Oil/Gas/Shale Update, Part I

It was only two weeks ago that Colorado Confidential last covered oil, gas and shale news on the Western Slope and so much has been added to this topic that we will have to divide these news briefs into two segments.Congressman Pitches Oil Shale Subsidies Without Disclosing Ties to Industry

A former Republican Congressman asked Club 20’s Oil Shale Task Force to help him draft and support a bill that would provide subsidies for the oil shale industry. But James V. Hansen from Utah “forgot” to mention to the committee that he represents an oil shale company.

Former Congressman Hansen is writing a bill that would create price supports for each barrel of shale oil produced and provide tax credits or grants to oil shale companies instead of low-interest loans. Hansen represents the White River Mine owned by Mobile, Ala.-based Oil Shale Exploration Company, or OSEC located west of Rangely near Bonanza, Utah. However, he was never disclosed to Club 20 members during his presentation that he was associated with OSEC.

A Western Colorado Congress member, Cathy Kay, said it was dishonest that Hansen did not disclose his ties to an oil shale company and wondered why Club 20 would be promoting his agenda. Club 20 executive director, Reeves Brown said that Club 20 hasn’t defined what is needed from the federal government to support oil shale as a viable industry.

The Bureau of Land Management is set to approve OSEC’s oil shale research and development lease in late January. The other five leases are in Colorado and were issued last month.

Public Meeting Scheduled About Drilling in Watersheds

A second town meeting between the town of Palisade, the city of Grand Junction, the Bureau of Land Management and Genesis Gas and Oil will be on Jan. 30 at the Palisade Community Center starting at approximately 6:30 pm. The series of meetings are about drilling in town watersheds.

The biggest issue at the previous meeting was over the public’s trust that Genesis and the BLM will develop the best management practices for drilling at the source of Palisade’s and Grand Junction’s water supply. Genesis official said a draft document explaining those practices will be available by summer.

Worried city officials often point to the City of Rifle, which has over 70 gas wells in one of their major watershed areas, as the source of their concerns about risk.

Drilling in Colorado May Get More Expensive, Chapters One, Two & Three

An analysis on how Colorado can derive more income from the current oil and gas drilling boom stated three suggestions, according to Rep. Bernie Buescher (D-Grand Junction).

–Repeal the ad valorem tax credits (depending on oil and gas prices, could increase net revenues $192 million more a year)

–Impose a severance-tax floor of 2 to 3 percent ($33 to $83 million a year in revenues)

–Raising the structure of the severance tax (could generate $96 million)

Sen. Josh Penry echoed industry’s support of increasing revenues as long as it went to communities affected by the boom. The report noted that under the provisions of the Taxpayer’s Bill of Rights, any tax increases will need voter approval.

Drilling in Colorado May Get More Expensive, Chapters Four & Five

Rep. Kathleen Curry (D-Gunnison) and Rep. Al White (R-Winter Park) will be working together on a bill that will require energy extraction companies to turn over more documents to ensure they are paying the proper amount of severance tax.

White also plans on sponsoring another bill that will require energy extractors to properly calibrate wellhead measuring devices to ensure producers are taxed for what they actually pull out of the ground.