Nine voices, nine views

The Rocky

Wednesday, December 12, 2007

Photo by Matt McClain

Amanda Vinson feeds her daughter, Raeven, while taking a break from a meeting in Mesa organized by the Western Colorado Congress for concerned citizens who live around natural gas drilling sites in Mesa County.

The question is simple: Is Colorado best positioned to take advantage of what may be the greatest energy boom in its history? The evidence, presented in four days of special reports by the Rocky Mountain News, says no. Even so, most involved predict that consensus for reforming state policies to meet the gas rush's unparalleled challenges and opportunities will not come easy. Gov. Bill Ritter and eight other leaders share their distinctive viewpoints.

The overall tax rate on oil and natural gas producers in Colorado is 5.7 percent of production value. Taking into account the various taxes charged, that compares to 11.2 percent in Wyoming and 9.4 percent in New Mexico, according to research by the Colorado Legislative Council. Is the current tax rate on oil and gas production fair and correct?

Gov. Bill Ritter: What I think is that we have tax policies in place that have helped this industry thrive. But the question becomes can we allow that industry to continue thriving and at the same time change that tax policy so there's greater revenue flowing to the state.

Because we're in Colorado, we're situated differently than New Mexico or Wyoming. We have to take that issue to the voters. We know in California there was an effort to increase their severance taxes, and industry came out in a big way against it - they spent $60 million defeating it - and it lost.

I would like to get to a place where we have some consensus on how to go forward. We've had, I think, very productive talks with industry about this.

The one thing we know about the people of this state is they're fiscally conservative. And that fiscal conservatism is appropriate. It shows up at the ballot box, so I won't put severance taxes on the ballot just for the sake of doing this and cost us the opportunity to put something else on that is a greater priority to the state at the time.

I think there's every chance we'll look at this and get the industry to agree there's some level of severance tax increases they might be able to agree with, and we'll form that consensus. And then the question will be when should that go to the voters.

Meg Collins: We are committed to paying our fair share when it comes to taxes. Colorado's current tax policy is uniform and equitable and includes state severance tax, state income tax, state sales tax, local property tax, and local sales and use tax. Many states we're often compared to don't have all of these taxes.

Also, unlike many other energy-producing states, Colorado's tax structure is locally focused. We believe that's a good thing, as it allows local governments the ability to collect taxes at the local level, where the dollars directly benefit the communities in which we operate.

Tresi Houpt: No. I believe that we should tax comparatively with other states. An increased rate would allow us as a state, along with local government, to address impacts and enhance services and programs.

Elise Jones: Colorado is selling off its natural resources at bargain-basement prices, resulting in the loss of more than a billion dollars in revenue in the past five years that could have been used to offset the negative impacts of the energy boom.

We have found enormous disparities between Colorado's severance tax policies and those of its neighbors, particularly Wyoming. The state's nominal severance tax rate is 5 percent, but the effective rate falls to just 2 percent after deductions and exemptions, according to the nonpartisan Legislative Council staff.

For example, in 2005 Colorado collected $132 million in severance taxes on the $6.5 billion of oil and gas produced in 2004. An identical amount of production would have generated $382 million in Wyoming and $479 million in New Mexico.

Jack Rigg: BP operates in Colorado, Wyoming, New Mexico and many other states, and complies with appropriate tax laws everywhere we operate. Based on our familiarity with these state tax laws, it is an oversimplification to contend that there is some "average" or "overall" tax rate on oil and gas production in Colorado or anywhere else.

BP does not own the oil and gas we produce - it is typically owned by a state or federal government, a family that homesteaded on the land or purchased the minerals, or some other entity. Those owners contract with us to produce the resources and those private owners often have a liability for any taxes that are due. So they need to be involved in any discussions about increasing their taxes.

Like any business, those taxes are ultimately reflected in the price everyone pays for gasoline, natural gas or other products. Any increase in the state's taxes on oil and gas will have to be submitted to and approved by voters, so whether this is a "fair" or "correct" system is a debate in which policymakers and Colorado citizens will have to engage as part of an election campaign.

Duke Cox: Colorado needs to look to the example set in other states that have already reviewed and decided what constitutes fair taxation of the mineral extraction industry. Those states, such as Wyoming, Oklahoma, New Mexico, Kansas and Texas, have looked at the costs of accommodating the oil and gas industry and realize that their future depends on enough tax collection to pay for the damages and costs incurred by the current oil and gas boom and to set aside dollars to replace this nonrenewable income for the future.

