5:29am

Thu December 1, 2011
Business Report

Oil and Gas Boom Takes Toll on Colorado's Rural Roads

Weld County and many of its communities are enjoying a windfall thanks to the oil-and-gas boom over the last couple years. KUNC’s Erin O’Toole talks with Jeff Nuttall, publisher of the Northern Colorado Business Report, about some of the impacts from the boom.

O’Toole: So what’s the story on the financial impact that’s being felt in Weld County from all this oil-and-gas activity?

Nuttall: Well, the good news is there’s lots of money flowing into the county and many of its cities and towns as a result of the boom, which kicked into high gear in 2009. We’re talking about the Niobrara oil shale play that’s occurring all around the county and bringing in increased severance tax and federal mineral lease payment revenue.

This fall, the state distributed more than $54 million across the state to local governments and school districts for the fiscal year that ended June 30. Weld County pulled in about $2.6 million of that, with the county’s 31 cities and towns taking in another $3 million or so, including more than $1 million for the city of Greeley. And of course that doesn’t count the increase in property valuations and all the local spending by oil and gas workers on everything from groceries to housing.

O’Toole: Given the general state of the economy, that all sounds like the impact is pretty positive..

Nuttall: It is, but there IS a downside, too. All the heavy oil-and-gas equipment being moved around on Weld County’s highways and roads is taking a toll, especially on already-fragile rural roads that once saw maybe 10 to 12 vehicles a day and now sometimes accommodate hundreds.

The boom is crushing some of these roads, and that’s requiring the county to use a portion of the income its collected in severance and federal mineral lease money to repair those roads.

O’Toole: So there is a downside. What’s being done to minimize that effect?

Nuttall: Weld County officials are being proactive in trying to keep up with the repairs. They’ve formed the Niobrara Working Group, which is comprised of local municipalities and oil and gas companies. And it meets monthly to identify problems and figure out ways to address them.

O’Toole: Do you have an example of how that’s happening?

Nuttall: Sure; Weld County Commissioner Sean Conway told us that Houston-based Noble Energy contributed $250,000 to help pave the Grover bypass in northeast Weld County to move drilling traffic out of that little town, which is kind of near the epicenter of the Niobrara play.

The companies are also partnering with the county in providing in-kind materials for dust control and road repair materials to help lower the financial strain on the county.

O’Toole: That seems to make sense, given the fact that they’re making so much money right now on these wells.

Nuttall: Agreed. Weld County has the most active wells of any county in the state with something like 17,000. Companies like Anadarko, another Houston-based driller, recently announced that they see “tremendous potential” for the Northern Colorado region in terms of oil and gas extraction over the next several years, projecting reserves of 500 million to 1.5 billion barrels of oil in a 100-square mile area north of Denver.

So even more drilling activity is expected in Weld County next year, as Anadarko, Noble and other companies step up their production.

O’Toole: But all that comes with even more impacts on the county’s roads?

Nuttall: Unfortunately, yes, but as Commissioner Conway told us, “Like anything, you get challenges with these opportunities. ” It would be nice if the oil and gas money were pure profit for counties, cities and towns, but there are expenses that must be met to keep all the revenue coming in.