Head of EAB suggests forming land purchase company
The head of Garfield County’s Energy Advisory Board is suggesting formation of a company that would buy properties at pre-drilling prices to help landowners affected by natural gas development.EAB acting chair Harlan Hansen detailed his proposal at a board meeting Tuesday night in Rifle.Hansen floated the concept of creating what he calls the Western Colorado Land Purchase Corp. It would be available to buy land from people who face falling property values because of drilling but receive none of the benefits of gas development because they don’t own the mineral rights under their land.The company would buy the land at a price based on a valuation that would assume no drilling had taken place on the land. It would then lease the land, and hold it until after the gas development was complete and its value was again high enough to recoup the company’s investment.Hansen envisions the company starting up from private and public stock sales.”Hopefully energy companies would purchase very large offerings of stock,” he said.Energy company representatives Tuesday had little initial reaction to Hansen’s idea, but citizens’ representatives were intrigued. Scott Brynildson, who lives in the Mamm Creek area near Rifle, said it could be a way to help those being impacted by drilling, and he’d be willing to invest in such a company.”I don’t have a lot of money but I’d put my money where my mouth is,” he said. “There are some little people out there getting hurt.”Orlyn Bell, who lives south of Silt, said, “I would think that within a half-mile of my property you could drum up $5 million to $6 million worth of business overnight.”Hansen said he’s not sure how exactly to proceed with the concept, or whether the EAB should play any role in pursuing it.”I don’t know where it goes from here. I have no idea,” he said.He said that perhaps the Club 20 Western Slope lobbying group, a service organization such as Kiwanis or a Realtors association could take the idea on as a project.Hansen also proposed another means for compensating surface owners who don’t have mineral rights but are affected by drilling. Noting that natural gas now is worth $6 per thousand cubic feet, he suggested that rather than receiving damage payments, surface owners be offered 6 cents of every $6 of gas sold.That might yield a landowner about $8,600 a year, or $172,000 over the 20-year life of a typical well, Hansen said.”Now you’ve made the landowner a partner, and it’s cost you 1 percent of the price of natural gas,” he said.Terry Dobkins, vice president of production for Antero Resources, said that concept isn’t new. He has seen such percentages negotiated privately between energy companies and landowners, he said.”The concept works very well if you believe your well economics are enough to cover that 1 percent,” Dobkins said.Some companies, he added, fear using the approach as a precedent for other negotiations, because it can be difficult to implement when the projected profitability of a well already is slim, he said.However, Dobkins said Antero has used the royalty approach quite successfully in Texas when it was trying to drill directionally under land where well pads couldn’t be built due to previous development. It offered royalties as a way of gaining surface occupancy from adjacent property owners without mineral rights.”It’s really a negotiation. I think everything should be on the table,” he said.Said Hansen, “I think there’s got to be a way to get landowners and companies in a partnership.”
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