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Text version of visual diagram titled “Oil and Gas Leasing Process on Colorado Trust Land"


 

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  • Step 1: The State Board of Land Commissioners owns 2.8 million acres of surface land and four million acres of mineral estate.
  • Step 2: 3rd party nominates a minerals tract. Staff reviews the nomination. The nomination can be denied, which ends the process. Or the process proceeds to the next step.
  • Step 3: Staff solicits input from subject matter experts – such as Colorado Parks and Wildlife, Denver Water, the State Archaeologist, Colorado Natural Heritage Program – and Local Government designees as designated by the Colorado Oil and Gas Conservation Commission. The nomination can be denied, which ends the process. Or the process proceeds to the next step.
  • Step 4: Nomination is presented publicly to the State Board of Land Commissioners. This is a public comment period. The nomination can be denied, which ends the process. Or the process proceeds to the next step.
  • Step 5: The State Board of Land Commissioners approves the nomination. The tract is auctioned online. The auction can receive no bids, which ends the process. Or bids are received, and the process proceeds to the next step.
  • Step 6: Bid won at auction. The lease is issued with stewardship stipulations. The lessee pays bonus and annual rent even if no production occurs. Eighty-eight percent of leases do not go into production. The rent collected flows to public schools. 
  • Step 7: Lessee proceeds with production permitting process. This process is not under the State Board of Land Commissioners’ purview. Lessee must comply with all local, state, and federal permitting regulations, including the Colorado Oil and Gas Conservation Commission. 
    • Step 7a (production permitting process): Lessee files a development plan and obtains surface use access. This is a public comment period. If there is no viable plan, the process ends. Or the process proceeds to the next step.
    • Step 7b (production permitting process): Lessee obtains COGCC spacing/pooling orders. This is a public comment period. If the COGCC does not issue the orders, the process ends. Or the process proceeds to the next step.
    • Step 7c (production permitting process): Lessee obtains COGCC permits. This is a public comment period. If the COGCC denies the permits, the process ends. Or the process proceeds to the next step.
    • Step 7d (production permitting process): Lessee obtains local/county permits. This is a public comment period. If the lessee is denied, the process ends. Or the process proceeds to the next step.
  • Step 8: Lessee extracts minerals and pays a 20% royalty. The revenue collected flows to public schools. Surface land is reclaimed/restored by lessee. Only 12 percent of leases go into production.