Denver well drilling raises a money issue in Colorado

While Colorado prepares to vote in November on a proposed increase of the mandatory setback of oil and gas rigs from homes and businesses, the city of Denver finds itself in a quandry—of sorts.

Several drilling companies have filed plans to drill south of the Denver International Airport and the eastern side of Aurora. Plans call for horizontal drilling under the city of Denver but the city would not reap any financial benefits as it has in the past.

As the Denver Post reported recently, oil drillers are in a race as suburbs are quickly growing. The drillers not only want to locate their wells before ‘burbs’ spread into the targeted areas, but also before any possible increased mandatory setback goes into effect.

And they are taking advantage of a law that allows them to carry out horizontal drilling under Denver but not pay the city any taxes on the product. It’s the result of a law passed by the Colorado legislature that stated the county hosting the wells’ surface facilities gets all the tax money.

The law was approved overwhelmingly with bipartisan support. With each pad possibly hosting dozens of wells, it could mean nearly $70,000 a year in taxes a year for each well.

Some now say the legislature should revisit the issue and change the law.