1. School Trust Lands— Challenges and Opportunities
Aaron C. Garrett
School Children’s Trust Section, USOE
November 12, 2014

2. What are the Opportunities? What are the Challenges?
OUTLINE
What are Trust Lands?
What are the Opportunities?
What are the Challenges?

3. TYPES OF LAND
Private
Federal
State
Trust Lands

4. Where Did Trust Lands Come From?

5. Statehood Deal State Agrees Not to Tax Federal Domain
Federal Government Grants Land to State for Support of Free, Public, Nonsectarian Schools

6. Utah Enabling Act
Law passed by Congress offering entrance into the Union
Contains terms and promises of both parties
Confirmed by Utah in its Constitution

7. How Did Trust Lands Come to Be?
Thomas Jefferson

8. Congressional Land Grant Intent
School in Every Township
Section 16
Ohio (1803) – Minnesota (1858)
The Arid West
Sections 16 and 36
Oregon (1859) – Wyoming (1890)
The ‘Really’ Arid West
Sections 2, 16, 32 & 36
Utah, Arizona and New Mexico

9. Currently:
3.4 million surface acres of Trust Land
in Utah
Lands Earn Revenue From:
Minerals
Surface
Development
Grazing
Forestry

10. When did the trust lands really start making money to help fund schools?

11. 1994 Trust Lands Management Act
Created School and Institutional Trust Lands Administration (SITLA)
Codified a fiduciary duty to manage trust lands for the best financial interests of the beneficiaries (public school system)
At SITLA’s Creation, Permanent State School Fund had approximately $50 million, now approaching $2 BILLION.

12. Growth in Permanent Fund (log scale)

13. Growth in Permanent Fund
June 30, 1987 Balance: $ ,271,659
Sept. 30, 2014 Balance: $1,914,763,501
Growth Rate of 1240%

14. Growth in Permanent Fund
FY 2014 SITLA contribution to Fund: $122 Million
FY 2014 Investment Growth: $155 Million
FY 2014 Distribution: $39 Million

15. Biggest Current Opportunities

16. OIL/GAS
Natural Buttes (Kerr McGee) (66 leases)

17. OIL/GAS Natural Buttes (Kerr McGee) (66 leases)
Past 5 Years Grand Total: $103,349,772.61

18. OIL/GAS Natural Buttes (Kerr McGee) (66 leases)
Past 5 Years Grand Total: $103,349,772.61
Approximately 21% of ALL SITLA
Revenues

19. OIL/GAS
Drunkards Wash (Conoco/Dominion & Chevron) (76 leases)

20. OIL/GAS Drunkards Wash (Conoco/Dominion & Chevron) (76 leases)
Grand Total Past 5 Years: $29,648,963.34

21. MINING
Top Three Revenue Producers, Past 5 years

22. MINING
Top Three Revenue Producers, Past 5 years
Andalex

23. MINING
Top Three Revenue Producers, Past 5 years
Andalex
Produces Coal

24. MINING Top Three Revenue Producers, Past 5 years Andalex Produces Coal
$17,889, in Revenue

25. MINING
Top Three Revenue Producers, Past 5 years
Moab Salt

26. MINING Top Three Revenue Producers, Past 5 years Moab Salt
Produces Potash

27. MINING Top Three Revenue Producers, Past 5 years Moab Salt
Produces Potash
Royalties of $5,302,483.47

28. DEVELOPMENT
Top 3 Revenue Producing Projects, all time

29. DEVELOPMENT
Top Revenue Producing Project, all time
South Block

30. DEVELOPMENT Top Revenue Producing Project, all time South Block
Started in 2005

31. DEVELOPMENT Top Revenue Producing Project, all time South Block
Started in 2005
Revenues of $45,282,556

32. DEVELOPMENT Top Revenue Producing Project, all time South Block
Started in 2005
Revenues of $45,282,556
Timeline: 10+ years (25-50 years)

33. DEVELOPMENT Top Revenue Producing Project, all time South Block
Started in 2005
Revenues of $45,282,556
Timeline: 10+ years (25-50 years)
Potential: $45,000 per acre = $360,000,000

