WELD COUNTY — The talcum-tinged aroma of a bygone era wafts through Gene Smallwood’s barbershop, where a vintage adjustable chair adds to the retro ambiance but also seats a new clientele — the oil and gas men brought by the energy boom.
“You can’t believe the money they make,” says Smallwood, who since 1960 has been part-owner of the oldest business in the town of Eaton.
The money that has flowed with the tapping of the Niobrara Formation revved the economic engine for an entire region, but small communities sprinkled across the map have been presented with uniquely transformative opportunities and challenges.
The arrival of the energy industry sparked expansion and annexation, filled local restaurants and provided new customers for other businesses. But it also brought an annoying onslaught of noise and traffic and uncertain environmental consequences.
For schools, it has showered benefits from bikes to buses but also lured district workers — sometimes even teachers — away to more lucrative oil field jobs.
New tax revenue and corporate cooperation have helped towns expand their infrastructure. But while the growth has given rise to rooftops in some corners, it also has underscored a housing crunch in others.
“The little town of Kersey has suddenly come to life,” says town administrator Brett Bloom, adding that while the pace of change has been overwhelming, there’s a sense that the community just east of Greeley must seize the day. “Right now, you got to jump on the bandwagon and grow with it. If you don’t, you’re going to be the loser, I’ll guarantee you.”
But the broader view across Weld County has been complicated by the more immediate volatility of crude oil prices, which fell off severely in December. And while town officials don’t sound panicked, some are preparing for a lull in activity that could impact their bottom line.
“It doesn’t appear yet that they’ve slowed down, but I know they will,” says Gary Carsten, town manager of Eaton. “As they make rigs dormant until the price comes back, it’ll ripple through. I expect it to happen this year, but I don’t expect activity to diminish enough to where it hurts us. We’ve already budgeted pretty conservatively.”
Anadarko Petroleum Corp., with about 6,000 active wells in the county, has said it anticipates a gradual, rather than sharp, recovery of crude oil prices before the company returns to “playing the type of offense we did the last five years.”
PDC Energy, the third-largest operator in Weld County with about 2,800 wells, says its operations remain viable even at current crude oil prices — and forecasts growth in production in 2015.
“Where a lot of companies are facing laying down drilling rigs, we plan on maintaining the same number of rigs, our five-rig count,” says Celesta Miracle, PDC’s vice president of government relations and outreach. “We reduced our activity in Ohio to continue to invest in our Weld County programs. So our overall spending is down, but we’re maintaining our activity level in Weld County.”
In Platteville, a few miles down U.S. 85 from Eaton, town manager Troy Renken says he’s still looking at the boom as a long-term proposition that could span 20 years. But even as his town expands, he takes a cautious approach to local finances.
“We’re letting our unrestricted fund build up, but we’re also fixing our community,” Renken says. “We definitely want to take the opportunity while it’s here.”
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Although significant growth has been forecast for northern Colorado since before the oil and gas boom, energy has accelerated the pace and given some towns the chance to redefine themselves, says Eric Berglund, president and CEO of Upstate Colorado Economic Development, a public-private nonprofit in Weld County.
“A lot of towns are well-positioned to handle that growth,” he says, “and it has created an opportunity for towns that might have resources from a tax base to decide: Who do we want to be as we grow?”
In Fort Lupton, city administrator Claud Hanes figures the boom has brought about 2,500 jobs, most of them at an oil field services facility run by Halliburton, which last week announced nationwide job cuts with yet undetermined impact on Colorado. Although there are minimal new retail outlets, a 94-bed hotel may break ground this year, and sales tax revenues were running 26 percent above projections.
Annexations, water and sewer line replacements and expansion at the south campus of Greeley-based Aims Community College, which has tailored a program to skills needed by the oil and gas industry, all contribute to what Hanes describes as “excitement in the community.”
But again, the traffic: According to Hanes, Colorado 52, a main east-west corridor through town, carries about 17,000 vehicles a day, and the new normal of U.S. 85 is nearly twice that many — about double the rate of six years ago.
Hanes figures the dip in oil prices is just a low point among the peaks and valleys of the energy industry. But despite his long-term optimism, he’s bracing for a “worst-case scenario.”
To be on the safe side, the town will budget for a 30 percent to 40 percent decline in assessed valuation of oil and gas properties, along with a 30 percent drop in sales tax revenue that could translate to almost a $1 million hit.
“If low prices continue,” Hanes says, “then there’ll be some jobs lost, obviously, and the loss of sales tax revenue could be more detrimental to us than property tax loss. We’ve put aside quite a bit of money, because we knew the day would come at some point.”
