The Utah Division of Oil, Gas and Mining director John Baza said his agency has projected the total value for the extractive industries will reach $6.3 billion in 2005. The same industries production sales value was $4.2 billion in 2004.
Those revenues are largely responsible for the state's $1 billion "excess revenue" this year, said Gov. Jon Huntsman Jr.
"The collection of severance taxes and mineral lease monies far exceeded estimates, which assisted our efforts to bolster funding for education, transportation and other key initiatives," Huntsman said in a statement.
Baza said most of the rise in revenues can be attributed to soaring energy prices. The good economic news could continue through next year, with revenues possibly reaching $7 billion, he said.
A record number of 1,100 applications for permits to drill were approved in 2004, but the record was short-lived. This year, 1,600 permits were approved and 800 new wells were drilled, Baza said.
Drilling and equipping a new gas or oil well costs an average of $2 million. In 2004, the now-defunct Utah Energy Office estimated that a single gas well in Uintah or Duchesne County, where most of the drilling activity is occurring, would create 13 new jobs and $309,300 in additional personal income. The state would net $55,300 in tax revenues while the counties would collect $29,200.
Baza cited a Department of Workforce Services report showing that the monthly average wage for mining workers in Utah is $4,609, a paycheck about 75 percent higher than the statewide average for all industries.
He said oil shale, tar sands and uranium mining could further contribute to Utah's minerals-based revenues.
A series of tight deadlines set forth in the new national Energy Policy Act will force the U.S. Bureau of Land Management to lease lands in Utah, Colorado and Wyoming for oil-shale and tar sands development within 2 1/2 years.
One of the key provisions for Utah is the language backed by the state's senior U.S. senator, Republican Orrin Hatch, aimed at reviving the U.S. oil shale and tar sands development, which went bust in the 1980s.
Baza predicted Utah could be just three to five years away from active, commercial oil shale development.
"It's the first time I've seen so many factors pushing shale," he said.
Eastern Utah, western Colorado and southern Wyoming are believed to have 1.5 trillion barrels of oil trapped in shale and sands. Politicians and other boosters like to compare that resource to the amount of oil in the Middle East, sometimes calling the region the next Saudi Arabia.
But James Kohler, BLM solid minerals branch chief in Salt Lake City, has said just because the resource is huge doesn't mean it could ever be mined, processed and sold at a profit while also protecting the environment.
