Report: Drilling could cost North Fork
A new report by a North Fork Valley activist group contends that there would be more economic negatives than positives for Delta County from a 35-well drilling project proposed by Gunnison Energy 12 miles north of Paonia.
The report by Citizens for a Healthy Community says Delta County would receive property and severance tax revenue from just three wells that would be located in the county, with the rest to be located in Gunnison County. But the impact of the project to the surrounding area would result in hits to agritourism; to hunting, fishing and other outdoor recreation revenues; and to residential and agricultural property tax revenues because of a decline in property values, it says.
“Our research revealed that the (project) would result in a net economic loss to the County when all foreseeable costs … are subtracted from estimated property and severance tax revenues,” the report says.
It says it’s estimated that the three wells would generate from $307,000 to $367,000 per year in oil and gas property and severance tax revenue to Delta County over the 30-year life of the wells.
“However, this same project has the potential to result in a loss of $24,275 in agritourism sales tax revenue, $187,460 in outdoor recreation sales tax revenue, and a loss of $598,275 in property tax revenues for a net annual loss of $810,000 to the County or $24.3 million over the 30-year life of the proposed project,” the report says.
“… Finally, the County will be responsible for potentially large increases in road repair costs due to increased traffic on fragile county roads, as well as increased public safety expenses,” the report says.
Citizens for a Healthy Community is based in the North Fork Valley, and its roughly 500 members are seeking to protect the region from the impacts of oil and gas development. The new report, available at the group’s website, chc4you.org, was prepared by Andrew Forkes-Gudmundson, an attorney who is the group’s associate program director.
The report comes at a time that Delta County commissioners have supported the Gunnison Energy proposal and other forms of economic diversification due to the loss of hundreds of coal mining jobs in the region in recent years.
“While the County would like to make up for lost coal jobs and revenue, North Fork Valley residents want to protect a growing local economy that has been transitioning away from extractive industries towards sustainable agriculture, tourism, recreation, art and music, and renewable energy,” the study says.
It later concludes, “Our research suggests that the County Commissioners should rethink the true, long-term value of oil and gas development, and in particular the (Gunnison Energy project), on the future of Delta County.”
Delta County Administrator Robbie LeValley said the county received the report this week.
“We’ve just started to look through it and analyze it,” she said.
She said Citizens for a Healthy Community is scheduled to present the report to county commissioners July 17. LeValley also has forwarded the report to County Assessor Debbie Griffith for her take on it.
Brad Robinson, president of Gunnison Energy, said Monday that the company has drilled wells in Delta and Gunnison counties for 14 years.
“During that time, none of the exaggerated impacts or conflicts that have been predicted by those who fundamentally oppose any fossil fuel development have occurred. We do not expect any different outcome from the wells we are currently planning than from the wells which we drilled over the last 14 years.”
He said the citizen group’s report “fails to account for many of the economic benefits of gas exploration and production.” For example, it ignores that 50 percent of the federal royalties from gas production are returned to the state and then distributed locally to schools and communities, he said.
Citizens for a Healthy Community “also ignores the benefit of payments to local landowners and the benefits to companies and their employees who provide services to support our operations,” Robinson said.
David Ludlam, executive director of the West Slope Colorado Oil and Gas Association, called the report a “myopic, self-serving analysis” and said it “doesn’t change the fact that energy and agriculture are not only compatible, but are interdependent. The reality of the interdependence between energy and agriculture is evident throughout the West no matter how many fake reports activist groups publish at the expense of Colorado’s most economically challenged communities.”
Some North Fork Valley ranchers have supported local drilling, saying it has been done responsibly and resulted in royalties for them.
A 2013 study of shale gas drilling in Washington County, Pennsylvania, cited in the Citizens for a Healthy Community report, found a 10 percent increase in property values likely attributable to lease payments, offset by a 26 percent decrease in the case of homes dependent on groundwater due to concerns about contamination risk. The North Fork report assumes a full 26 percent drop in property values. Forkes-Gudmundson said the reason is that the Gunnison Energy project involves mostly federal lands and minerals, so few private mineral royalties would be generated.
“We looked at the (Pennsylvania) report’s fear of water contamination as being most important,” due to concerns about impacts to the headwaters of the North Fork Valley, Forkes-Gudmundson said.
The North Fork Valley is building a reputation for organic farming, and Forkes-Gudmundson said it would be a hard sell for an organic farmer to persuade people to visit his farm “if five miles upstream there’s an industrial-scale scale fracking operation potentially pumping chemicals into his watershed.”
While the study focuses on one project, Citizens for a Healthy Community believes it points to a larger issue of drilling projects in the upper North Fork Valley that could largely occur in Gunnison County, bringing it property and severance tax revenues, while Delta County could bear many of the negative impacts. A project known as Bull Mountain, proposed by SG Interests, would involve 146 upper North Fork wells, all in Gunnison County.
LeValley said Delta County works with Gunnison County where appropriate on matters such as road impacts when drilling in Gunnison County might affect Delta County.
When it comes to coal mining, Delta County has benefited by being where many high-paid miners have lived over the years even though much of the mining has occurred in Gunnison County.
LeValley said one thing the county has to consider in the case of oil and gas jobs is that they may involve a lot of contractors who wouldn’t live in the county.
Where drilling occurs in Delta County, the county has rules in place beyond state requirements to help assure that it’s done responsibly, with an eye toward protecting things like agritourism, LeValley said.
“Delta County’s been a proponent of responsible development from the very beginning,” she said.
Natasha Leger, interim executive director of Citizens for a Healthy Community, said its report validates what people in the community have been saying for a long time about the importance of transitioning the North Fork Valley from extractive industries to agritourism, recreation and sustainable agriculture.
“Now we actually have a quantitative report to back up what people have been saying for years,” she said.