The Crested Butte News Serving the Gunnison Valley since 1999
Fracking a concern
The natural gas industry, which pays a severance tax as well as what Gunnison Energy Corporation president Brad Robinson calls “significant property tax on the value of our pipelines and well facilities,” is also a major county taxpayer, and its share may be growing.
Gas is more expensive to buy at market than coal per million BTUs produced. Recently the cost of natural gas has been hovering around the mid-$4 range per million BTUs (British Thermal Units). This month, the local, low-sulfur, relatively low BTU variety of bituminous coal was going for about $0.70 per million BTUs.
That’s why it is cheaper to generate electricity with coal than with gas. But for an economy moving toward taking a cut from the sale of gas, as opposed to coal, the difference in price is promising.
However, the gas companies that operate in the North Fork Valley, namely Gunnison Energy Corporation (an Oxbow company) and SG Interests, have suggested in public meetings that they’re operating at near capacity and that, in the short term, they couldn’t produce much more gas than they are now.
According to Robinson, GEC is producing about 7,000 MMBTU (a million BTUs) per day, adding, “It should ramp up quickly if we get the permit for the water storage pits and our horizontal wells are successful.”
Even at the current rate of production, the amount of tax that could potentially be collected by the county is significant. In an example provided by Robinson, the county will start getting several hundred thousands dollars in tax revenue when production reaches 30,000 MMBTU, and more than a million dollars in revenue at around 50,000 MMBTU of production.
But the shift is in more than just the revenue stream, and increasingly public bodies are seeing the public show interest in the emerging natural gas industry that hadn’t been shown toward coal. It’s a move to something different from a seemingly ever-present coal industry that has existed in a far corner of the county and in the budget.
Natural gas development in the scale seen in the last few years is a relatively new enterprise in Gunnison County, where recent history has been shaped in many ways by extractive industries.
That industrial past has also left scars on the land and on the minds of people moving to the area for its beauty. In places, it has tainted the water and also the public’s image of extractive industries where an aesthetic-based economy has developed. Still, the two coal mines inside the county boundary, Elk Creek and Arch Coal’s West Elk Mine, have been a part of the balance for decades.
High Country Citizens’ Alliance (HCCA) public lands director Matt Reed says, “We’re not opposed to coal mining at currently operating mines. What we’re opposed to is expansion, especially into roadless areas on public land where there are going to be surface impacts.”
But some of the gas industry’s practices, like hydraulic fracturing, have drawn skepticism from regulators and citizens concerned about the potential for environmental fallout in sensitive ecosystems. No matter how much the resource is worth, groups like Hotchkiss-based Citizens for a Healthy Community and the North Fork River Improvement Association say it isn’t worth the risk of doing damage to a vital and irreplaceable water resource.
Crested Butte-based HCCA has also taken an active role in shaping a set of amendments being considered for the Gunnison County Regulations for Oil and Gas Development that would tighten, in many ways, regulations for gas operations.
“What HCCA is asking for in terms of energy development in the North Fork is a balance. On one hand you have industry providing jobs and tax revenues, but on the other hand there’s critical need to protect human health and the environment. There’s the potential of it swinging toward the former at the expense of the human health and environment.”
Reed also points out that the recent billing natural gas has gotten as a means toward a greener energy future might not be accurate at all “when you look at the cradle-to-grave comparison,” he says.
It’s also important to remember that the county is losing one of the coal mines that operate within its boundaries, but the North Fork Valley isn’t losing anything. Instead the coal industry is moving over, in a sense, to make room for the gas industry.
“The proposed county regulations achieve a balance between the resource extraction and environmental and human health concerns,” Reed says. “I feel like the public’s starting to be made aware of this and that it’s not about having one and not the other. It’s about a more common sense approach that allows for both.”
The commissioners will hold a two-hour public hearing on the proposed amendments to the Gunnison County Regulations for Oil and Gas Development at their meeting on June 14.
