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Election ad for Gorman raised concerns, questions

GLENWOOD SPRINGS, Colo. ” When a company called Alpine Intercontinental Petrochemical Alliance LLC decided to endorse John Gorman for Garfield County assessor, it created questions not just for his opponent but for him as well.

“I have to confess massive amounts of ignorance about that company,” Gorman said when first asked about the endorsement after defeating incumbent Shannon Hurst in the Nov. 7 election.

He had campaigned on a platform of making sure the oil and gas industry pays its fair share of taxes. The company called for the same thing in backing Gorman in an ad in the Post Independent two days before the election.



Hurst, contacted by the newspaper after the election for her thoughts about the ad, wondered about its assertion that the company is an “industry insider” ” an assertion accompanied by a picture of a gas drilling rig.

“We show nothing in our records for that company,” she said.



She added that Secretary of State records indicate an interesting link between the company and Gorman. Those records reveal the company’s principals to be the Kaufman family of Glenwood Springs. William Kaufman, a Republican, donated $100 to Democrat Gorman’s campaign. His son, Don, is a former chairman of the county Democratic Party.

The ad said the company wasn’t affiliated with Gorman’s campaign, but Hurst considers that claim to be deceptive. Gorman said he knew of the Kaufmans’ plans to run the ad beforehand, but it wasn’t associated with his campaign and he had feared it might not help him.

“I thought it might lose me the election … because here I am saying I’m going to hold these people (the energy industry) to account and then one of them is saying ‘Yeah, vote for Gorman.’ What kind of deal is that?” he said.

He said he also thought the enterprise behind the ad “sounds like some kind of made-up oil company.” But he said he knew the Kaufmans and so he assumed it probably was legitimate.

Indeed it is, said Don Kaufman, who like his dad is a Glenwood Springs attorney.

He said the company, AIPA for short, has an ownership in 182 wells. The Kaufman family owns land south of Silt, where it is a partner in wells, and AIPA may be the eighth-largest natural gas producer in Garfield County, Kaufman said.

“We’re intimately involved in the industry. We have been for many, many years,” he said.

He called Hurst’s lack of records for AIPA “one of the problems; that’s one of the reasons that we supported Gorman.”

“It boggles my mind that we’re not part of Shannon Hurst’s understanding of this industry,” he said.

AIPA has never drilled a well of its own, but it has been a joint operator in wells, investing in them and receiving a commensurate share of revenues, Kaufman said. That’s different from a mineral owner who is paid royalties based on well production.

Kaufman believes joint operators fall into a gray area that deserves attention. Kaufman said AIPA has never received a tax assessment related to the production value of one of its wells.

“Everyone should pay exactly what they’re supposed to pay ” not more, not less ” but there hasn’t even been an assessment. … We would like to play by the rules, we think that’s important, that’s why we ran the ad,” he said.

Told of Kaufman’s concerns, Hurst said it sounds as if AIPA has what the Assessor’s Office refers to as a “working interest” in wells. She said her office doesn’t send notices of valuation to those with working interests, but instead deals only with the well operator ” the company that oversees the drilling of a well. That company is held responsible for paying taxes on all of a well’s production, and then charges other well partners based on their level of ownership. To handle things otherwise would be unwieldy, Hurst said.

“Every well, they could have 80 to 100 working interest owners,” she said.

Kaufman said Bill Barrett Corp., an oil and gas operator that has been active south of Silt, has handled all the reporting requirements for some wells drilled on behalf of joint operators including AIPA. But he questions that arrangement.

“If Barrett doesn’t properly report, do the (joint operators) just walk on their responsibility to pay the taxes? It’s crazy,” he said.

Gorman’s campaign centered on the question of whether energy companies are properly reporting production for tax purposes. He wants a comprehensive audit of reporting by those companies.

Kaufman said the situation is made worse by the fact that information provided by companies to the assessor’s office is confidential.

Hurst’s handling of joint operators is consistent with what Patrick Boyle, executive director of the Colorado Assessors’ Association, said is provided for by state law. A bill that passed this year reaffirmed the general concept, applying it not just to oil and gas production but to personal property such as drilling equipment. The bill, carried by state Rep. Al White, a Winter Park Republican whose House district includes western Garfield County, was passed to resolve questions raised in a long-running lawsuit between an energy company and an eastern Colorado county over how to handle taxation in the case of joint operators.

White said the bill was intended to streamline assessors’ work by clarifying the legality of their practice of sending notices to the well’s operator rather than all of its owners.

But other issues being raised by people such as Gorman and Kaufman have caught the attention of lawmakers such as White. He said he expects to see legislation next year dealing with certifying well measuring equipment to make sure companies provide accurate production reports for taxation purposes, and eliminating the confidentiality clause now applying to information companies provide to assessors. He said he and/or state Rep. Kathleen Curry, D-Gunnison, may carry a bill dealing with the confidentiality issue.

After hearing Kaufman’s explanation of what AIPA does, Hurst said it may be a more legitimate energy company than it sounded like in its ad. But she still believes the Kaufmans, as supporters of Gorman, used underhanded tactics in running an ad that failed to mention their connection to AIPA.

“They’re hiding behind that name, I think, because they’re the only people that own that company,” she said.

But Gorman said that by the sounds of it, the Kaufmans deserve credit for the ad.

“I think maybe they did do the right thing. I think it’s kind of a bold move from somebody from the industry to do something like that because none of the other (energy industry) players in Garfield County did.”

Being a joint operator doesn’t relieve AIPA from any obligation to pay taxes, Gorman said.

“It sounds like they want to do what I’ve been campaigning for, and that is pay their fair share. Upon thinking about it I think they ought to be applauded.”

Contact Dennis Webb: 384-9119

dwebb@postindependent.com

Post Independent, Glenwood Springs Colorado CO


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