34. BIGGEST FUTURE OPPORTUNITIES

35. The Book Cliffs

36. The Book Cliffs

37. The Book Cliffs
Resource: Oil/Gas

38. The Book Cliffs Resource: Oil/Gas
Potential: 20 wells at $6 million/year = $120 million/year

39. The Book Cliffs Resource: Oil/Gas
Potential: 20 wells at $6 million/year = $120 million/year
Risks:
Extent of resource speculative/unknown
Terrain
Political/Environmental

40. Graymont Mine

41. Graymont Mine

42. Graymont Mine
Resource: Limestone

43. Graymont Mine
Resource: Limestone
Location: Cricket Mountain

44. Graymont Mine Resource: Limestone Location: Cricket Mountain
Potential: $300,000 per year in royalties

45. Graymont Mine Resource: Limestone Location: Cricket Mountain
Potential: $300,000 per year in royalties
Lifetime: years, in process of expanding

46. Graymont Mine Resource: Limestone Location: Cricket Mountain
Potential: $300,000 per year in royalties
Lifetime: years, in process of expanding
Total Potential Income: $12 million

47. Magnum Salt Cavern Project

48. Magnum Salt Cavern Project
Near Delta, Utah
Huge Underground Salt Deposits
Store:
Natural Gas
Natural Gas Liquids
Wind
Carbon Capture/Sequestration
Anything
Unlimited Potential

49. Utah County Real Estate
Mid Valley (Eagle Mountain)

50. Utah County Real Estate
Hidden Valley (Saratoga Springs)

51. Potash/Phosphate

52. Potash/Phosphate
Blawn Mountain

53. Potash/Phosphate

54. Potash/Phosphate
Projects: Blawn Mountain, Ashley Creek

55. Potash/Phosphate Projects: Blawn Mountain, Ashley Creek
Potential: $1 billion in royalties

56. Potash/Phosphate Projects: Blawn Mountain, Ashley Creek
Potential: $1 billion in royalties
Risks:
Market
Environmental

57. Bonanza Block

58. Bonanza Block

59. Bonanza Block
Resource: Oil Shale

60. Bonanza Block
Resource: Oil Shale Lessee: Enefit

61. Bonanza Block
Resource: Oil Shale Lessee: Enefit Timeline: 25 years out

62. Bonanza Block
Resource: Oil Shale Lessee: Enefit Timeline: 25 years out Potential: ??????

63. Bonanza Block Resource: Oil Shale Lessee: Enefit
Timeline: 25 years out
Potential: ??????
Risks:
Technology
Environmental
Political

64. Utah’s Oil Shale Potential
1.32 trillion barrels of oil
77 billion recoverable
Most on BLM Land

65. Seep Ridge Block

66. Seep Ridge Block

67. Seep Ridge Block
Resource: Oil Shale

68. Seep Ridge Block
Resource: Oil Shale Lessee: Red Leaf

69. Seep Ridge Block
Resource: Oil Shale Lessee: Red Leaf Size: 17,000 acres

70. Seep Ridge Block
Resource: Oil Shale Lessee: Red Leaf Size: 17,000 acres Timeline: Commercial scale in months

71. Seep Ridge Block
Resource: Oil Shale Lessee: Red Leaf Size: 17,000 acres Timeline: Commercial scale in months Potential: ???????

72. Seep Ridge Block
Resource: Oil Shale Lessee: Red Leaf Size: 17,000 acres Timeline: Commercial scale in months Potential: ??????? Risks: Same (technology, environmental, political)

73. Tar Sands

74. Tar Sands Resource: Tar Sands Lessee: US Oil Sands Potential:
Utah: 30 billion barrels
32,000 acres leased in Utah
Have a test pit and test plant

75. Tar Sands
Risks
Political

76. Tar Sands
Risks:
Political
Technological

77. Tar Sands
Risks:
Political
Technological
Legal

78. Challenges to the Trust
Outside Interest Groups
Political Risks
Highly Dependent on oil/gas
Technological Changes
Mismanagement of the Land or the Fund
And on…and on…and on…

79. The End
Questions
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