What real es­tate slump? Town on roll with oil on rise

The Washington Times Weekly - - Front Page - By Maxim Kni­azkov

PARA­CHUTE, Colo. — They cheer when you cry. They buy when you sell. This is a town out of sync with the rest of the coun­try.

The desert here is so dry it’s dif­fi­cult to main­tain a de­cent lawn. Yet lo­cal real es­tate prices are through the roof while the rest of the na­tion’s hous­ing mar­ket is in a slump.

Is there an­other town in this coun­try where city em­ploy­ees have been re­ceiv­ing 10 per­cent raises ev­ery six months?

Wel­come to Para­chute, where up is down and down is up, where un­bri­dled cap­i­tal­ism has made Karl Marx’s dream of full em- ploy­ment a re­al­ity, and no­body is ask­ing for help from Venezue­lan Pres­i­dent Hugo Chavez.

“The real es­tate slump? It’s not here,” laughs Flo Rinker, a re­tiree

from Mas­sachusetts, who moved to the Rocky Moun­tains’ west­ern slope with her hus­band 14 years ago. “Here, we have money in the bank.”

And she goes on to boast how a mod­est two-bed­room house she bought five years ago for $125,000 now is worth $270,000, at the very least, and prob­a­bly will reach $300,000 some­time next year.

All of this, lo­cals say, be­cause there’s oil in them there hills.

Trap­per and rancher Mike Cal­la­han, who was among the area’s first set­tlers in the 1890s, learned it the hard way, ac­cord­ing to lo­cal lore. Mr. Cal­la­han built a stone cabin with a fire­place. On the first cold night, he made him­self com­fort­able in front of the crack­ling fire.

He could not be­lieve his eyes when first the stone fire­place and then the rest of the cabin caught fire and burned to the ground.

Thus came a dis­cov­ery that would af­fect this re­gion for decades to come, of­fer ing a prom­ise of tremen­dous riches and a ma­jor shake-up in the world en­ergy mar­ket.

“All this beige color you see in the moun­tains around is shale that has a lot of oil inside it,” ex­plains Ju­dith Hay­ward, a mem­ber of the Para­chute Board of Trustees, which is how the lo­cal City Coun­cil is called. “It won’t burn if you throw a match at it. But if you heat it up in the fire long enough, it will.”

Th­ese oil shale de­posits stretch from west­ern Colorado into neigh­bor­ing Utah and Wy­oming, cre­at­ing a mam­moth non-liq­uid oil field that an­a­lysts es­ti­mate con­tains as much as 800 mil­lion bar­rels of re­cov­er­able crude, or three times more than is known to ex­ist in Saudi Ara­bia.

If a cost-ef­fi­cient way is found to ex­tract oil from the rocks, this de­posit alone, economists say, can sat­isfy U.S. en­ergy needs for four decades and en­sure what politi­cians in Wash­ing­ton long­ingly talk about — the coun­try’s en­ergy in­de­pen­dence.

So far, they have not, but out there, in the des­o­late canyons of Rio Blanco County, Shell Oil is qui­etly run­ning an ex­per­i­men­tal plant, test­ing new cut­ting-edge tech­nol­ogy de­signed to ex­tract oil from shale.

The method, com­pany of­fi­cials say, con­sists of us­ing pow­er­ful un­der­ground heaters to con­vert kero­gen, an oil pre­cur­sor con­tained in shale, into pure mar­ketable oil.

Shell said its plant al­ready had been able to ex­tract 1,700 bar­rels of high-qual­ity light oil, plus as­so­ci­ated gas, and the tech­nol­ogy “has shown great prom­ise.” But the project’s com­mer­cial vi­a­bil­ity is highly de­pen­dent on the oil mar­ket.

The last time an oil com­pany, Exxon, tried to do some­thing sim­i­lar in the late 1970s, oil prices were push­ing to­ward $38 a bar­rel. But when in the early 1980s they started plum­met­ing to­ward $14, Exxon pulled up stakes and went, plung­ing the lo­cal econ­omy into a deep re­ces­sion.

