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

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Presentation on theme: "School Trust Lands— Challenges and Opportunities Aaron C. Garrett School Children’s Trust Section, USOE November 12, 2014."— Presentation transcript:

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

2 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 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: $ 15,271,659 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, – 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

37 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

42 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 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 Blawn Mountain

53 Potash/Phosphate

54 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

59 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

67 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 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 Comments


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