In Platteville, where Anadarko’s 115,000-square-foot structure anchors a fledgling “energy park,” the town for the first time amassed a $1 million balance in unrestricted funds. The money enabled it to address capital improvements such as road repair and complete existing projects that had gone unfinished in the economic downturn.
The strategy of building the city’s unrestricted reserves could help weather the recent price volatility of crude oil.
“If the boom goes away this year, we’re setting up our revenue sources where we don’t have to cut employees and services,” town manager Renken says. “We may not complete some projects in a worst-case scenario, but our budget is fairly stable. We’d just hold off on larger infrastructure projects. Oil and gas is great as far as revenue is concerned, but we know it won’t last forever.”
Meanwhile, Platteville traffic also has become a concern.
Before the boom, Travis Conklin could commute from his ranch just east of town to his job at the air traffic control center in Longmont in about 20 minutes.
Then came the trucks and the traffic he says clogged the roads in town and made his drive an hour-long proposition — and twice caused him to blow tires while swerving off the road to avoid semis bearing down on him.
So Conklin, who counts himself among industry proponents who subscribe to a drill-here-drill-now philosophy, moved away in frustration — not only with the roads, but also with what he considers broader public safety issues such as the proximity of operations to schools.
He calls the energy industry’s presence “a double-edged sword, a slick slope” that on one hand offers economic benefits, while on the other diminishes some of the small-town charm.
“What hurts the people, it’s the eyesores, the traffic, the extra possibility of getting run over by a semi not paying attention,” he says. “I don’t want more regulation. But responsibility? Yeah. How many people are just dealing with it because they don’t know what to do? It’s a sad scenario. You can’t put a price tag on it.”
Kersey finds itself almost literally at the intersection of the energy boom and development. Weld County Road 49, which heads north from Interstate 76, is being transformed into a four-lane, oil and gas corridor that runs into U.S. 34 on Kersey’s western edge, spurring big plans for new business there — on top of the new hotel and retail outlets closer to the heart of town.
Recent activity has been a huge boost for a stagnant tax base. For the first time in years, Kersey didn’t have to raise water and sewer rates on its residents, and the budget shows a replenished general fund.
Still, the changes don’t always meet with local approval.
“We got a lot of people in this town — not just the older people, but people who moved here for the peace and quiet, the small-town atmosphere — they don’t want to see it changed,” says administrator Bloom, who also serves as public works director. “What they don’t realize is that if we don’t let this retail, commercial stuff happen, our water and sewer is going to get so expensive they can’t afford to live here.”
Bloom notes that even amid lower oil prices, drilling activity in the area continues — PDC is a major operator just outside of town — and he’s still getting calls from people checking to make sure Kersey is moving forward with annexation.
“I don’t think any of them are worried about it,” he says. “The people interested in annexing are still there, wanting to do it.”
Times like these raise questions that blur the line between prosperity and quality of life: Amid rapid economic shifts, can a town lose the character that defined it?
“There’s always that concern,” says Eaton’s Carsten, a lifelong resident of the 5,000-population community north of Greeley. “I don’t think we’re growing that fast, but certainly you can talk to 20 people, and 10 will say we’re not the Eaton of 10 or 20 years ago.”
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The women tending to volunteer duties on a frigid morning at the Pioneer Museum, a surprisingly expansive collection of historical artifacts nestled in the heart of Platte ville, are themselves reflections of the town’s past, having lived in the community for as long as 75 years.
“It’s a lot noisier than it used to be,” says Ruth Rhoades, a resident since 1944.
“It’s a little more impersonal, isn’t it?” adds Dorothy Brotemarkle, who arrived here as a young child in 1939.
Still, on balance, they see the changes since the oil and gas boom as “a plus,” although Rhoades notes that the other day, her husband counted 11 vehicles that whizzed past their home before he could cross the street to retrieve the newspaper from its delivery box.
Volunteer Lucy Montoya, a relative newcomer who dates her residency from 1973, fears that the environmental concerns about practices like fracking and injection wells one day will weigh on the negative side of the ledger.
“Maybe in 20 years,” she says, “it won’t seem so ‘plus-y.’ What I really wish I knew was whether it will be detrimental in the long run. From my standpoint, I feel that eventually we’ll come to pay.”
Town officials throughout the area generally praise the industry’s wide-ranging efforts to sow goodwill by earmarking money or resources for any number of civic endeavors — efforts regarded with particular gratitude after recession-era cuts.
