Oil and gas teamwork

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When the Moffat County commissioners signed a contract with Savant Resources last Tuesday, they netted more than $500,000 for the county and other entities-- money that might have previously gone unnoticed as minor income.

As interest in oil and gas exploration began to increase in Northwest Colorado in late 2003, the county commissioners created a team to supervise mineral negotiations with interested companies.

That team helped obtain the recent half-million dollars for the county.

Two members of that team include Jeff Comstock, the county's natural resources director, and Museum of Northwest Colorado director Dan Davidson.

The two have been negotiating the county mineral leases for three years, a collaboration that has led to new and improved benefits for the county, including higher amounts paid for county mineral leases as well as royalties from producing wells, which benefit the Moffat County School District, Colorado Northwestern Community College and the Colorado River Water Conservation District.

Before having the team in place, there was a standard deal that netted the county minor incomes from the county's minerals. The solution was to form a team that would oversee the county leases with oil and gas exploration companies.

The county has come a long way since the time before formation of the mineral lease team, commissioner Darryl Steele said.

"Moffat County owns mineral rights on 55,000 acres," Steele said. "Our mineral rights management was kind of lax at the time, because in the past it was not a big deal. We could see the need for management in that area."

How it works

Comstock and Davidson negotiate the mineral lease and royalty agreements, subject to approval by the commissioners, but the money received by the county cannot be used for county operations.

"That's by statute, and it's a good thing," Steele said. "That way they don't get used to having that money, in case it gets pulled away someday."

Dollars received by the county from mineral rights goes directly into a fund for capital expenditures. A resolution sends that money in four directions, Steele said.

Senior housing receives 15 percent of the income, with courthouse expansions and renovations receiving an additional 15 percent.

Multiple use buildings at the fairgrounds account for 25 percent of the generated income, with the remaining 45 percent going toward new projects in the county.

"That gives the commissioners some money for future projects," Steele said.

Other members of the team also are involved in the process.

Administrative assistant Erin Miller operates the computer program that tracks data, while Nancy Miles with the assessor's office maps the property in the negotiations.

County Treasurer Robert Razzano collects the money that comes into the county.

"We've upped the bar on negotiated leases and royalty rates," Steele said.

He credits Davidson for his ability to research existing leases and historical mineral rights ownership in the county, and Comstock with his understanding of oil and gas exploration in his position overseeing the county's natural resources.

Improvements include mineral leases that are now recorded electronically, with indicators showing what is currently leased and what is vacant.

As leases expire, the program informs county officials, and parties involved are notified in time to renegotiate contracts.

The benefits reach beyond the county's ownership of mineral rights, Steele said.

"The team has also helped private mineral owners by setting the bar higher," he said. "Steps are put into the leases that help private property owners. We insist on surface agreements for access to the sites."

That insures that private property owners are included in the process when determining how the oil companies will access the sites in the lease.

Dan Olsen can be reached at 824-7031, ext. 207, or dolsen@craigdailypress.com.

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