For an Energy Boomtown in Colorado, Heady Days Bring Growth and Anxiety
RIFLE, COLO.—It's a little after 5 a.m. on a workday. Dozens of men are piling out of cars and trucks, shuffling across the parking lot, and boarding buses heading north to the natural gas fields. They are wearing jackets, jeans, and baseball caps and not saying much of anything. Their heads are lowered and heavy. Behind them, the Rocky Mountains are barely visible.
These men are part of an influx, a nomadic tide of workers—day laborers, engineers, subcontractors, machine operators, maintenance men—streaming into this small town in western Colorado and the surrounding region amid the wild glow of a new energy boom. Many of them have found lodging together, snatching up hotel rooms, cheap apartments, or long-term rentals, or crowding with other families into single-family homes. Others, usually single and Hispanic, are living in company-built "man camps"—huddles of trailers tucked away in the vast expanse of northwestern Colorado's Piceance Basin.
Powered by a new wave of natural gas drilling, Rifle, a once sleepy town of about 10,000 people, is being transformed. More than 2,500 new homes are planned or under construction. Unemployment is virtually nonexistent. The air is filled with a dusty excitement, but also a familiar dose of anxiety.
Black Sunday. After all, Rifle has been here before. It isn't just some modern-day boomtown riding the country's latest push for domestic energy. Rather, it's a boom-bust-boomtown, or a boom-bust-boom-bust-boomtown, depending on how far back one goes. Most recently, in the late 1970s, Rifle was at the center of a highflying oil shale boom in which energy companies poured hundreds of millions of dollars into the region, racing to find ways to liberate oil from underground shale. But when gasoline prices fell sharply in the early 1980s, so, too, did investment in "nontraditional" oil.
Exxon, the largest company in the area at the time, closed up shop on "Black Sunday," May 2, 1982. In a single day, 2,200 workers lost their jobs. Local bars thrived for about a week. Then, a 20-year recession set in.
Today, another boom is taking hold, this time involving natural gas. It's being spurred by rising energy prices and more sophisticated technology that enables companies to drill horizontally as well as vertically. New permits for wells jumped nearly 70 percent from 2005 to 2007 and are projected to rise an additional 20 percent this year. Along the interstate at night, tall, white drilling rigs glow brightly, lighting up nearby mountains. By day, the roads are full of pickup trucks shuttling around heavy equipment and tankers from industry giants like Halliburton. On top of all this action, there is a renewed push by some companies to revive the long-dormant oil shale sector.
During its previous energy booms, Rifle stubbornly maintained the quaint hallmarks of a small town founded in 1882—a main street, corner saloon, store names displayed in western block-style fonts—at the expense of modern conveniences. "If I wanted to buy a shower curtain, I had to drive 63 miles to Grand Junction or 26 miles to Glenwood Springs," says Police Chief Daryl Meisner, who has lived in Rifle for 56 years. But a wave of slick-looking retail franchises recently opened up, among them a Wal-Mart, a Starbucks, and a Taco Bell-Long John Silver's. Just down the street from the Rusty Cannon Motel, a new Hampton Inn is being built, and four more hotels are sprouting up.
The city's mayor, Keith Lambert, estimates that the local population could swell as high as 30,000 by 2025. The city has spent nearly $40 million on new infrastructure proj-ects; another $35 million to $40 million of projects are planned. Housing vacancy rates in Rifle are less than 1 percent, Lambert says.
But the growth is creating complications and arousing feelings of ambivalence among longtime residents. Crime rates, though still low, are up. The town's 22-person police force responds to about 1,400 calls per month—double the number of just a few years ago. Reports of domestic violence and alcoholism are more common. Several new schools are being built to alleviate overcrowding. In many classrooms, the majority of students are Spanish speakers, the sons and daughters of migrant workers coming from states like Texas and Oklahoma. And even amid a national housing crisis, house values are appreciating at a rate of about 25 percent. Simple townhomes now cost close to $300,000.
The net result, many say, is a loss of a sense of community. But there is also a deep anxiety about the area's ability to endure another seemingly inevitable bust cycle. When Exxon and other oil companies pulled out 26 years ago, Rifle was devastated. Home values dropped by more than half. Bankruptcy rates doubled. Hundreds of workers left town with their families, and those who stayed lost much of their savings, got by on part-time jobs, and pawned possessions.
Environmental and public health concerns linger as well, although drilling has become cleaner and more sophisticated. In September, against the objections of conservation groups and many state leaders, the Interior Department moved to open up the Roan Plateau, a scenic area just north of Rifle that is home to falcons, mountain lions, elk, and deer, to natural gas drilling, issuing leases for about 55,000 acres. That same month, researchers at the University of Colorado released a report warning of an "acute problem with toxic emissions" from natural gas drilling, citing air quality tests performed at 14 sites in the region around Rifle. In particular, they noted high levels of benzene, an organic compound released by drilling that has been associated with leukemia. County officials are now calling for further testing.
To many residents, this is literally a backyard issue. Though much of the drilling is taking place 20 to 30 miles away in the wilderness, a significant number of wells have been drilled within earshot of town, or even closer. Several years ago, Bob Hooker, like many locals, sold the mineral rights for his land to a natural gas company, thinking he was making a good business deal. Now, however, he can see a drilling rig when he looks out his windows and can sometimes smell methane-tinged air drifting down over his property. "We don't like it," says Hooker, 70, who has lived in Rifle for 20 years. "We'd rather them return the land."
New campus. A spate of recent projects, however, suggests that oil companies don't plan to leave anytime soon. Up in the shrub land, about 2 miles from downtown, two of the region's biggest energy players, EnCana and Williams, have given $3 million and $1 million, respectively, to help open a new campus of Colorado Mountain College, with which they've developed a program to train operators of natural gas plants. "They want people who are qualified and knowledgeable about the oil and gas industries, who have work ethics, and who come in clean and sober," says Pam Arsenault, until recently CEO of the new campus, noting that some companies struggle with workers who fail drug tests. The college could also help provide training for potential oil shale operations.
In fact, although natural gas has lately gotten the most attention, "oil shale is the 800-pound gorilla" in the distance, Mayor Lambert says. This summer, as congressional Republicans pushed to expand offshore oil drilling, similar calls were being made to open up Colorado's oil shale deposits. The prospect of an oil shale revival rests on the painstaking progress of several corporate players. Three companies—Shell, Chevron, and American Shale Oil—are working to do what so many other companies failed to do in the 1970s: develop technology to allow them to profitably tap into the equivalent of up to 800 billion barrels of oil trapped underground in the region.
Compared to natural gas drilling, oil shale development is more controversial. It is a much dirtier fossil fuel, and traditional extraction methods guzzle water. At the moment, the companies with federal approval to do oil shale research in the region say they're likely several years away from commercial production. But if the research pans out, the effect would likely be to magnify Rifle's already torrid growth—a boom-boom, rather than boom-bust.
- Click here to read more about the push to exploit more oil shale.
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