Companies describe their involvement as simply the right thing to do for communities where their employees live and work, with programs that pre-date the current crescendo of political controversy over oil and gas operations.
Amy Venturi, director of social investment for Anadarko, says that through quarterly meetings and active lines of communication with county commissioners, she keeps tabs on community needs and tailors programs that try to fill them.
“It’s a planning process, it’s very strategic, in that we know we want to make an impact in these areas and we want to do that in the right way, and do it according to our values,” she says. “We do have a budget, but it really depends on needs in the community, the greatest needs at that time.”
PDC Energy relies largely on its 250 Colorado employees — split between the company’s Denver and Evans offices — to be its “eyes and ears” in helping to determine areas of need.
It has been a longtime supporter of the Boys & Girls Clubs of Weld County and a variety of more localized efforts ranging from Quilts of Valor, which presents quilts to injured service members, to the one-day summer festivals presented by many small communities. An annual volunteer day for employees last year yielded about 700 hours of service in Colorado.
“What we understand now is that being out in the community puts a face to the industry,” says PDC’s Miracle. “Yes, it’s about supporting the community, but also someone can walk up and say, ‘I’ve had this question…’ “
Anadarko often seeks out nonprofit organizations, many in the Denver area, whose programs might translate well to other communities. Then it sponsors programs like a Denver Zoo effort that brought animals to the Fort Lupton library; a Special Olympics program in Mead; a Wish for Wheels bike giveaway in the Weld County RE-1 School District.
“This program is something that we believe in, we’re passionate about — it’s been part of Anadarko and the bedrock of our values and culture since long before there was political pressure, or pressure from communities,” says company spokeswoman Robin Olsen.
Part of companies’ outreach is designed to address operational concerns in the communities impacted by the industry.
For example, Miracle notes that as PDC was preparing to drill near Kersey, representatives met with homeowners, county commissioners and the mayor to hear their thoughts and suggestions.
“Some of the concerns they provided we took into consideration to make changes,” she says. “We know we’re part of the community and want to be a good neighbor.”
Anadarko also says it has tried to be proactive in communities by soliciting feedback and working to mitigate issues — such as traffic — as they arise.
Olsen points to an 85 percent reduction in truck traffic due to 150 miles of pipelines that now move water around the Wattenberg field. In a partnership with Halliburton, she adds, truck traffic has been further reduced by a hub-and-spoke concept that allows for remote fracking by transporting fluids over surface pipes.
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In Mead, a town of about 3,800, town manager Dan Dean takes a measured approach to the changes wrought by the energy industry. Oil and gas interests want to be good neighbors, he allows, but “their operations are first and foremost.”
“I think the community is split,” Dean says. “They’re either quite pro or quite con. Some are involved in the industry and are very supportive, and some prefer not to have anything to do with it.”
Gary Shields, the mayor, also sees the division. Like other town administrators in the region, he notes the “education” offered by industry representatives who have taken them to fracking sites and explained the processes at work.
“They’ve got great technology, and it makes sense the way they explain it,” Shields says. “There are still some concerns that are valid, there are studies not complete yet into air quality. I think we all have to wait and see what those studies say.
“Frankly, they say that it’s safe, but we may not know for a while.”
Oil and gas production has been a constant presence for decades in the region — but never to this extent, as advances in drilling technology have unlocked previously untouchable resources. Most date the current boom from 2010, when Houston-based EOG Resources hit it big with the “Jake” well near the Wyoming border and started the rush to the Niobrara.
In Eaton, a surge in tax revenues has been channeled into street maintenance and allowed the town to pay cash for a $2 million library addition. Burgeoning oil and gas activity all around the town played a role in persuading area voters to form a recreation district and build a $24 million facility.
Meanwhile, those technological advances — horizontal drilling, in particular — have energy companies snaking pipelines far beneath the town, where both the public and individual property owners reap benefits.
For years, public leases to energy companies yielded perhaps $12,000 a year from old vertical wells. Now, that’s just a good month. Carsten estimates that Eaton’s take for 2014 will approach $150,000.
And on a smaller scale, residents like longtime town barber Smallwood, whose house sits on property smack in the middle of town, suddenly find themselves getting an unexpected bump off of new production.
“Most of the town gets royalties,” he says, noting his own income of around $400 or $500 every couple of months started flowing early last year. That kind of money may not exactly change lives, but other energy-related activity is transforming the town.
Once a hub of sugar beet activity, Eaton sold the dormant old factory site to Omaha Track, which has launched a transload facility for the sand used by oil and gas companies in hydraulic fracturing. That development is expected to attract even more economic activity across 20 to 40 acres to the south of the industrial area.
