Western Colorado copes with energy boom | VailDaily.com

Western Colorado copes with energy boom

Steven K. Paulson
Associated Press
Vail, CO Colorado
Paul Conrad/Aspen TimesWith a drilling rig looming just off his property, Rifle rancher John Terry stares down one of his horses Monday evening in this photo from September, 2003.

RIFLE ” An aerial photo of a 10-square-mile area of La Plata County showed natural gas wells but looked more like a bombing had scarred the landscape.

Lawmakers gasped when they saw a photo of a house that exploded because of methane seepage. Another photo showed a road used for drilling rigs that looked like someone used a roto-tiller on it.

These and other problems were addressed by Western Slope officials during a tour and hearing by a legislative committee studying oil and gas drilling and the distribution of severance taxes to help communities deal with Colorado’s energy boom.

Counties directly affected by the drilling say they need more money to cope with crowded schools, clogged roads and labor shortages. But state officials say there aren’t any immediate solutions.

“This is a state resource that is being depleted, and it should be used to benefit the entire state,” said Sen. Gail Schwartz, who chairs the committee.

Schwartz said everyone in Colorado ” not just the Western Slope ” has been affected by the drilling. Companies are forced to pay more money to attract workers. Authorities are coping with increased pollution. Residents are driving on damaged highways.

During a hearing Tuesday in Rifle, local officials offered several solutions, including allowing individual counties to dole out state money to cities and towns, and creating a rainy day fund to bail them out if and when the bonanza dries up.

Twenty-five years ago, counties banked on a similar energy boom from oil shale only to watch it fizzle, leaving behind empty homes and coffers.

The severance taxes are collected from oil and gas producers and are supposed to compensate communities adversely affected by oil, gas and mineral extraction. There are an estimated 30,000 active oil and gas wells in Colorado; including severance taxes on minerals, the state expects to collect about $242 million this year.

Under a law passed this year, the amount of severance funds going directly to local communities was doubled from 15 percent to 30 percent. The rest is doled out as grants.

Las Animas County commissioner Ken Torres said local jurisdictions shouldn’t be forced to apply for individual grants and to provide matching funds, as they do now.

Yuma County commissioner Dean Wingfield suggested the state save some of the funds now to protect local governments when the energy economy declines.

La Plata County commissioner Kellie Hotter said production is already declining in her county. Officials are trying to plan for the future ” a difficult task because of many unknowns, including drilling’s impact on water wells and the need for local governments to plug oil and gas wells as they go out of service if companies abandon them.

Hotter suggested lawmakers base part of the distribution of severance taxes on the number of drilling permits issued.

“We need a formula to put this on an equitable basis,” she said.

Chip Taylor, spokesman for Colorado Counties Inc., which represents most of the state’s 64 counties, said few can agree on a better formula for distributing grants. Some officials want the state to count the number of workers living in their counties, while others note that they may have a lot of oil and gas development but that their workers live in other counties.

“I do think it should be a fair distribution statewide. The question is, what is the fair way?” Taylor asked.

Local officials told the lawmakers they welcome the boom’s benefits, including greater property tax revenues, high-paying jobs, royalties to mineral rights owners, and charitable contributions from oil and gas company officials who live in their communities.

Schwartz, a Democrat from Snowmass Village, said the committee’s visit to the drilling fields on the Western Slope was an eye-opener. She said riding on crowded, damaged roads and seeing two-acre drilling pads carved out of alfalfa fields while horses gamboled in the shadow of the Roan Plateau was a surreal experience.

“It’s hard to imagine,” she said.

Rep. Kathleen Curry, D-Gunnison, noted that oil and gas rigs are here to stay and the goal is to find a way for them to coexist in a state that still depends heavily on tourism.

“It’s an irony to stand here and look at the Roan with a drilling rig in front of it,” she said, staring at the sheer walls of the plateau rising above Rulison as workers scrambled up and down a six-story drilling rig that clangs away day and night.

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