Colorado leaders need to learn from the other states that our citizens do not have to subsidize the oil and gas industry.

Colorado laws and regulations allow inconsistent reporting of income and deductions. The confusion caused by incompatible laws, regulations and language in state leases creates a potential for, and encourages, miscalculation of taxes and royalty income. Streamlining with consistent laws, regulations and language should prove valuable to the state as well as the oil and gas industry.

Kellie Hotter: As part of the working group formed by the severance tax interim committee, we recommended that there be further study of this issue. There needs to be thorough evaluation of the impacts of any decision to change the current tax rate on oil and gas production, including potential TABOR (Taxpayer's Bill of Rights) implications and the effects on exploration, development and production.

Josh Penry: Until the Ritter administration proves it is committed to regulating this industry as a fair broker and in good faith, a change in severance tax runs the risk of significantly deterring investment.

One other point is also relevant here: Most of the groups promoting a severance tax increase are seeking to drive up spending on projects or programs that disproportionately benefit communities that have no connection to or association with energy development.

To these groups I say: When the cities of Denver and Boulder are willing to give those of us on the Western Slope a cut of their local sales or property taxes, then maybe rural folks will be willing to think about a tax increase on West Slope energy resources for the benefit of people who live in Denver and Boulder.

Chris Romer:There are several changes in the tax code structure we need to make, including increasing the tax yield from our existing tax. Those changes should increase our overall tax load to approximately 7.5 percent (a 2 percent increase), which would still be below surrounding states.

We may not need to raise the tax, but instead we need to phase out some existing tax loopholes unique to Colorado. The biggest impediment to this process is we do not have an overall energy management and business plan for the 21st century that industry and stakeholders can agree on.

Transparency on where the new money would be invested (not spent) is critical and my vote would be for more jobs and a better educated work force.

Currently, oil and gas producers can take a credit against their severance taxes, based on 87.5 percent of their local property tax payments. It's a credit unique to Colorado. The result is that producers in 25 out of 30 counties usually don't pay any severance tax at all. Should this practice continue? Why or why not?

Ritter: You do away with that credit and it could impact the revenue flowing to counties because of producers pulling out because they don't get the offset anymore. And so that's why it's so important to involve the industry in this conversation and why we're really trying to have this task force ultimately look at this question (and) return recommendations to us. (Editor's note:The task force concluded its work in October, after Ritter was interviewed.)

Collins: Colorado's tax structure is locally focused. The confusion often occurs in the collection process. For example, many people don't know that there are more than 200 tax districts in Weld County. So, while Weld County operators may pay a lower severance tax, these operators are paying higher property taxes to the local communities and districts. That money stays in those communities where we operate.

Colorado's policy is a good balance between local and state taxes and represents the fairest tax policy when compared to other Western states.

Houpt: Although I haven't studied this issue thoroughly, the suggestion that has been made to assess these taxes separately, without any types of credit, would make sense to me.

Jones: The rules governing severance tax were put into place decades ago, during a time when oil and gas prices were much lower. With the current boom and its associated higher prices and record industry profits, it only makes sense to update Colorado's severance tax policy to remove exemptions and loopholes - like the property tax credit - that prevent Colorado from getting a fair return for its mineral resources.

Rigg: It is our understanding that Colorado's overall tax system is designed to strengthen local governments and minimize the role of state government, and this property tax credit leaves tax policy in the hands of local governments consistent with that philosophy. In Colorado, the property tax credit allows local governments to decide what is important and what deserves to be funded without having to lobby the governor and legislature for money.

Cox: The fact that there are any instances where the wealthiest industry in the world is not paying any taxes must be corrected immediately. Colorado needs to ensure that we collect comparable taxes to the other states that have already determined the appropriate tax base needed to offset costs the industry brings to local and state government (as well as) meet future financial needs. Our state's mineral wealth will never return. Once it has been extracted, it is gone forever.

Hotter: Local property taxes represent the primary source of revenue used to mitigate the impacts gas development and production have on counties, special districts and schools, and as locally elected leaders, we want to ensure that our ability to meet the impacts of gas development and production are not compromised.

Penry: The property tax credit was a trade-off built into the original severance tax law long ago. The goal was straightforward: to allow local governments to collect more and allow the state to take and keep proportionally less. As far as changing this piece of the tax structure . . . raising energy taxes has real economic risks. Regulatory uncertainty combined with higher taxes would create disincentives to energy investment in Colorado.

