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Candidates on energy

Gargi Chakrabarty, Rocky Mountain News

Published October 14, 2006 at midnight

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Colorado's gubernatorial candidates - Republican Bob Beauprez and Democrat Bill Ritter - both say, if elected, their administrations would be mindful of the impact of oil and gas drilling on Colorado's land, wildlife, air and water quality, as the state rides the energy boom.

But their approaches appear very different. For example, Beauprez would not change the severance tax rate while Ritter would consider increasing it. Oil and gas companies pay severance tax on their production.

On the issue of split-estate - in which a property's surface rights and mineral rights are owned by different parties - Ritter would change the process of negotiations while Beauprez believes the system works well.

Through the end of July, Beauprez received $9,500 from 29 individuals who work for oil and gas companies, compared with Ritter's $4,550 from 10 donors.

The candidates spoke to the Rocky Mountain News on a wide range of energy-related issues.

Bill Ritter, Democrat

• Gas price: Keep the state fuel tax, encourage alternatives like ethanol.

So much of (gas price) is just market driven. There's a fuel tax of 22 cents a gallon. Congressman (Beauprez) wants to waive it and put in place a sales tax (which would exclude grocery and gas). I just believe that's the wrong approach. Sales tax does not address the transportation needs in the same rational way that a gas bill tax does. What we can do is focus on how we can move forward in the production of biofuels (such as ethanol and biodiesel). We need to be smart about it, we need to research it. By producing biofuels, this state has real potential to be a player on the national scene.

Bob Beauprez, Republican

• Gas price: Replace the 22.4 cents per gallon state fuel tax with a sales tax on everything except gas and groceries to collect the same revenue.

We are a pretty good place for oil production, but I don't think we have enormous refinery capacity. We have some in Commerce City, but the vast majority of refineries are in Texas and the Gulf. So that explains some of the price differential (with other parts of the nation). I had made a suggestion to replace the gas tax with a sales tax. So we completely eliminate the 22.4 cents a gallon sales tax at the state level with a sales tax on everything but gas and groceries. It would be revenue neutral so it would capture the same amount of dollars that we get from the gas tax. So your cost of gasoline would immediately go down 22.4 cents per gallon. There are other ideas, like charge people a rate for every mile they drive, or charge them for however many tires they have. We need to come up with a better system of capturing the dollars we need to maintain our transportation system.

Bill Ritter, Democrat

• Severance Tax: Consider an increase in the tax rate.

There are a lot of conversations about severance tax, whether we should increase it. I have not foreclosed the possibility of increasing severance tax. We need to have a conversation about why our severance tax is where it is. The other part is to look at the impact of the pace of oil and gas drilling and ask whether or not counties are being fully compensated for the impact they are experiencing. You go to Rio Blanco County, there are some real serious issues around the roads. We should have a conversation about whether or not to increase the severance tax as part of trying to ensure that we are addressing the impact oil and gas exploration and drilling are having around the state.

Bob Beauprez, Republican

• Severance Tax: Will not increase the tax rate.

Severance tax goes up from increased energy production. I don't want to increase severance tax. In just the last decade we have gone from something like $1.2 billion of annual energy production to now nearly $10 billion. I don't have an amount of reference for the increase in severance tax, but it has to be relatively parallel because (severance tax) is a percentage of (total production). So the total dollars are increasing dramatically. Some are saying let's increase the rate at a time when you are increasing production. I am not sure we have to do that. I think what should be done is make sure that dollars that are supposed to be coming back to the impacted areas actually get there.

Bill Ritter, Democrat

• Wildlife mitigation: Employ advanced technology to protect habitats.

We have a combination of agencies that participate in decisions about the outdoors. Those agencies need to have a sense about the impact of their decisions. There is a group of sportsmen that put together a multipoint plan on how to take care of wildlife and extract resources. We can't alter migration patterns by training elk and deer to go to a different place. Our plan is a common-sense approach to land management. It has to do with looking at the Colorado Oil and Gas Conservation Commission and the Division of Wildlife and ensuring that when we extract oil and gas, we are not impacting wildlife migration patterns. There are technologies that allow you to significantly reduce impact on land, like directional drilling. There are places on the Western Slope where the sage grouse is an important part of the habitat. There are some companies that do all they can while they drill to ensure they not only preserve wildlife habitat but also try to enlarge the population.

