Boom! Boom!

In western Colorado, an energy boom of unprecedented proportions has been layered on top of a thriving amenity economy. Which will come out on top?

  • Rush hour traffic in Glenwood Springs, Colorado, where workers pass through on their way home from resort towns like Aspen to down-valley bedroom communities. ED KOSMICKI

  • Gas wells and their supporting truck traffic have boomed along the scenic Colorado River in Garfield County, Colorado, where more than 2,500 gas well permits were issued last year. ED KOSMICKI

  • In Rifle, Colorado, the average home now goes for $350,000. ED KOSMICKI

  • Barber Mike Wood has held on through Rifle's ups and downs. FRANCISCO THARP

  • The East Fork of Parachute Creek - home to rare plants and animals and one of Colorado's tallest waterfalls - runs through the 70,000-acre Roan Plateau in the heart of oil shale and gas country. Despite strong public opposition to drilling on the top of the scenic plateau, the BLM has released plans to allow 193 well pads there in the next 20 years. COURTESY COLORADO ENVIRONMENTAL COALITION

 

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And sometimes industry just hands out money to the community. Colorado Mountain College recently built a new campus in Rifle with $4.6 million donated by EnCana, Williams and Shell. The new campus offers a course-load of oil and gas support training, among other programs. At the county fairgrounds, underneath "4-H Pig Sale, March 29"and "Free Manure - You Haul," a new electronic sign sports the logos of Williams Oil and EnCana; the two companies split the cost of the $36,000 sign.

Like most barbers, Wood has an insider's perspective on his clients' woes, so he sees the dark side of the boom, too. One Battlement Mesa retiree saw her monthly rent go from $750 to $1,000 overnight, and her fixed income isn't going to change, no matter how big the energy industry gets.

For some residents, especially public employees, the rising real estate and living costs are unbearable. "It would be a frightening time to be renting,"says County Commissioner Tresi Houpt. "I think we've hit a crisis point when those people you want - police officers, teachers, hospital employees - can't live and work in your community unless they owned a house before." Teachers have been in high demand since 2002, when the local school district began growing by about 6 percent per year (previously it was a more manageable 1.5 percent). But despite being the 17th highest paying district in the state, the district has a hard time keeping educators, says Garfield RE-2 Superintendent Gary Pack. "(Teachers) usually realize within a year or so that if they're single, they're not going to be able to buy a home here." In 2007, the district lost 54 teachers, with many citing the cost of living as a reason for leaving.

Both local government and the private sector are struggling to attract and retain employees during a time when they are desperately needed. Construction workers can make significantly more money working in the gas fields than pounding nails, and other industries have a hard time paying wages in line with the cost of living. Many contracting firms have either downsized or shut down altogether for lack of workers.

"It's hard to keep skilled, committed workers these days," says Duke Cox, a general contractor who has done business in western Colorado for 32 years. He's reduced his business from eight employees to zero, thanks to competition from drilling jobs, and now has to rely on subcontractors.

The boom has been a mixed blessing for businesses that traditionally catered to tourists. Gas companies often put up their transient workers in hotels, and occupancy rates in Rifle have been at about 97 percent, says Annick Pruett, executive director of Rifle's Chamber of Commerce.

"If tourists don't have a place to stay, they're going to go down the road and spend their money somewhere else,"says Kris Daler, president of the Rifle Economic Development Corporation.

The boom is also straining the area's social services. The Garfield County Sheriff's Department has had to hire 15 new deputies since 2002 in order to deal with a spiraling crime rate; since 2001, total offenses have shot up from 100 to 600 per year, with sharp increases in assaults, DUIs and drug-related violations. It's a common phenomenon in energy country. Just north of Garfield County, the Rio Blanco County Sheriff's Department saw its calls in the Piceance Basin increase from a mere five in 2003 to 1,675 in 2007.

Homeless shelters are also feeling the pinch. With a rental vacancy rate near 5 percent and hotel rooms going for $800 a week (on the rare occasions a room is available), energy workers may go to extremes to find a bed. One Grand Junction homeless shelter is in high demand even for the employed, says Theresa Black, executive director of the shelter's managing nonprofit. She's seen "guys with a big roll of cash" stay there, and gas workers take about 10 percent of the bed space, she says.

Traffic volume - much of it from big gas trucks - has increased at a rate three times greater than the population growth of the region as a whole, recent studies report. Roads are not only congested they're also deteriorating under all the heavy use. The direct and indirect impacts of the boom have put a huge burden on local government coffers. Officials in Rifle anticipate that they will need about $67 million of infrastructure improvements over the next five years, while Garfield County will need hundreds of millions of dollars in coming decades to cover the impacts to roads and other services.

That's not to say that industry isn't doing its part. Counties collect property taxes on gas companies twice, first on the land they own, and second, and more significantly, on the value of the gas they produce - the ad valorem tax. For Garfield County, that adds up to around $85 million in revenue per year (about 65 percent of total revenues) distributed between the county and its various taxing districts. But that may not be enough to cover the costs to replace and repair stressed roads and infrastructure.

Gabe Preston, an analyst with RPI Consulting, a planning firm that works with rural counties on fiscal impacts of development, says it's partly up to the county to work the system to its advantage. "There's no way to say generally whether counties are losing or winning,"says Preston. "It depends on the fiscal structure that the county has in place. If you look at a county like La Plata (in southwestern Colorado) that has been a focus of energy development for decades, the government has adapted their fiscal structures over time to do a pretty good job to address the impacts."

Rio Blanco County, which sits just north of Garfield County and is expected to bear the brunt of the boom in coming decades, charges gas companies impact fees for each well they drill in order to cover costs to roads and other infrastructure. Garfield County's commissioners, however, rely on the companies to voluntarily pony up for costs; they yielded over $3 million for road repairs last year. Requiring companies to pay impact fees could damage the cooperative approach, says Garfield County Commissioner John Martin, who feels that the industry is already regulated enough.

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