Romer: It should be phased out over five years. This tax loophole is unique to Colorado and does not allow for Colorado to build a new energy economy the way surrounding states like Wyoming and New Mexico have. Surrounding states are investing their energy revenue in the new knowledge-based economy, while we spend ours on some local energy impacts and most of it on stakeholder wish lists.

Currently, severance tax revenue is divided so that half of the money goes to the Department of Local Affairs and half goes to the Department of Natural Resources. DOLA uses its half of the money to give out grants to local communities to deal with impacts from energy and mining production. Half of the DNR's 50 percent is used for loans and grants for water projects. The other half goes to run four DNR agencies and for special programs created by the state legislature. Do you favor keeping this arrangement? If not, how would you change it?

Ritter: I think the place the attention is being paid to is that other half that goes to the DOLA.

One thing that I understand from both traveling during the campaign and all the traveling I've done since being inaugurated is that there is definitely a significant impact from oil and gas development, particularly on the Western Slope, but even in the northeast part of the state and the southern part of the state - the Trinidad area and Las Animas County.

In all of those parts, we should be paying attention to impact already. We doubled the amount of money that flows (directly) to communities (without the DOLA grant-making process). We went from 15 percent to 30 percent (in the last legislative session) because I really believe that we were not accounting for this impact enough.

I think the other thing this severance tax group is looking at (is) once we collect severance taxes what we do with them? In the DOLA grant-making process is the need for greater transparency and greater guidelines on how those grants will be made.

It is important for us as a state to look at this big pocket of money and ensure that we're disbursing it fairly, that we're accounting for impact and that we're transparent about how we're giving it out.

Collins: We are committed to working with the legislature and the governor's office to maintain a uniform and equitable tax structure that preserves the locally focused nature of the current system. It's important to our industry that these funds are directed to the local communities where we operate.

Houpt: I am not opposed to 50 percent being directed to the state for the DNR budget. I am pleased that the local government allocation was increased in the last legislative session (from 15 percent to 30 percent, based on the number of energy employees residing in a given locale), but agree with the new equation for determining how the funds are distributed to local governments as proposed by the severance tax interim committee (which would also take into account the number of wells and amount of production).

My hope is that this new equation for distribution will direct a practical level of funding to all impacted counties and municipalities that are faced with growing demands on services and infrastructure as a result of the increase of energy development in and around their jurisdictions.

Jones: Regardless of what happens to the existing disbursement system, we believe the oil and gas industry should pay a higher - and fairer - severance tax for the mineral resources it extracts in Colorado.

This impact fee increase should be directed to three important tasks: addressing the local impacts in communities affected by oil and gas development, mitigating the effects of this development on wildlife and wildlife habitat, and creating a clean energy fund that could help affected communities and Coloradans across the state participate in the benefits of a more sustainable energy future.

Rigg: It's important to remember that this division of severance tax money does not apply to the local property taxes oil and gas producers pay. Those local property taxes help finance public education and other local government activities.

On the state level, BP believes that severance taxes should be prioritized for (1) effective oversight of oil and gas development and operations in the state, including protection of public health, safety and the environment, and (2) assistance to communities directly impacted by oil and gas development.

Cox: Western Colorado Congress believes that the first priority for severance tax allocation must be to address the impacts of the energy boom on communities and the environment. To do any less would mean that those communities are being forced to subsidize energy development in Colorado.

But severance tax is meant to do much more than to meet energy impacts. Colorado should be receiving a net gain from the extraction of these resources that will help provide for the state once this resource is depleted. Ultimately, we will find that our low severance tax rate will not provide enough revenue to offset the impacts of the industry and still be able to invest in Colorado's future.

Hotter: We support the current distribution of severance taxes between DOLA and DNR.

Penry: The method for spending severance tax dollars (those collected from the tax on private minerals) and federal mineral lease revenues (the royalties paid to Colorado from the production of minerals on federal land) are in significant need of a rewrite. The central failing of both is that neither have a true permanent trust fund. That means that when the drilling of these nonrenewable energy resources stops, so too will the flow of these nonrenewable dollars. Other energy-producing states long ago created a permanent fund. Colorado should, too.

Romer: NO!! The revenues have tripled since 2000 and will double again in the next five years and yet no one can explain what need is not currently being met. We need to invest in new job creation to stay competitive and to preserve our standard of living. We need to make Colorado the best place in the world to do research on cancer and renewable energy. We need to stop spending these rapidly growing energy dollars on parochial projects and invest in our future.