Bob Beauprez, Republican

• Wildlife mitigation: My opponent and his friends make me sound like we are going to tell the elk that you can no longer graze in northwest Colorado - you're going to have to move to Georgia or someplace. That we are going to teach them new migratory patterns. It's absolutely ludicrous. Here's what we are talking about: Someone comes in and puts down a (drilling) pad site - and that site may be a few acres. We will, on an acre-by-acre basis, find appropriate nearby habitat that we can revegetate. In northwest Colorado, some of the new grasses that the elk and deer historically pastured on have been overtaken by scrub vegetation. We can go in and clean that out, reseed with native grasses and provide nearby adjacent habitat.

Bill Ritter, Democrat

• Oil shale development: Oppose tax or royalty reduction.

I am not in favor of reducing royalties. Congressman Beauprez voted in favor of the Deep Ocean Energy Resource Act. Part of that act allows for the decrease in royalties on federal lands if you extract oil from oil shale, from 12.5 percent all the way down to 1 percent until it was economical. I don't believe that's the right approach. If it is going be economical to extract it, (companies) need to extract it. They need to go forward knowing that we are in a boom cycle and the companies involved in the demonstration projects are part of it. There is a great deal of impact from (oil shale development) and to reduce the royalty and give them that kind of a tax break would decrease our ability to decrease impact.

Bob Beauprez, Republican

• Oil shale development: Voted to reduce royalty payments by oil shale companies if price of oil falls.

What we did was shift the royalty burden. The direction we have given is to use the Alberta experience with tar sands as an available model. What that essentially says is that in order to (provide incentives) and encourage the development of this new technology, if prices are low enough, we provide for a reduction or deferral of the royalty in the short term to later years. We do that with other technologies like renewable energy. Why would we not utilize the same mentality if the end objective is to try to reduce our dependency on foreign oil? If oil prices drop enough, so that we don't have a situation like we did in the 1980s where people just pack up and go away, it provides some opportunity for relief. But oil prices would have to fall dramatically, almost unspeakably, for the royalty to fall to 1 percent.

Bill Ritter, Democrat

• Biofuels: Subsidize production only if proved energy-efficient.

Moving forward on (biofuels) has to be evidence-based. If we can demonstrate the energy efficiency around biofuels, if we can demonstrate that we get the best bang for the buck, then we should (provide incentives for) the production of biofuels. It's good for the environment, good for the agriculture economy, and, in the long term, it could really help with respect to energy independence.

Bob Beauprez, Republican

• Biofuels: Subsidize distribution.

I think the best we can do is to incentivize more distribution, more pumps for biodiesel and ethanol. I am a huge fan, and if we want to have an impact on fuel prices, this is clearly a way we can do it. We are still importing ethanol. Expanding production capabilities - we are building more plants now - is one of the keys. What we need is more distribution pumps. I believe we have 10 pumps in Colorado, not a single one on the Western Slope. One of the main things we can do to enhance ethanol utilization is continue the program the governor has established of subsiding the cost of ethanol pumps, not just double them but triple them and go beyond.

Bill Ritter, Democrat

• Split-estate: Supports changing the current process.

I think the status quo doesn't adequately address the problem. There was an effort in the legislature last year; that effort fell apart, and right now, there is a conversation between the home builders and the oil and gas industry to try to resolve the split-estate issue. I am hopeful that it will be resolved short of a bitter legislative battle.

Bob Beauprez, Republican

• Split-estate: Opposes dramatic changes to current process.

I had personal experience on this. On our farm, we had a couple of oil and gas lease tracts, and some had mineral rights, some did not. In other words, on some we had split estate. The negotiations worked out very nicely for us, never really experienced problems. I think in the vast majority of cases, the current system has worked very, very well. It has served Colorado well for a long, long time. So I would be a little cautious in making any kind of dramatic changes. What I would do is continue the process of getting the stakeholders to the table. They have begun discussions and if what comes out of that is good common sense compromise that would improve our current situation, I am all for encouraging that to happen.