Colorado drilling royalties hit record |

Colorado drilling royalties hit record

Gargi Chakrabarty
Rocky Mountain News
Aspen, CO Colorado

DENVER ” Colorado pocketed royalty payments of $178.4 million from drilling on federal lands in the fiscal year ended Sept. 30.

The record take comes on the heels of soaring energy prices earlier this year and strong production.

Colorado retained its No. 3 rank among the 35 royalty-receiving states, behind Wyoming’s $1.2 billion and New Mexico’s $614.8 million.

The money, which will go to state school districts, local governments and the water conservation board, is 45 percent more than fiscal year 2007, when Colorado received $122.9 million.

Experts warn fiscal year 2009 will be lackluster for government and school budgets as plunging prices of natural gas and oil will lower royalty earnings and the dollar distributions. But for customers, that means lower pump prices and utility bills.

“These funds provide a critical source of revenues that are so important to today’s federal and state budgets as well as to American Indian communities across the country,” said Interior Secretary Dirk Kempthorne.

The Denver-based Minerals Management Service – an arm of the Interior Department – collects a royalty, or fee, from oil, natural gas and mining companies that drill wells or mine on federal lands in individual states.

The fee usually is a percentage of the resource being produced, paid in cash or in kind. The agency later splits the money with the states.

The increase in Colorado’s share of the federal royalty is due to the skyrocketing price of natural gas through summer coupled with steadily growing energy production.

Next year’s royalty take will likely drop, mirroring the slowdown in production, as companies curtail investments with dropping prices.

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