Why isn't anyone concerned about the value of our public lands?
Real-estate values hit by well drilling:
Landowners in the Piceance Basin say as oil and gas wells go in, they lose out. Garfield County is studying the effects.
By Theo Stein
Denver Post Staff Writer
Divide Creek - When Becky Mangnall tried to sell her home in the heart of one of the Piceance Basin's most productive natural-gas fields two years ago, she discovered a problem.
Despite her rural location and panoramic views of aspen-draped slopes, Mangnall was forced to drop her asking price by $100,000 to $400,000 because of an EnCana Corp. gas well on her property.
Even then, banks wouldn't give the buyers a mortgage, she said, because of two tanks collecting the well's toxic petroleum condensates.
"None of them wanted to lend because in the appraisal it mentioned the hazardous materials," she said. So Mangnall was forced to carry the mortgage herself.
"My concern is if times get tough, I may be stuck paying my new mortgage on my teacher's retirement check," she said.
Mangnall's story and others like it show the unexpected toll the energy boom is taking on Western Slope real estate.
Surging demand for housing by well-paid oil-field workers is driving sales of homes in the Piceance and other energy basins.
But when those wells are drilled on private property - which energy companies with minerals rights have the power to do - they can adversely affect the land and its market price, landowners say.
Garfield County has launched a $500,000 study to nail down precisely what is happening to land values. The report by Denver-based BBC Research & Consulting is due by spring.
"We're trying to identify whether there really are barriers for lending institutions," county oil and gas liaison Doug Dennison said. "If we find there is truly a negative impact to people's property values, we will need to come up with some solutions."
A similar study done in La Plata County in 2001 found a 22 percent slump in the selling price of properties with coal-bed methane wells compared with similar lots.
The study also found that the selling price of neighboring properties did not suffer, although that may have been the result of wells being buffered by 160-acre spacing.
In Garfield County, the wells are being drilled 40 acres apart.
The Colorado Oil and Gas Conservation Commission had approved 916 drilling permits in Garfield County through October and says it expects to approve 1,200 by the end of the year - a 33 percent increase from 2004.
About 2,817 wells are already operating in the county, state regulators say. The two largest operators, EnCana and the Williams Cos. Inc., say they intend to develop another 10,000 more in the next decade.
The result, Dennison said, is that hundreds of county residents have called asking the county to lower their property assessment because of nearby rigs or wells.
Dennison said he knows of at least three other cases like Mangnall's, where property owners have had trouble getting bank loans on their property.
One of the problems is that a typical well pad has large metal tanks to collect water, petroleum liquids and other byproducts of gas extraction.
Property appraisers say they are required to identify these tanks and hazardous waste. Some banks have balked at lending because of them.
Ron Morgan, a Silt property appraiser, said he is required to note anything that could affect a property's worth, from a sagging roof to the presence of a drill rig.
It is difficult, however, to quantify the impact gas operations are having because there haven't been enough sales in Garfield County.
"Realistically, I know it's going to have some impact," Morgan said. "But to this point in time, there is insufficient data to support making an adjustment." Dave Preutt, an appraiser in Rifle, said:
"We have to use facts, and there's just not enough factual data out there."
Preutt and Morgan said they both know appraisers who are avoiding work in the gas fields.
Dennison said he thinks any decline in land values would be temporary. Property values should rebound, he said, after the drilling and hydraulic fracturing trucks leave and a well enters its production phase.
Others aren't so certain.
"It's a double-edged sword," said Orlyn Bell, a former state water engineer who sits on Garfield County's energy advisory board. "We're still in the mode of the county tax assessor saying property values are going up across the board. But if you're an individual at ground zero, it's a mixed bag."
Bell said he thinks the concerns about condensate tanks will subside when lenders and appraisers become more comfortable with them.
After all, he says, there's no problem in Weld County, which has more wells and more people.
The problems for property owners, however, don't end there, Bell said. Since drilling ended on his property, Bell said he has endured a host of small problems. One contractor spilled 2,000 gallons of diesel fuel. Another spilled hydraulic fracturing chemicals. A pollution monitor installed near his driveway sniffs the air for 43 chemicals.
The company paid the Bells $2,000 an acre to compensate for 8 acres of surface damage. Although company officials have worked hard to limit various nuisances, Bell said his property will never be the same.
EnCana spokesman Doug Hock declined to comment on how the company computed damage payments for Bell's property.
Some landowners own part or all of their mineral rights. For them, the drilling can bring benefits and drawbacks.
Ray Schoonmaker and his wife moved from Connecticut to a 260-acre parcel near Bell. They were delighted with the herd of 150 elk that wintered on their ranch and happy to learn that the mineral rights they owned also were going to make them money. But drilling all around them, which drove away the elk, and the harsh drought sent them back east after four years. They've tried unsuccessfully to sell their ranch for a year and a half - while keeping the mineral rights, Schoonmaker said.
"If you live long enough, you'll get past it," said Schoonmaker, of Killingworth, Conn. "But for us at our age, it's not what you want."
Some real-estate brokers selling homes in energy fields say it is just an issue of timing. "When the rigs are set up and drilling, it is a tough time to sell a house or property," said Toby Guccini of Rocky Mountain Realtors. "But once they're gone, the disruption is over with for the most part. If I can show people what the result is when they're done, many seem to develop a comfort level about the future."
