From the Denver Business Journal

Even a local government with a moratorium on oil and gas drilling can support new wells when doing so helps its long-term economic development goals.

Anadarko — Colorado’s largest oil-and-gas producer — and the northern metro-area town of Erie struck a deal in which Anadarko will drill 23 new wells on property it owns in unincorporated Weld County and then annex the 47 acres into Erie to be part of a larger town urban renewal project.

The wells and others drilled in the area are projected to generate tens of millions in tax revenue annually, helping fund infrastructure improvements needed to transform the rural properties.

For Anadarko (NYSE: APC), the Woodlands, Texas-based oil company, the deal is like many it reaches with area towns, said Jennifer Brice, Anadarko’s spokeswoman in Colorado.

“Our teams continuously seek ways to coexist with the communities around us,” Brice said, ”which can consist of condensing our operations and reducing the footprint and/or distance between our operations and developments.”

Similarly, Anadarko is donating 4 acres it owns near the local rural fire department, the Mountain View Fire Protection District, which is likely the site of a future fire station for the area just outside Erie town limits, Brice said.

Erie’s deal with Anadarko includes a pledge that the town government won’t oppose the new wells. Anadarko has promised to annex the wells into the town after they’ve been drilling and gone into production, or pay $5 million to Erie if it doesn’t annex.

Anadarko and Erie also agreed to streamlined reviews of licenses for oil and gas pipelines crossing town property.

State drilling permits for Anadarko’s wells outside Erie are being reviewed now. The company expects work on the drilling site to begin this spring, Brice said.

Oil and gas drilling has been controversial and drawn opposition from residents in and around Erie. The town froze new drilling permits within town limits for the first half of this year.

Anadarko’s land isn’t yet part of Erie, so the moratorium doesn’t apply.

Motivating the property agreement is Erie’s aim to develop a 1,200-acre commercial and residential project off Interstate 25 at the northern fringe of the Denver-metro area. Erie’s residents, much richer on average than the rest of the metro area, often shop and work elsewhere today, and the town wants to change that.

As Erie reached its deal with Anadarko, the town board finalized a $6.35 million purchase of 255 neighboring acres, acquiring control of a cornerstone portion of the 1,200-acre urban renewal area it has deemed Erie Gateway.

The town envisions the rural land will contain 1,820 homes and 1.6 million square feet of retail and commercial property over 25 years.

Erie expects 49 oil and gas wells to be drilled in the urban renewal zone, including the ones covered by the agreement with Anadarko. Those 49 wells are projected to generate $113 million in property tax revenue for local governments in their first 10 years, according to projections Erie provided in November to the local school district’s board.

Studies by Erie identified $96.7 million in infrastructure needs — highway interchanges, roads, water and sewer — to eventually be needed there. The tax revenue from the oil and gas wells could jumpstart that investment.

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