Asks city for a lease on 320 acres foroil and gas exploration

By Greg Masse

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Post Independent Staff

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GLENWOOD SPRINGS – A Denver-based energy company is looking to lease 320 acres of city land in South Canyon for oil and gas exploration. At least one city official thinks it’s a bad idea.

A representative of Contex Energy Co. approached the city’s staff earlier this month to inquire about leasing the land, which is located south of the South Canyon Landfill and west of South Canyon Road, city attorney Karl Hanlon said. The company offered $6,400 for a five-year mineral lease on the property.

The decision on whether to lease the land is solely up to the Glenwood Springs City Council, which will consider the matter tonight at its regular meeting.

In a staff report on the lease, Hanlon advised against granting the lease.

“Given the recent controversial nature of the oil and gas production in Garfield County, along with the small amount of money offered for oil exploration of the city-owned land, I am recommending the city reject the proposal,” he wrote.

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Hanlon said the land was leased to someone interested in exploring its potential for mineral extraction about 30 years ago, but he says times have changed.

“I just feel that land – we use it for a lot of reasons,” he said.

According to the lease, if oil or gas is found on the leased area, the city would get 1/8 of the royalties. Also, if oil and gas were to be found on the land, the lease would automatically become perpetual.

Hanlon said even if some oil and gas were found, he doesn’t feel the return would be worth it.

“It didn’t really seem like an appropriate thing to do with that property,” he said.

The request comes just a week after the U.S. Bureau of Land Management sold two controversial gas leases, totaling 1,560 acres, in the mountainous backcountry of Pitkin County.

Gary Butler, president of Contex Energy Co., said his company isn’t an oil and gas extraction company, but rather a land broker that finds land for his oil and gas company clients.

Although he wasn’t familiar with the South Canyon parcel, after hearing the price per acre, $20, he said that whichever company is interested in the parcel would be leasing it purely on speculation.

“It’s absolutely speculation,” Butler said. “Potentially this could be a structure. You lease it, then you explore it.”

Butler said it’s been his experience that only one out of every 100 or 200 land leases is ever even drilled.

Contact Greg Masse: 945-8515, ext. 511

gmasse@postindependent.com