DOLA gives out grants from the severance tax and federal mineral lease money with no legislative oversight. Some of the money goes to projects and areas of the state that are not impacted by energy development. Should this practice continue? If not, how should it change?

Ritter: I think this is a game of relativity. (In other words,) relative to other needs, was this the greatest use of that money? . . . Our administration's vision on this is that the best use of that money should be made as it relates to communities impacted by oil and gas development and extraction.

Collins: Our employees live and work in the communities where we operate, so it is important to us that the tax structure is locally focused and that the DOLA grants are directed to local communities. The state auditor has oversight of all grants issued through the DOLA grant program. If further review reveals that the grant process is broken and these funds aren't going to the impacted areas, we want to join the discussion.

Houpt: Since energy development is a state economy, I am fine with other local jurisdictions benefiting from the energy impact grant program; however, not to the detriment of those impacted counties and communities, or as a priority above an impacted area.

Additionally, I would like to see the grant program expanded to include proposals for projects that may not have a capital project component . . . for example, funds for a local government designee for a county unable to afford this representation otherwise.

Jones: The process should be reviewed to ensure that the formulas and grant selection process adequately address the energy boom's impacts on the communities most directly affected by it.

Similarly, monies need to be directed to addressing the impacts to wildlife and wildlife habitat from intensive oil and gas drilling. Additional revenue, once the needs of local communities are met, should help move Colorado forward into a 21st century energy economy, where we are poised to become a global leader.

Rigg: This is a question for state policymakers and citizens to address.

Cox: Many of the communities on the Western Slope are struggling with this industry. The large influx of workers has led to social problems. Schools are overcrowded and roads and infrastructure are being severely impacted.

County governments are grappling with housing shortages that have led some companies to build "man camps" outside of municipalities that bring their own set of social, infrastructure and safety issues. Existing land use and economies such as ranching, tourism, outdoor recreation and hunting are often in direct conflict with industry practices - leading to declines in these economies that have sustained the Western Slope for the last century.

By statute, a portion of Colorado's severance tax is to be "made available to local governments to offset the impact created by nonrenewable resource development." We believe the requirement to "offset the impact" indicates that impacts to local governments will be fully addressed by severance taxes. Is it fair that a resource boom could actually end up being a net loss to directly affected local governments?

Hotter: As part of the working group review, DOLA has presented a comprehensive plan for revising the grants program to make it more responsive to the needs of communities impacted by energy development.

That said, we believe that some discretionary funds should remain available for distribution to communities not directly impacted by energy development when there is a clearly demonstrated statewide need (such as the recent initiative to develop interagency/interoperable communication systems) or an emergency (such as the Holly tornado).

Penry: A recent audit by Colorado's nonpartisan state auditor raised significant questions about this grant program, a program that spends tens of millions each year. Significant additional accountability measures are needed to ensure these dollars are spent properly.

This also raises another obstacle for those who want to raise the severance tax: namely, the state of Colorado has a long way to go before it can efficiently and effectively spend the unprecedented energy windfall it is already collecting.

Romer: They need to give larger grants to energy-impacted communities and to get the industry to match these grants for local infrastructure.

Other energy-producing states, including our neighbors New Mexico and Wyoming, have built multibillion-dollar permanent funds from their oil and gas revenues. Should Colorado be setting aside some or all of its state and federal oil and gas revenues in a permanent fund? Should that fund be given constitutional protection?

Ritter: I would hate to see us take all of this money and say, "OK, we're going to park it here in this trust fund and no longer fund the four agencies at DNR and no longer fund the water projects and no longer fund impact." We cannot do that. We have relied upon this industry to support these different things and that should continue.

So then I think the question becomes whether, because of the increased revenues we're experiencing, because of the increased extraction we're experiencing, whether there's something we might do with that money that's coming off the top.

There are some conversations about a permanent trust like the other states. But there are also conversations about the other needs we have in this state. Take for instance capital construction for higher education and schools. There are people thinking about whether or not we should look at that money coming off the top, the new money, the added money, and bond against that for capital construction for either K-12 schools or higher education. I think you'll see those ideas being discussed.

Collins: It's important to note that Colorado does in fact have a permanent fund: the Public School Permanent Fund. The fund is managed by the State Treasurer's Office and funded through activity on school trust land. If the legislature desires to take any additional state and federal oil and gas revenues and redirect them to the Public School Permanent Fund, our industry would like to be a part of that discussion.

(Editor's note: The Public School Permanent Fund is based on lands ceded to Colorado at statehood by the federal government, with the stipulation that revenues derived from those lands from any source would be dedicated to public schools.)

