Negative Comments  and Actions By Some Colorado Officials Threaten To Cut Revenues That Colorado Counties And Local Governments Stand To Gain

DENVER (Oct. 17, 2007) - A new study shows that Colorado stands to gain $6 billion in new revenue over the next 30 years - more than $1 billion of that in the first year - from a federal plan to allow environmentally sensitive harvesting of clean-burning natural gas from the U.S. Naval Oil Shale Reserve lands in the Roan Plateau of Western Colorado.

The analysis also shows how negative comments about the development plan made by some state and federal Colorado officials may have already "significantly" reduced the eventual revenue that Colorado counties stand to gain from the federal plan.

"This analysis shows conclusively that the State of Colorado and local governments across our state stand to reap an enormous economic windfall of new revenues that are badly needed if the federal plan for natural gas harvest of the NOSR lands is allowed to go forward," said Colorado State Representative Bill Cadman (R), a member of the Board of Directors of Americans for American Energy. 

"This development is the most environmentally restrictive ever proposed, and it was developed only after seven years of careful negotiations between federal officials and Colorado officials at the local level where this development will occur," Cadman said.  "It is a Colorado plan developed by Colorado citizens, which is why it is supported by the public by nearly 2 to 1."

"I am concerned that statements and actions by politicians who find it convenient to badmouth this carefully crafted stakeholder plan are injecting a high level of regulatory uncertainty into the process.  They are taking money out of of the pockets of Colorado taxpayers and Colorado counties by making these irresponsible statements," Cadman added.  "These politicians may be making environmental extremists happy, but their political statements are costing Colorado taxpayers plenty."

The analysis, conducted by the non-profit group Americans for American Energy, found the following:

• The analysis shows that the State of Colorado is poised to reap up to $6 billion in revenue over the next 30 years from bonus payments, royalties and production taxes if NOSR lands are leased for natural gas harvest.
   
• As much as $1 billion of those revenues would accrue to Colorado in the first year the NOSR is leased through lease bonus payments.
   
• In addition to $6 billion of new revenue to state and county units of government, Colorado also stands to benefit from the economic impact of more than $11 billion of investment by the energy industry over the life of the project.
   
• Actions and statements already made in relation to the BLM plan by some elected officials from Colorado have already eroded investor confidence in this project.  This will undoubtedly reduce the size of the bonus bids that can be expected to be offered in connection with NOSR leases.  In turn, this will reduce the economic return that could be realized by Colorado units of government from this project.  There is no way to accurately gauge the revenue that Colorado has already lost as a result of the current negative political environment surrounding the NOSR leases.  However, given the magnitude of the potential bonus bid at stake – in excess of $1 billion – the loss Colorado taxpayers already may have suffered is likely to be substantial.

According to the study:  "It is important to note that government officials at all levels have tremendous influence over the perceived risk associated with an investment of this magnitude.  Elected officials telegraph a significant message to developers when they make public comments about these proposed projects.  If developers foresee heightened regulatory risk affecting future execution of a project on the basis of negative positions taken by government representatives, a perception of increased risk is created that an investment will not be able to realize a reasonable and timely rate of return."

The study also noted a recent poll that shows that development of the NOSR lands is overwhelmingly supported by the Colorado public – by nearly 2 to 1. The poll found that development was supported by 76 percent of those who consider themselves Republicans, 59 percent of "unaffiliated" respondents, 41 percent of Democrats and even 30 percent of "liberal Democrats."

To download the full report by Americans for American Energy, go here.