Real-estate values hit by well drilling:
Landowners in the Piceance Basin say as oil and gas wells go in, they lose out. Garfield County is studying the effects.
By Theo Stein
Denver Post Staff Writer
Divide Creek - When Becky Mangnall tried to sell her home in the heart of one of the Piceance Basin's most productive natural-gas fields two years ago, she discovered a problem.
Despite her rural location and panoramic views of aspen-draped slopes, Mangnall was forced to drop her asking price by $100,000 to $400,000 because of an EnCana Corp. gas well on her property.
Even then, banks wouldn't give the buyers a mortgage, she said, because of two tanks collecting the well's toxic petroleum condensates.
"None of them wanted to lend because in the appraisal it mentioned the hazardous materials," she said. So Mangnall was forced to carry the mortgage herself.
"My concern is if times get tough, I may be stuck paying my new mortgage on my teacher's retirement check," she said.
Mangnall's story and others like it show the unexpected toll the energy boom is taking on Western Slope real estate.
Surging demand for housing by well-paid oil-field workers is driving sales of homes in the Piceance and other energy basins.
But when those wells are drilled on private property - which energy companies with minerals rights have the power to do - they can adversely affect the land and its market price, landowners say.
Garfield County has launched a $500,000 study to nail down precisely what is happening to land values. The report by Denver-based BBC Research & Consulting is due by spring.
"We're trying to identify whether there really are barriers for lending institutions," county oil and gas liaison Doug Dennison said. "If we find there is truly a negative impact to people's property values, we will need to come up with some solutions."
A similar study done in La Plata County in 2001 found a 22 percent slump in the selling price of properties with coal-bed methane wells compared with similar lots.
The study also found that the selling price of neighboring properties did not suffer, although that may have been the result of wells being buffered by 160-acre spacing.
In Garfield County, the wells are being drilled 40 acres apart.
The Colorado Oil and Gas Conservation Commission had approved 916 drilling permits in Garfield County through October and says it expects to approve 1,200 by the end of the year - a 33 percent increase from 2004.
About 2,817 wells are already operating in the county, state regulators say. The two largest operators, EnCana and the Williams Cos. Inc., say they intend to develop another 10,000 more in the next decade.
The result, Dennison said, is that hundreds of county residents have called asking the county to lower their property assessment because of nearby rigs or wells.
Dennison said he knows of at least three other cases like Mangnall's, where property owners have had trouble getting bank loans on their property.
One of the problems is that a typical well pad has large metal tanks to collect water, petroleum liquids and other byproducts of gas extraction.
Property appraisers say they are required to identify these tanks and hazardous waste. Some banks have balked at lending because of them.
Ron Morgan, a Silt property appraiser, said he is required to note anything that could affect a property's worth, from a sagging roof to the presence of a drill rig.
It is difficult, however, to quantify the impact gas operations are having because there haven't been enough sales in Garfield County.
"Realistically, I know it's going to have some impact," Morgan said. "But to this point in time, there is insufficient data to support making an adjustment." Dave Preutt, an appraiser in Rifle, said:
"We have to use facts, and there's just not enough factual data out there."
Preutt and Morgan said they both know appraisers who are avoiding work in the gas fields.
Dennison said he thinks any decline in land values would be temporary. Property values should rebound, he said, after the drilling and hydraulic fracturing trucks leave and a well enters its production phase.
Others aren't so certain.
"It's a double-edged sword," said Orlyn Bell, a former state water engineer who sits on Garfield County's energy advisory board. "We're still in the mode of the county tax assessor saying property values are going up across the board. But if you're an individual at ground zero, it's a mixed bag."
Bell said he thinks the concerns about condensate tanks will subside when lenders and appraisers become more comfortable with them.
After all, he says, there's no problem in Weld County, which has more wells and more people.
The problems for property owners, however, don't end there, Bell said. Since drilling ended on his property, Bell said he has endured a host of small problems. One contractor spilled 2,000 gallons of diesel fuel. Another spilled hydraulic fracturing chemicals. A pollution monitor installed near his driveway sniffs the air for 43 chemicals.
The company paid the Bells $2,000 an acre to compensate for 8 acres of surface damage. Although company officials have worked hard to limit various nuisances, Bell said his property will never be the same.
EnCana spokesman Doug Hock declined to comment on how the company computed damage payments for Bell's property.
Some landowners own part or all of their mineral rights. For them, the drilling can bring benefits and drawbacks.
Ray Schoonmaker and his wife moved from Connecticut to a 260-acre parcel near Bell. They were delighted with the herd of 150 elk that wintered on their ranch and happy to learn that the mineral rights they owned also were going to make them money. But drilling all around them, which drove away the elk, and the harsh drought sent them back east after four years. They've tried unsuccessfully to sell their ranch for a year and a half - while keeping the mineral rights, Schoonmaker said.
"If you live long enough, you'll get past it," said Schoonmaker, of Killingworth, Conn. "But for us at our age, it's not what you want."
Some real-estate brokers selling homes in energy fields say it is just an issue of timing. "When the rigs are set up and drilling, it is a tough time to sell a house or property," said Toby Guccini of Rocky Mountain Realtors. "But once they're gone, the disruption is over with for the most part. If I can show people what the result is when they're done, many seem to develop a comfort level about the future."