Houpt: Yes, I believe that a portion of the state revenue should be set aside to build a permanent fund . . . (and) the funds set aside should be designated for specific purposes, not to fund the state budget when there is a shortfall.

Jones: We know that our natural gas resources are finite. Yet the impacts of the energy boom, from surface damage caused by wells and roads to population shifts and demographic changes, will be with us for a long, long time. So it only makes sense to conserve revenues generated by drilling to address these long-term, cumulative impacts and irreversible changes coming to communities in the bull's-eye of the energy boom. Creating a permanent fund is a good way to pay for these impacts.

Rigg: BP operates in several states that earmark certain tax revenues for "permanent" funds. In some cases (Wyoming and Alaska), the states do not have significant other sources of tax revenue, so these moneys are set aside in "boom" times to address any long-term revenue issues that may arise during an industry downturn. Colorado has a more diverse tax system, so whether Colorado should also create and fund a "permanent fund" - or create any other constitutionally protected, earmarked fund - is an issue for Colorado policymakers and citizens to decide.

Cox: Once impacts of the energy boom on communities and the environment have been met, it is the obligation of the state legislature to invest the remaining money in Colorado's future. One option is to set up a permanent fund that could be used for projects that meet criteria set out by the legislature. History has proven that a permanent fund would be more likely to be used for its stated purpose if given constitutional protection.

Hotter: In theory, we agree with the concept of setting aside revenue to develop a permanent fund. The challenge will be in determining the appropriate revenue stream from which to divert these funds, since most current sources of revenue are dedicated to addressing the impacts the state is already experiencing. If a permanent fund can be created, it certainly should be given constitutional protection.

Penry: Yes, Colorado needs a permanent trust fund. The windfall of energy revenue the state is collecting could create a permanent fund of at least hundreds of millions dollars - and more likely billions - over the life of this energy surge. That permanent fund, in turn, could fund state priorities quite literally forever. Policymakers should be smart enough to plan for the day the drilling stops.

Romer: Yes, but first we need an immediate investment in new high-paying jobs and in our math and science programs. Our economy is based now on knowledge and skill, not water and real estate. We are in grave danger of having our standard of living reduced because we failed to differentiate between spending and investment.

A permanent trust fund dedicated to education is a good idea. I would also target math and science programs like the Denver or Douglas County schools of science and technology. We could use another 10 science and technology high schools so we do not need to hire foreign-born engineers to keep our companies from moving out of state.

The oil and gas industry gets this, as they also are running low on qualified workers and engineers. So why keep fighting with them and invest together in our future in a business plan that works for both the state and industry.

olorado faces major decisions and debate on such urgent issues as health care, education and transportation. Where does reforming the state's energy extraction policies rank?

Ritter: We spent a lot of time in this last session looking at the Colorado Oil and Gas Conservation Commission. We actually reformed it. We thought a commission of seven people, five of whom came from industry, was needing reform, needing to have a group of different voices on that. With all due respect to the people who were serving on it, it didn't represent air and water quality. It didn't represent wildlife, and even local communities weren't sufficiently represented. So we reformed it.

That was a priority in this last session. For me, it continues to be a priority. Because if you think about the Western Slope, the resource management plans by the BLM (federal Bureau of Land Management) look to the present 5,000 wells growing to another 50,000 wells by 2020. That's a significant increase, a tenfold increase in extraction.

We want to be very careful about how we grow. This is a $23 billion industry in Colorado. So it's really important to our economy and we want to ensure it continues to thrive, (but) that it's not about thriving at the expense of air and water quality and wildlife migration or wildlife viewing or you know all of the recreational activity that surrounds wildlife. We can't build this industry on the backs of all those things.

Collins: As illustrated in a 2005 Colorado Energy Research Institute study commissioned by our state's legislature, our industry has a $22.9 billion impact on the state's economy. We are proud to be an important part of our state's economic make-up. However, it is up to our elected officials to determine the importance of this issue. We are committed to working with the legislature and the governor's office on this issue.

Houpt: At the top. If Colorado increases our severance tax level to be competitive with neighboring states, we will have additional revenue to begin to address our health care, education and transportation needs.

Jones: As a number of new economic studies show, Colorado's future prosperity depends on clean air, clean water and healthy, scenic landscapes that offer the kind of Western way of life we all love. The energy boom threatens to degrade or permanently diminish the things that make Colorado so attractive to entrepreneurs, retirees, new businesses and visitors: pristine air, pure water, stunning scenery and abundant wildlife. So reforming the oil and gas industry to balance the need for energy with the need to protect our future prosperity should be a very high priority.