Now, oil prices have shot up over the $90-a-bar­rel mark, and folks here hope the price stays high.

“Here it’s like in Hous­ton 100 years ago,” con­ceded L es­lie Robin­son, an ad­ver­tis­ing ex­ec­u­tive from the neigh­bor­ing town of Ri­fle. “We are in busi­ness if the prices stay up.”

Oil shale so far is just a prom­ise, a vi­sion that will re­quire years of ad­di­tional re­search, the suc­cess of which can­not be guar­an­teed.

For now, the re­gion’s real mother lode is nat­u­ral gas, which of­fi­cials say comes from about 3,000 pro­duc­ing wells around the area.

A decade ago, the drilling rigs were not here ei­ther. But ris­ing nat­u­ral gas prices — from $1.55 per thou­sand cu­bic feet in May 1995 to $6.98 last May — plus new dr illing tech­nolo­gies, have changed the equa­tion and made lo­cal gas fields prof­itable.

“Gas has trans­formed our town dra­mat­i­cally,” Mrs. Hay­ward said. “But oil shale could be even big­ger than the gas in­dus­try. Seven years ago we did not even know what a traf­fic jam is, and now look at this.”

The park­ing lot in front of the lo­cal Su­per 8 Mo­tel was crammed with trac­tor-trail­ers.

Once a sleepy bed­room com­mu­nity of 600 re­tirees and low-in­come ser­vice work­ers from posh ski re­sorts like Vail or As­pen, the town now has a pop­u­la­tion of more than 1,300 and grow­ing fast.

Jack Pretti, a lo­cal real es­tate bro­ker, pre­dicts the com­bined pop­u­la­tion of Para­chute and nearby Bat­tle­ment Mesa likely will reach 50,000 in the next 20 to 25 years.

The boom­ing en­ergy sec­tor has af­fected ev­ery facet of lo­cal life, send­ing real es­tate and other prices sky­wards, but also cre­at­ing thou­sands of new jobs and boost­ing tax rev­enue.

In the late 1990s, one could rent a de­cent place to live for about $400 a month. Now it costs that much just to park an RV at a lo­cal trailer site. A mod­est mo­bile home now rents for $1,200.

“And we have a wait­ing list to get here,” smiles Karen Bow­ers, the trailer park man­ager.

An area that just 10 years ago had no home worth more than $350,000 now fea­tures mil­lion­dol­lar man­sions.

“Th­ese be­long to en­ergy com­pany ex­ec­u­tives,” Mr. Pretti ex­plains. “And the fact that they’ve built them is a good sign. It’s an in­di­ca­tion the com­pa­nies are here to stay.”

The num­ber of busi­nesses in Para­chute’s Cham­ber of Com­merce has in­creased ten­fold to roughly 250, Mrs. Hay­ward said, and those that ex­isted in the 1990s have bal­looned in size.

“See this guy?” she says, ges­tur­ing to­ward Toby’s Vac­uum Truck Com­pany. “Seven years ago, he had just two trucks. He now has 80 trucks and at least as many em­ploy­ees. He de­liv­ers wa­ter to drilling sites.”

Un­em­ploy­ment has be­come a no­tion from his­tory books. In fact, while home builders else­where lay off their crews, here there is a dire short­age of qual­i­fied con­struc­tion work­ers.

“I’ve heard of gas com­pa­nies just snatch­ing work­ers off private home con­struc­tion sites,” Mrs. Hay­ward says. “They stop by and of­fer each of them some­thing like $50,000 a year. And the next day, the crew is gone.”

Six years ago, Para­chute had just three em­ploy­ees and a bud­get of $800,000. Now it boasts a 22-mem­ber city work force and a bud­get ap­proach­ing $9 mil­lion — the re­sult of a dra­mat­i­cally broader tax base.

“We have been giv­ing them 10 per­cent raises ev­ery six months for the past three years,” Mrs. Hay­ward said of the city em­ploy­ees. “Oth­er­wise, they won’t be able to keep up with cost-ofliv­ing in­creases.”

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