Land Board sells $4.2M worth of Routt oil and gas leases
March 16, 2011
Learn more about the Colorado State Land Board at http://www.colorado.gov/…. For oil and gas information, from the "Sections" pull-down menu, click "Minerals."
Steamboat Springs — A February auction of state mineral leases indicated a surge of oil and gas speculation in western Routt County.
Colorado's State Land Board auctioned multiyear leases of surface or subsurface mineral rights on 19 Routt County tracts, totaling more than 5,200 acres. Most of the tracts are in the Hayden area. Others are close to the Moffat County line. Routt County leases sold in the Feb. 17 auction generated nearly $4.2 million in revenues for the Land Board, which channels revenues to Colorado public schools.
The auction leased mineral rights on nearly 56,000 acres across Colorado, generating total revenues of more than $22 million. Land Board field operations manager Beverly Rave said past auctions have generated as little as $1 million statewide, so the new figures indicate an increase in oil and gas activity in the state.
"This will be the first year that our revenue … looks like it will break $100 million," Rave told the Routt County Board of Commissioners on Tuesday in the Routt County Courthouse.
The Land Board holds mineral lease auctions quarterly, in February, May, August and November. Tracts to be auctioned are determined by nominations. Land Board audit manager Pete Milonas said nominations are made primarily by oil and gas companies.
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"We're seeing a lot more nominations in Routt County," Milonas said.
Three buyers purchased mineral leases in Routt County last month. Texas-based Quicksilver Resources leased mineral rights on nine tracts totaling more than 3,500 acres, for a total price of more than $3.2 million. Hannon Associates of Denver bought leases on seven tracts totaling more than 1,200 acres, for a total of about $667,000. Lastly, oil and gas executive Jack Overstreet, of Englewood, bought leases on two tracts totaling about 400 acres, for about $265,000.
"There's a lot going on," said Chad Phillips, director of the Routt County Planning Department. "Anytime gas prices start going back up, you see more activity."
Phillips said that in addition to areas involved in the February auction, oil and gas activity could be increasing in other parts of Routt County, as well.
"I've had some phone calls from people around Oak Creek, or even out around (Routt) County Road 14 because they've been approached by people who are buying leases," Phillips said. "Typically, we don't get a whole lot of interest in those areas."
As of June, the Land Board owned surface rights on more than 59,000 acres in Routt County, and "mineral estate" rights, including sub-surface ownership, beneath more than 106,000 acres.
Phillips said the county has a special use permitting process for oil and gas exploration or production. The scope of the project determines whether it is handled within the planning department or if it appears before county commissioners.
Phillips said issues including surface water, groundwater, wildlife and impacts to public roads come into play during oil and gas permitting.
"We've got one of the tougher reputations (among Colorado counties) as far as being strict with oil and gas development because we do try to watch out for everything," Phillips said. "Our regs go beyond what the state requires."
Rave and Milonas met with county commissioners Tuesday in an effort to improve communications between the Land Board and Routt County.
Commissioner Doug Monger said the Land Board's February auction could be a sign of things to come for oil and gas activity in Routt County.
"It's going to continue to be a feeding frenzy," he said.
Phillips took a broader perspective.
"I don't think we'll ever see the amount of drilling that you see going down the I-70 corridor," Phillips said. "But it's definitely coming."
— To reach Mike Lawrence, call 970-871-4233 or e-mail mlawrence@SteamboatToday.com