion, with Colorado getting half. That would mean $500 million for each fund. The state would not get the funds until the protests are resolved, however.
Bill Barrett Corp. Vice President Duane Zavadil said his company’s analysis of the leases shows the protests combined with drilling restrictions could hold down bids.
“We anticipate the value of the Roan is going to be severely discounted as a consequence of those actions,” Zavadil said. “It’s just a shame.”
A spokesman for Ritter’s office was not available for comment.
Penry said the protests could end up costing the state lots of revenue from the bonus payments.
“When the governor and environmental groups filed their protest on drilling on the Roan Plateau, they’re protesting a huge revenue source for higher education,” Penry said.
The auction takes place at 9 a.m. today. The BLM moved it to the Denver West Marriott Hotel to accommodate bidders and the media, the BLM’s Hall said.
Usually, most of the auction bidders are brokers who represent large energy companies. As a result, the names of the companies who will do the actual drilling won’t be known for months or years when they apply for the permits, he said.
Environmental groups will be outside to protest the auction. The Colorado Environmental Coalition called it a “blatant disregard for wildlife and the tens of thousands of citizens who spoke out against oil and natural gas drilling on the Roan Plateau.”
BLM to auction 55,186 acres on Western Slope
* What: Bureau of Land Management auction of 31 leases totaling 55,186 acres on the Roan Plateau
* When: 9 a.m. today
* Where: Denver West Marriott Hotel
* At issue: Hundreds of millions of dollars of new state funds from bonus and lease payments to be used for higher education and projects to mitigate the impact of drilling.
The money will be available after protests by environmental groups and Gov. Bill Ritter are resolved.
Energy companies have decried drilling restrictions imposed as part of the leases.