Rigg: "Reforming" Colorado's "energy extraction policies" obviously ranks high with Governor Ritter and state legislators: They enacted several new laws in 2007 that substantially change the regulatory climate within which this industry operates. They now face significant challenges in implementing those new laws. BP will continue to work with the administration and the legislature in that process.

Cox: While it may seem intuitive that the subjects of health care, education, transportation and others are more closely associated with our daily lives, and therefore are more urgent, that is something of an illusion. The oil and gas policy decisions we are making today will affect the quality of our air, water and the beauty of our state for the next 100 years.

Colorado history has shown that every resource boom in our state was not only a time of economic prosperity but also a period of poorly regulated environmental impacts. Just as every boom is followed by a bust, so every boom has also burdened future generations with cleanup costs. If we are to avoid repeating this history, state government must play an active role to ensure that our state is left a better place as a result of this resource boom.

Hotter: This is high on my list of priorities. We need to make sure we have the most efficient assessment and distribution of these monies as the energy boom continues. As we in La Plata County know, you've got to make the most of these monies before they are gone. As a state, we have to make sure this is a priority.

Penry: In so many ways, the debate surrounding our energy resources is a top tier issue for Colorado. The industry generates over $20 billion to Colorado every year and supplies more than 70,000 jobs. And from that private investment comes a significant return to the state of Colorado - namely, hundreds of millions of dollars in new money for our schools, our roads, our water resource systems and other important state priorities every year.

And, of course, there are real challenges as well: managing impacts to local communities and wildlife and water. Finding the right balance between these opportunities, challenges and values should rank near the top of any list of issues facing Colorado.

Romer: We need a new engine for creating high-paying jobs and to keep our new knowledge-based jobs from leaving the state. Without high-paying jobs and a strong economy, we cannot afford more transportation or health care spending. Using the growth in energy revenues to invest in the new energy economy is the most urgent issue facing the state.

Should certain areas of the state, such as the Roan Plateau, be off-limits to oil and gas exploration and drilling? If so, which places and why? If not, why not? Please explain.

Ritter: I think the Vermillion (Basin) is a great way to talk about that . . . the BLM environmental impact statement says the Vermillion has only 2 percent of the (gas resources) in Moffat County. We're looking at a place that's largely uninhabited and really unscarred by human activity, and for 2 percent of the resources . . . I said I didn't want to drill in the Vermillion.

It caused some consternation among the folks in Moffat County. We continue to have conversations to try and work through our differences on that, but I think it's a good example of a cost-benefit analysis over the life of the resource management plan . . . It's a fragile environment and I think we want to leave it that way because the benefit that comes from drilling it is so little.

We gave our input on the roadless plan. The roadless plan looked at all the roadless areas in Colorado, and I think in our plan we preserved 98 percent of the roadless areas. So we wanted to stay roadless.

The western part of the Roan Plateau is private lands. It has drilling on it. So we're talking about the eastern two-thirds of the plateau. Again, there was a plan in place that was put together by a lot of people working very hard. I just thought my administration after coming in ought to be able to take a different look at it.

The Roan, there is a greater resource there. So it may change the cost-benefit analysis some. I think it was fair for me as governor to request 120 days for my administration to look at that.

Collins: Colorado is a special place - we live here, we are proud to be a part of it and we take our responsibility to preserve it seriously. We are confident that our industry can coexist on the Roan Plateau because this type of coexistence occurs every day.

We've taken great strides and made substantial investments in new technologies that allow us to minimize our impacts on the environment and surrounding landscape . . . Companies are continually investing to lessen impacts on the environment.

Houpt: Because we are drilling in the Rocky Mountain region, we have to be mindful of the special areas that warrant protection. We are fortunate to have areas in our state that are unique visually, contain wild or wilderness characteristics, endangered species and/or provide important long-term economic opportunities that may not be compatible with a traditional approach to drilling.

I am confident that in time the industry will be able to achieve extraction of resources in these designated areas with minimal or no disturbance. I believe the top and the cliffs of the Roan Plateau are important to preserve and that ultimately the industry will find a way to develop the resource without disturbing the plateau.

