Bodman, Kempthorne clear way for Colorado to begin receiving Anvil Points leasing revenue

The US Energy and Interior secretaries jointly notified Congress on Aug. 8 that the way has been cleared for Colorado to begin receiving leasing revenue from Naval Oil Shale Reserves No. 1 and 2 on the Roan Plateau.

The US Energy and Interior secretaries jointly notified Congress on Aug. 8 that the way has been cleared for Colorado to begin receiving leasing revenue from Naval Oil Shale Reserves No. 1 and 2 on the Roan Plateau.

Funds have been obligated and a contract has been let for the Anvil Points cleanup project in western Colorado, Energy Secretary Samuel W. Bodman and Interior Secretary Dirk A. Kempthorne said. The money comes from a fund which was established to provide financial resources for cleaning up spent shale at the former oil shale research area.

"Our notification certifies that we have met the legal requirements for allowing Colorado to begin receiving its share of current and future oil and natural gas revenue from a major section of the Roan Plateau. Currently, about $2.7 million is generated each month from leases in this area and the state will now receive 49% of these payments as well as its 49% share of all future bonus bids, rents and royalties on oil and gas leases in the area," Kempthorne said.

Colorado Gov. Bill Ritter responded that he was pleased the cleanup is moving forward, but added that other key steps need to be taken before further leasing and development occurs on the plateau.

"We remain disappointed that the federal government seems intent on shortchanging Colorado by rejecting our proposal for phased leasing. Additionally, this certification fails to direct any extra money from the Anvil Points cleanup fund back to Colorado. The state stands to lose up to $50 million if legislation is not passed to direct Colorado's fair share of lease revenues that have already accumulated back to the state instead of reverting back to the federal treasury," he said.

Upcoming lease sale

Reaction from the state's congressional delegation was mixed. US Sen. Wayne Allard (R-Colo.) said that the certification was significant because Colorado will finally get its share of revenue from the Anvil Points federal oil and gas leases. The timing was particularly important because of the US Bureau of Land Management's scheduled Aug. 14 Roan Plateau lease sale, which could generate as much as $1 billion of bonus bids, he indicated.

"The national energy debate will undoubtedly continue, but I have spent years working with the Department of the Interior to cross this threshold and ensure that Colorado gets our share. The $400-500 million from these royalties over the next 20 years could fund many important needs for Western Slope communities and our state," said Allard, who proposed directing leasing royalties to local communities in 2007 and who is retiring at the end of this year.

"The best that can be said about today's announcement is that the Bush Administration has finally officially recognized that there is no need to continue short-changing Colorado by keeping all the royalties from the existing leases in the Roan Plateau area. But they are doing nothing to refund the state's share of the money already collected, let alone listen to Gov. Ritter or the Colorado communities that want them to change their plans for leasing all the rest of the Roan at one time," observed US Rep. Mark Udall (D-Colo.), who is running for Allard's Senate seat.

By law, all revenue from oil and gas activity in this area of the Roan Plateau has been diverted to the Anvil Points Fund, according to BLM which let the cleanup contract. It said that anticipated costs include $15.4 million for environmental remediation, $39.4 million to reimburse DOE for past activities at the site (including installation of wells and related infrastructure) and about $10 million for environmental monitoring and compliance activities.

Management of the area was transferred from DOE to DOI in 1997 under the Transfer Act, which also established the fund as a special US Treasury account, the DOI agency said. It said that Colorado's Health and Environment Department concurred in the design and location of a proposed repository for the spent shale.

Ritter said that the state's Natural Resources Department has submitted a protest to BLM of the federal agency's plan to lease the entire top of the plateau on Aug. 14. "The Roan Plateau is vital to our citizens as an energy resource, an economic resource, a recreational resource and as an environmental resource. We must get this right," the governor maintained.

Contact Nick Snow at nicks@pennwell.com

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