By David Grant Long

The company, which employs about two dozen people locally and has pumped trillions of cubic feet of the gas from the McElmo Dome over the past 15 years, no longer fits into the parent company’s future vision, Rich Hansen, public affairs manager for Shell Continental Companies, said Friday.

"The goal, if successful, is to have the company sold by the first or second quarter of next year," Hansen said Friday from Shell’s Houston, Texas, headquarters. "The management of Shell has decided that although the Shell CO2 company is a financially successful, profitable company, it is not as strategic and doesn’t fit into their long-term growth plans as nicely as other things."

The move reflects the philosophy of new management at both Shell Western Exploration and Production, of which Shell CO2 is a part, and Shell Oil, the parent company, he said. Since CO2 is mainly sold to competitors to help them produce oil, he explained, the local operation is not in keeping with the company’s main objectives.

"They see their long-term business as drilling oil and gas wells and producing them," he said, while CO-2 production is mainly a "service business."

"We produce it and ship it to west Texas and sell it to other oil companies to help them produce oil and gas," he added. "Shell doesn’t see itself in the so-called service industry -- they want to be in the primary oil and gas business.

"So they have decided to put it on the market and letters have been mailed this month to other oil companies, to other CO2 companies, to financial management companies and pipeline companies to announce that we’re interested in selling," he added.

Since production began in 1984 through 1998, Shell has paid more than $40 million in ad valorem property taxes to Montezuma County, according to County Assessor Bob Cruzan, which does not include taxes paid on real and personal property (land and equipment owned by the company). Those taxes ranged from 40 percent of the total county property taxes collected in 1986 ($5.5 million) to about 10.5 percent of the total in 1997, Cruzan explained

The bulk of the CO2 produced locally from BLM lands is sent by pipeline to Texas oil fields, where it is used to extract additional large quantities of crude oil from wells already depleted by normal pumping methods. Since Shell drilled more wells two years ago, CO-2 production has risen markedly, once topping a billion cubic feet in one day, according to Hansen.

The move is in keeping with divestiture of other "mature" assets -- oil fields in Alaska, Louisiana and Montana -- in recent years, he explained, although the local gas deposits are far from depleted and have a longer life expectancy than the other assets.

"In the case of the CO2 (fields), it is a very long-lived asset," he said, "and we or someone will be producing CO2 in Montezuma County for a long time to come," at least the next 20-30 years.

"We are not -- not -- approaching the end of the life of the field," he added. "The decline is not imminent."

The McElmo Dome fields are currently producing around 700 million cubic feet a day, according to Hansen, with the daily figure topping 1 billion cubic feet at times last fall.

Because of the vagaries of the market, demand fell in the early part of this year, but is now rebounding strongly, he said.