Gazette article featured GOP plan for Roan revenue, but no opposition comment


Reporting on a proposal by two Colorado Republican legislators to use "potential revenues" from drilling on the Roan Plateau "for higher education," an August 22 article in The Gazette of Colorado Springs omitted comment from state Democrats who support a bill to block further drilling. Additionally, The Gazette did not mention widely reported criticism of the plan's revenue projections.

In an August 22 article by Ed Sealover, The Gazette of Colorado Springs reported on a proposal by two Republican state lawmakers "to use potential federal revenues from Roan Plateau drilling for higher education." However, The Gazette provided no comment from Democratic lawmakers who oppose further drilling and others who contend that estimates of the "potential federal revenues" upon which the proposal is based have been overstated and would not justify the environmental impacts that would result from development.

As The Denver Post reported, the Bureau of Land Management (BLM) "unveiled a plan to open part of the Roan Plateau's top to oil and gas drilling" in September 2006. The Post further reported, "The plan, which officials hope will be a model for energy development, opens about half the public lands on the plateau top to drilling -- but imposes restrictions on energy development." In an article posted June 12 on the KCNC CBS4 website, the Associated Press reported that "[a]fter seven years of study, hearings and comment from state agencies, the Colorado office of the Bureau of Land Management finalized a plan last week that authorizes up to 1,570 new natural gas wells on and around the Roan Plateau over 20 years." On August 3, the U.S. Department of the Interior granted state officials another 120 days to review the plan because of their concerns over the impact of drilling in the area.

According to the Gazette article, the proposal from state Sen. Josh Penry (R-Fruita) and state Rep. Al White (R-Winter Park) to use potential federal revenues from Roan Plateau drilling comes despite "a bill moving through Congress [that] would preclude such drilling."

From Ed Sealover's article "Severance tax revenue up; legislators debate best use," in the August 22 edition of The Gazette of Colorado Springs:

DENVER -- Lawmakers searching for money for everything from higher education to local roads have begun to ogle an old but often overlooked source of revenue: severance tax receipts.

The tax is charged on the removal of underground resources in Colorado, including oil and gas, coal, molybdenum ore, oil shale and metallic minerals like gold and silver.

Half the annual revenue goes to the state trust fund, while the other half is divided between local government grant projects -- 70 percent of that total -- and direct distributions to local governments -- 30 percent.


Though Western Slope lawmakers often fight for more local funds for roads and lowincome housing, some people see the increasing revenues as statewide funding solutions. An educational foundation has been given the OK to collect signatures for a constitutional amendment on the 2008 ballot that would raise the tax and put defined amounts toward education and school construction.

Sen. Josh Penry of Fruita and Rep. Al White of Winter Park have put forth a plan to use potential federal revenues from Roan Plateau drilling for higher education. Though a bill moving through Congress would preclude such drilling, White said the state has to take advantage of this new source of revenue if it gets the opportunity to do so.

"We're getting a lot of positive interest," White said.

The interim committee on severance taxes is expected to make recommendations on revenue distribution in time for next year's General Assembly session. [emphasis added]

The Gazette, however, failed to mention widely reported public criticism of the revenue projections included in Penry and White's plan. As The Denver Post reported on July 27 (accessed through the Nexis database), Penry and White's proposal "to channel revenue from the Roan Plateau into a fund for higher education overestimates the amount of money it will bring in," according to Mary Ellen Denomy, an "expert on petroleum accounting" who "researched recent lease deals in the area at the request of some statehouse Democrats." According to the Post, "Penry dismissed Denomy's analysis as a politically motivated attack on his proposal" and "said his numbers -- backed by the oil and gas industry -- show that the land on the Roan Plateau could command bonus payments of $40,000 an acre. Penry cited two nearby deals that raised between $43,000 and $50,000 an acre." But the article further noted:

Denomy analyzed 19 transactions involving leases on land controlled by the Bureau of Land Management. Based on her analysis of 20,661 acres of land on the plateau or adjacent to it, the average bonus payment was $220 an acre.

"Show me where the BLM has leased any property for $40,000 an acre," Denomy said. "Not anywhere in our state."

Similarly, as the AP reported in an article about the battle over drilling on the Roan Plateau that appeared in the August 11 Glenwood Springs Post Independent, "There's also debate over how much money the state will get from [BLM] lease payments and royalties":

First, federal legislation is needed to give the state any money. Currently, revenue from fees and royalties on land already leased in the planning area goes to a special fund for the cleanup of a site on the plateau where oil shale research took place decades ago.

BLM officials have said there's more than enough money for the cleanup, which could start next summer. [U.S.] Sen. [Wayne] Allard has proposed a bill to give the state its share of the revenue.

But even if the money starts flowing, it likely won't be as much as predicted by supporters of development, said Mary Ellen Denomy, a petroleum accountant.

Based on 19 federal tracts leased in the area over the last year, an analysis by Denomy, done for environmental groups and Democratic legislators, concluded the state's share of lease revenue over 20 years would be $8.1 million at most.

"For the largest gas reserve in the lower 48, that's not credible," state Sen. Josh Penry, R-Fruita, said of Denomy's analysis.

Penry believes the figure would be closer to $1 billion, based on recent sales in the area. He is co-sponsoring a bill to funnel the state's proceeds to two permanent trust funds, one for higher education and one for energy-impact assistance.

Furthermore, although the Gazette article noted that "a bill moving through Congress would preclude" drilling on the Roan Plateau, it did not include any comment from supporters of the bill. As Colorado Media Matters noted, citing August 8 reporting in The Daily Sentinel of Grand Junction, Colorado Democratic U.S. Rep. John Salazar sponsored a provision in the House energy bill (H.R. 3221) -- which the House passed 241-172 on August 4 -- "barring oil and gas development on the surface of the Roan Plateau."

In an August 4 press release indicating his support for the measure and indicating that it included provisions he previously introduced and promoted, U.S. Rep. Mark Udall (D-CO) stated, "It is important to note that this is not a prohibition on development, but a requirement that it be done in the least disturbing manner possible, and lands below the top of the Roan Plateau or any non-federal lands are not affected."

The Gazette article also did not provide any comments from Democratic Gov. Bill Ritter or U.S. Sen. Ken Salazar (D-CO), despite their leading roles in gaining the 120-day extension to review the BLM's drilling plan for the Roan Plateau.

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