Oil, gas industry adds $22.9 billion to Colorado economy, study finds

DENVER — The booming Colorado oil and gas industry contributed nearly $23 billion in direct and indirect economic benefits to the state in 2005, a state-funded study found.

The industry generated $22.9 billion for the economy, or 6.1 percent of the total gross state product, according to the report by the Colorado Energy Research Institute released Thursday.

The institute, created by the Legislature in 2004, found the industry paid $870.5 million in business, personal, state and local taxes. The industry generated about 70,000 jobs — direct and indirect — accounting for 2.2 percent of the employment in the state and 3.2 percent of total earnings in 2005.

"Oil and gas activities contribute to the economic well-being of many other industries within the state of Colorado as well," the report said.

The report found that oil and gas development spun off jobs in government, professional services, retail and health and social services.

Colorado is well-positioned for further growth, said Dag Nummedal, director of the energy institute, as energy companies explore and expand production of such unconventional resources as gas from tight sands, older oil and gas fields and oil shale.

Of the state's five major oil and gas basins, southwestern Colorado's San Juan and Paradox basins produced the biggest economic punch — $3.9 billion. Northwestern Colorado's Piceance Basin was next with $3.4 billion.

The study was designed and produced by the energy institute, Colorado School of Mines and consultants Booz Allen Hamilton.

It was intended to explore the industry's economic and fiscal contributions and to develop a model to estimate the benefits annually.

Some conservationists and a state lawmaker said future studies should include the costs of development — including public spending, environmental problems and social disruptions — to calculate the overall impact of the industry.

Pete Morton, an economist with the Denver-based regional office of The Wilderness Society, called this year's report "a good first step" but said a follow-up should identify the cost of public services, new roads and other infrastructure.

He said the next report should also consider loss of investment income when retirees leave an area because of development and any drop in tourism and recreation revenue.