Colorado collected $122.9 million in royalties from mineral production on federal land in fiscal 2007, a 16.5 percent drop from a year ago.
It was the first time since fiscal 2002 that Colorado’s share of the royalties declined, according to data released Tuesday by the Interior Department’s Minerals Management Service. In total, 34 states received $1.97 billion in fiscal 2007, which ended Sept. 30, a drop of roughly 11 percent from a year ago.
The agency cited lower natural-gas prices as a reason for the decline. The bulk of the revenue is generated from oil, natural-gas and coal production.
“There was a pretty high level of price back in 2005 and early 2006, and that came down. So it’s just a normal price cycle,” said Steve Colby, a researcher for the state’s Department of Local Affairs. “It’s back up now, but we don’t see that money for a while.”
Colby said 50 percent of Colorado’s share of the revenue goes to the state’s public-schools fund, 25 percent goes to a local-affairs grant program, 15 percent goes back to the local governments where the federal leases exist and 10 percent goes to the state’s water conservation board.
The local-affairs grant program funds projects that help with the restoration of affected lands in the state.
“We are proud of the substantial contributions our industry makes to Colorado, including funding through federal royalty revenue that supports local governments and local schools,” said Meg Collins, president of the Colorado Oil & Gas Association, in a statement Tuesday.
Colorado’s portion was the fourth-largest in the U.S. Wyoming led all states with $925 million, followed by New Mexico, $553 million, and Utah, $135 million.
“It’s kind of new that we are a big player,” Colby said.
In fiscal 2002, Colorado received just $43.7 million.
Despite the growth in federal revenue, some environmentalists say Colorado isn’t collecting enough from the oil and gas industry on a state level.
Colorado’s severance tax — a charge levied by the state when nonrenewable resources such as oil and gas are “severed” from the earth — is about one-third what the petroleum industry pays in neighboring states, according to an October report by Randy Udall, director of the Community Office for Resource Efficiency.
Although Colorado has a 5 percent severance tax, “a dizzying array of exemptions and deductions reduces the effective tax rate to 1.9 percent,” Udall’s report said.
Andy Vuong: 303-954-1209 or avuong@denverpost.com
Freeport to restart Climax moly mine
Freeport-McMoRan Copper & Gold Inc. said it plans to restart the Climax molybdenum mine near Leadville.
The initial $500 million project will involve the resumption of open-pit mining and the construction of new milling facilities, the Phoenix-based firm said Tuesday.
Construction is expected to begin next spring with approximately 150 workers and peak at more than 500. The operation will employ about 350 when production begins.
Bloomberg News Service