All this prompted a fresh look at the town’s “comprehensive plan,” a long-range assessment that gets updated every eight to 10 years. When the town did its 2008 update, it projected a population of about 17,000 — more than three times the current population — by 2060 or later. Energy activity could change that calculation.
During the Great Recession, Eaton would consider two or three new housing permits a year. Now it’s looking at somewhere between 30 and 60, though Carsten sees little likelihood of rampant population growth.
“The thing that’s really going to control all this is the availability of water,” he says. “Water rights now are just out of sight. Oil and gas can afford to buy water, where developers can’t necessarily. That’ll be the brake.”
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Logan Lacy taught vocational agriculture and wood shop during his six years at Eaton High School, but when he got an offer to work in the oil fields, he simply did the math.
As a teacher with a master’s degree in a household of two working parents and two young children, he made around $39,000, which he augmented with about $2,700 more as an assistant football coach.
Starting salary at the energy industry job: about $65,000.
By Lacy’s calculations, it would take 18 years of teacher raises — and those increases aren’t a sure bet by any stretch — to make what he could bring in right now as an “EcoNode specialist” with Select Energy Services, helping the company reduce its environmental footprint.
Even with virtually no debt beyond a car payment and a mortgage on the foreclosure home he rehabbed, Lacy found that the decision practically made itself, despite his enduring love of teaching. He gave his notice to the school in April then started at Select in June, working seven days on, seven days off, 12 hours a day.
“I just couldn’t pass it up,” he says. “It came to a point where — I’m not going to lie — I was kind of looking for something else, trying to find more money. But more or less it showed up to my lap.”
The hiring binge brought on by the energy boom has offered new and more lucrative opportunities for many, although the plummeting price of oil could curb employment in the near-term.
At this point, the impact has been felt sharply by schools.
Just outside of Kersey in the Platte Valley School District, Superintendent Glenn McClain Jr. talks about the “constant tension” between the money that lures district employees to the oil fields and a school career they love.
“I would never want to come across as complaining about the oil and gas industry,” says McClain. “They’ve done a lot of good for the local economy. But beneath that, you have to worry about the workforce. We’ve got to redouble our efforts. If we need to look at wages, we’ll do that.”
Jo Barbie, superintendent of the Weld County RE-1 district that encompasses several small towns along the U.S. 85 corridor, also has had trouble keeping bus drivers and custodians from moving to the energy industry — and some teachers, too. But when she sees the tanks and pipes that have sprung out of the ground everywhere, evidence of the more than 5,200 oil and gas wells that dot her district, it marks a new reality that cuts both ways.
It’s easier to live with the downside when the energy companies step up to fill some of the voids left by recession budget cuts. Barbie points out that Noble Energy helped the district secure grant money for five compressed natural gas buses and contributed nearly $1 million to build a four-bay bus maintenance facility.
Another grant, bolstered by $120,000 from Noble, added two more buses at a cost to the district of less than the price of one, she adds. The company helped the district score yet another $600,000 grant to construct a CNG station where it receives a wholesale rate on the gas for its buses.
But even deep-pocketed oil and gas interests can only do so much, for so long, figures Kevin Aten, human resources chief at Greeley-Evans School District 6, the largest of eight school districts in Weld County. “They’re good partners,” he says, “but they cannot fix the (education) funding mess of Colorado.”
The window for the current boom runs from five to 20 years, town administrators say they’ve been told by industry experts. And so far, none seem spooked by the decline in crude oil prices.
Platteville Mayor Bonnie Dunston already experienced one oil and gas bust — in 1980s Wyoming, when operations shut down in a hurry. She and her husband had helped build “man camps,” company housing units for workers during the boom.
“Casper was that way about ’84, things were going gangbusters and then overnight it was gone,” Dunston recalls. “They’re not drilling, they’re not doing anything.”
She and her husband returned to Platteville and hauled grain for feedlots before venturing back into oil field work, helping to build roads and pads for rigs in the area. This time, she predicts, oil prices will level out and return equilibrium to the boom and prosperity to her small town.
“Back then,” she says, “the times were a bit different.”
Kevin Simpson: 303-954-1739, ksimpson@denverpost.com or twitter.com/ksimpsondp
MANAGING THE BOOM — A three-part Denver Post Special Report:
Day 1: Colorado’s housing and oil and gas booms are colliding in Front Range communities
Day 2: Energy and agriculture exist on top of one another, leading to a nuanced relationship
Day 3: Towns have reaped economic benefits but worry about changes to their small town life