Jones: Are there places too special to drill? Absolutely. Coloradans wouldn't tolerate drilling in Rocky Mountain National Park, or on Vail Mountain, in downtown Denver, or above Cheesman Reservoir. Similarly, there are other important and beloved natural landscapes - like the Roan Plateau, Vermillion Basin and our roadless national forests - whose other values, like recreation, wildlife and drinking water, should be preserved for our economic prosperity and so future generations can enjoy them as we do today.

Rigg: BP does not have any activities or interests in the Roan Plateau area, so we're not engaged in that debate. However, it is important to remember that America's demand for energy is growing. According to the U.S. government, we Americans will consume 28 percent more oil and 19 percent more natural gas in 2030 than we did in 2005. Today, we consume 24 percent of daily world oil production but only have about 3 percent of proved world oil reserves.

It is up to governments to decide where and under what conditions oil and gas exploration and development will occur, and up to American citizens and policymakers to decide whether domestic production should be encouraged.

Cox: Certainly, there are a few areas that should not be drilled in Colorado. National parks, wilderness areas, proposed wilderness areas and public water supply watersheds are areas that contain values that far exceed any monetary value of the resources that could be extracted from them.

The Roan Plateau is a proposed wilderness area that has wildlife and scenic values that make it worthy of protection as one of our national treasures. The federal government's efforts to allow the Roan Plateau to be drilled are not in the nation's interests or in the interest of the surrounding communities.

Another area worthy of protection is the northwest side of the Grand Mesa that provides clean drinking water to the city of Grand Junction and town of Palisade. On Feb. 9, 2006, the federal government ignored the protests of local elected officials and leased 13,000 acres for oil and gas development within Palisade's and Grand Junction's designated watersheds - a primary source for clean drinking water for the largest urban area on the Western Slope of Colorado.

Hotter: This (the Roan) is not really my jurisdiction. I don't think I would want outside commissioners telling me what to do.

Penry: Yes, certain areas of the state should be off-limits to drilling, and they are. Earlier this year . . . myself and others crafted a management program for roadless areas in Colorado that prohibits new drilling on more than 4 million acres of Colorado's national forests.

But that's far from the end of the list of places that are off-limits. There are more than 3 million acres of wilderness in Colorado where drilling is prohibited, as are millions of additional acres in national parks, national monuments, national conservation areas, state and federal wildlife areas, and countless other congressional and administrative designations where drilling is not allowed.

Energy production shouldn't happen in these places, but it should happen on the Roan Plateau. The Roan Plateau is home to 4 percent of America's entire proven natural gas reserve - nearly 9 trillion cubic feet of gas in all . . . The BLM has adopted a plan that allows drilling on the Roan under the most restrictive management plan in the history of the American West. Only 1 percent of this relatively small but resource-rich area can be impacted at any one time, and more than a third of the entire area is entirely off-limits to any surface disturbance at all. That means not one shovel of dirt will be turned. If this isn't the definition of balanced energy production, then there is no such thing.

Romer: For now we should hold off on drilling the Roan. Technology will allow us to access the Roan someday soon without disturbing the surrounding ecosystems. The advances in horizontal drilling have been amazing.

re any changes needed in the state's regulatory authority concerning oil and gas? Does it have too much authority in any area? Too little?

Ritter: I don't see need for additional regulatory authority. I see the need for enforcement. We think that it's important that people are involved in inspecting oil and gas wells, that they don't have such a high caseload that they can't do their job adequately. And I think you'll see a budget or recommendation to add individual inspectors to the work force.

We're also looking at air quality . . . I recently signed off on a letter to the Environmental Protection Agency asking them to ensure that they're on board with what we're attempting to do around air quality. Again, that credit goes to the Owens administration and its commissions. That happened before I became governor. They understood the impacts on air quality and looked at how it needed to change.

Now it's about enforcement, and I think that really is the most important thing. The regulatory authority is in place, but if we don't give it the kind of support it needs in terms of (employees), that's our fault. And secondly, we have to be stubborn about doing this . . . stubborn about protecting air and water quality and about protecting wildlife.

Collins: Changes have been made and more are happening right now as reform to Colorado's Oil and Gas Conservation Commission is evolving. We're a part of the group addressing this issue. It is important not only for our industry, but for our state, our state's economy and our country's growing need for clean-burning energy.

Houpt: I believe it is the desire of the Oil and Gas Conservation Commission to work closely with federal agencies and local governments to achieve the very best for all stakeholders . . . I am hopeful that the issue of who has the authority to regulate at what level will not be the issue of dispute.

