Tension in Western towns over energy boom

By Judith Kohler

updated 4:38 p.m. ET March 4, 2006

RIFLE, Colo. - Ask cattle ranchers Dan and Cheryl Johnson how much money they make an hour and they will tell you it’s a pittance. Ask them to put a value on their life along winding Piceance Creek in western Colorado and they answer simply — priceless.

These days, the Johnsons are worried their operation will end up worthless. Energy companies hunting for natural gas are snapping up land all around them, either through old oil shale claims or through federal auctions. Some now have claims on minerals under the same land the Johnsons lease for grazing their cattle in the pasture-dotted hills northwest of Rifle. Roads are being built and plans are in the works for new wells.

Dan Johnson fears that if the companies drill in the narrow gulches around his property — the conduits for moving cattle from pasture to pasture — he’ll lose precious grazing land and be out of business. He and his wife, both in their late 40s, can feel their dream of passing their business to their two daughters slipping away.

“Cattle prices are way below the rest of the economy,” Johnson said. “Equipment prices keep going higher, the fuel prices keeping going higher.

“And now we have this other burden tacked on top of it,” he said.

Growth conflicts
The energy boom that has dominated much of the Rocky Mountain West for the past several years has been a mixed blessing. It has brought millions to tiny counties happy to have the money, but the rapid development has become a top concern for retirees, those in a fledgling tourism-based economy and professionals whose relocations to once-quiet towns have helped make the West one of the nation’s fastest-growing regions.

“That growth has not been built around growth in the natural resource industry,” said Thomas Power, professor and head of the University of Montana’s economics department. He said Westerners need to weigh what they’re willing to sacrifice for “a very temporary expansion in the economy.”

David Zalubowski / AP This oil well looms over a community's playground in Frederick, Colo.

Mineral development — oil and gas, coal, gold, silver and uranium mining — for decades has provided the West with high-paying jobs and great infusions of wealth. It’s also been followed by busts that states have worked hard to offset by diversifying their economies. Hunters and anglers — worried that drilling, truck traffic and erosion from well sites are already harming antelope, deer and other animals — are teaming up with environmentalists to lobby for habitat protection.

They are among many residents who say natural resources — their beauty and their preservation — now play a huge role in the region’s economic health.

“The gold in them thar hills is coming in the pockets of people retiring here for the quality of life,” said Dave Kearsley, an investment adviser and attorney who moved from Massachusetts to Grand Junction for that very thing.

Mayor’s perspective
Not everyone sees it that way.

Monty Newman, the mayor of Hobbs, N.M., called oil and gas “our major lifeblood.” His town in southeastern New Mexico is a thriving service center for the industry.

Energy development can coexist with protecting the environment and the so-called rural way of life, he said.

“I know it takes a lot of natural resources in order to make this country run and provide incomes so people can retire,” Newman said.

The surging development of the Rockies’ vast natural gas reserves, stoked by high prices and the push for more domestic production, is filling cash registers at motels, stores and restaurants throughout the region. Wyoming and New Mexico have piled up hundreds of millions of dollars in surplus, thanks to taxes from oil and gas development.

Western Colorado’s Garfield County, site of one of the country’s busiest offices for federal oil and gas permits, said a full 17 percent of all revenues — nearly $8.5 million — came from oil and gas production last year.

There’s plenty more where that came from, industry officials say. While production is declining in older fields including the Gulf Coast, they say the Rockies promise many years of reliable gas and companies are investing in the pipelines and processing plants. EnCana Oil and Gas USA is building a gas processing plant in western Colorado that will be able to process 650 million cubic feet of gas daily.

“I don’t see a bust in this decade and probably the next two decades,” said Joe Jaggers, vice president of exploration and production in the Denver office of Oklahoma-based Williams Cos., one of the largest producers in the region.

Williams recently received approval to boost the number of wells it can drill in a 20,000-acre section of western Colorado, including the gas-rich Piceance Basin.

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