AURORA | Anadarko Petroleum Corp. will purchase $9.5 million worth of “used” water from Aurora for its oil and gas drilling operations across the state, pending Aurora City Council approval July 9.
The Houston-based company would pay Aurora Water over five years to use 1,500 acre feet of “effluent” water per year, according to city officials.
Greg Baker, spokesman for Aurora Water, said this is the city’s first foray into selling water to an oil and gas company and the revenues will ultimately help to keep water rates low for customers.
He said the company will be paying four times the market rate for the city’s “effluent” water, or water that has already been used and treated that would otherwise flow downstream and out of the state. The water is sanitary but not potable or made available for public use.
That equals to about $1,200 per acre foot, whereas the market rate is about $350 per acre foot, Baker said.
“That’s a great deal for our taxpayers,” he said.
The city has virtually no use for the water that Anadarko wants because it doesn’t have the capacity to store it, and there is no need for it, Baker said.
“We have enough water to meet our city’s needs,” he said.
The water deal has the potential to be controversial, especially in anti-fracking circles.
“We know that some of these are contentious issues,” Baker said. “But frankly, when you look at this, it’s water that we absolutely cannot use and the financial benefits will go back directly to the rate payer either through a rebate or through a sustained rate.”
Members of the city council’s Management and Finance Committee will meet Wednesday to decide how the city should use the $9.5 million generated from the sale of the water.
One idea, according to city documents ahead of the meeting, is to use revenue to partially pay off debt from Prairie Waters, a $650 million project that was completed in 2010 to ensure the city’s residents had enough water during droughts. The city borrowed more than $540 million and raised water rates to pay for the project.
According to the documents, Aurora’s top water officials are recommending that option, which they say would ultimately lower rate increases for water customers in the future.
A second option would be to use the money to reimburse taxpayers for helping to foot the bill to construct the project.
The rebates would range between $60 and $150 per customer over the five-year term of the city’s contract with Anadarko.
The full Aurora City Council will decide on July 9 how to use the revenue.
John Christiansen, a spokesman for Anadarko, said the company is looking for water from several sources for its Colorado drilling operations.
From Aurora, Christiansen said the company is looking to lease water for it’s drilling operations in the Wattenberg field, a sprawling oil and gas field along the northern Front Range.
Anadarko will likely get about 30,000 barrels of water a day from Aurora, Christiansen said. Statewide, fracking operations make up less than 0.13 percent of total water used, Christiansen said, and Anadarko’s operations account for just a fraction of that.
The water sale comes just a few months after Aurora agreed to sell potable water to Niagara Bottling Co., and amidst growing concerns among residents about the potential environmental effects of hydraulic fracturing.
Aurora resident Pat Dunn said municipal water should belong to the city’s residents and no one else. Dunn is an anti-fracking activist in Aurora and Arapahoe County.
“With large portions of the state on fire, and the act that we often times experience a drought, I find it very troubling that the Aurora City Council would even consider selling our precious water to oil and gas operators,” she said.
Dunn, a retired business owner who has spoken against hydraulic fracturing at Aurora City Council meetings, doesn’t think the plan to sell water to Anadarko will go over well with the public.
“I think the answer you’d get from most people is that we’re asked to conserve water here in Aurora and you can only water on certain days, and here we are, going to sell water to frackers,” she said.
Reach reporter Sara Castellanos at 720-449-9036 or [email protected]
Staff writer Brandon Johansson contributed to this report.