Jones: Governor Ritter provided great leadership in working with conservationists, sportsmen, property owners, local community leaders and industry representatives to pass several key bills this year to improve the state's regulatory authority to provide greater balance and oversight of the record-breaking oil and gas development occurring in Colorado.

This legislation has resulted in a more diverse and balanced Oil and Gas Conservation Commission and triggered a rulemaking process that will hopefully result in the adoption of best management practices by the industry to minimize impacts on wildlife and public health. These are positive and important steps.

Rigg: Colorado's regulatory regime is evolving as a result of several new laws enacted in 2007 and just now beginning to be implemented by state agencies. BP supports a strong, effective regulatory agency and structure that allows and encourages responsible development while protecting public health, safety, environmental and other community values.

We also have our own internal requirements that often go beyond what federal or state laws and regulations require, and we constantly work to improve our operations and "raise the bar" of our own expectations.

The state's legal requirements are also constantly evolving, becoming more demanding to reflect new technologies and practices and changes in government and public priorities. BP will continue to work . . . to assure that our operations meet or exceed all regulatory requirements while providing the energy demanded by our customers.

Cox: Until last year, the main mission of the Colorado Oil and Gas Conservation Commission was to "promote oil and gas development." Legislation passed last session changed the mission of the COGCC to include more focus on "responsible and balanced development," and added specific language regarding protection of public health and wildlife.

The rulemaking the COGCC will be involved in during 2008 to address protection of public health and wildlife is long overdue. We are hopeful that new rules will ensure that future oil and gas drilling and production is done responsibly and with more consideration for the impacts the industry can have on public health, air and water quality, and wildlife.

Hotter: I am pleased with the people on the Colorado Oil and Gas Conservation Commission representing this part of the state. We feel secure that they will be looking out for our best interests. In the past, the (La Plata) county has had success entering into agreements with the industry on drilling projects and safeguards.

Penry: The General Assembly gave the governor an unprecedented opportunity to do what so many of us believe is possible: foster a robust energy sector in Colorado in a way that balances our air, water, wildlife and way of life. Whether or not the governor uses this unprecedented opportunity to that end remains to be seen. If he does, it will be a signature accomplishment and a legacy. If he doesn't, instead opting to use the new law as a bulwark to unreasonably obstruct this critical sector of our economy, it will be a source of great contention for his administration for the rest of his term.

Romer: It's too early to tell. We need to watch the new commission for a year and see if they can write a business plan.

The participants

Gov. Bill Ritter, Democrat

Meg Collins, president, Colorado Oil & Gas Association

Tresi Houpt, Democrat, Garfield County commissioner

Elise Jones, executive director, Colorado Environmental Coalition

Jack Rigg Jr., regional manager for government and public affairs, BP America

Kellie Hotter, Republican, La Plata County commissioner

Duke Cox, homebuilder, board member Western Colorado Congress

State Sen. Josh Penry, R-Fruita

State Sen. Chris Romer, D-Denver

Ritter was interviewed in person. All others responded via e-mail. Answers were edited for length and clarity.

• June 12, 2008

  5:58 a.m.

  Suggest removal

  bill_v writes:

  While I respect Commissioner Houpt’s defense of protecting certain drill spots, it is my belief that she should not be in any position that "affects a 23-billion dollar" industry.

  Given her behavior as a Garfield County Commissioner she has dealt unfair and unjust blows to business owners in the county effectively closing their doors because a real estate agent moved in after the fact and complained about a 25 year old business. The worst part, is she ignored a district court judge, first-hand testimony from five people, and mounts of evidence. Larry McCown, another Garfield County Commissioner, called the evidence presented to the overwhelming. Yet given this overwhelming evidence they refused to listen to it and shut down a 25 year old excavation company in Carbondale, Colorado.

  A grass roots petition website has been created with a petition of over 150 people and growing. Over 50 people have left comments on how outrageous their behavior was along with all of the transcripts and documents in the case.

  If this is an indicator to her behavior, it would not surprise me if after she gets comfortable and "makes a name for herself" she will be susceptible to bending to special interest groups.

  Tresi Houpt does not have the best wishes of Garfield County in mind, nor its economy. She is up for reelection this November in the Garfield County Board of Commissioners and already petition drives are being created as well as full campaigns to make sure she no longer represents Garfield County.

  For more information, visit http://www.stopGARCOinjustice.com to read more of her atrocities in Garfield County, Colorado. Efforts are underway to collect letters from their supporters and email-blast them off to a media database of over 4,000 names that include national, state, and local news papers, radio stations, governors offices, mayors offices, and corruption investigation groups.