Indian nonprofit recruiting tribes for energy venture

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North American Indian tribes are organizing a Denver-based energy company that would produce natural gas, coal and some oil, as well as generate electricity.

Red Earth Energy Co. would be a for-profit, spinoff of the Council of Energy Resource Tribes, a nonprofit organization in Denver that was formed 25 years ago to explore ways to develop natural resources on tribal lands.

The council, which represents 51 tribes in the United States and Canada, voted last December to begin recruiting tribes for the venture, which is not yet a legal entity.

A. David Lester, the council's executive director, said it's likely only about a dozen tribes will participate in the company as equity investors. "Tribal decision-makers are very conservative and cautious about putting at risk the assets of the tribe," Lester said.

The move comes as tribes continue to generate wealth from gambling establishments and more traditional ventures such as Ignacio-based Red Willow Production Co., Colorado's fifth-largest natural gas producer. Last month, a group of 15 tribes disclosed they were creating a Native American National Bank in Denver, an investment bank that hopes to amass $300 million in assets it will then invest in other economic development projects originated by tribes across the nation. And nationally, Indian tribes are pressing each other to create economic development alliances to leverage their successes.

Lester said council members have been discussing the creation of Red Earth for more than two years. Though it has yet to be decided how many tribes will participate, Red Earth's potential is sizable. Lester said tribes potentially control 10 percent of onshore energy resources in the United States, mostly natural gas reserves, coal and some oil. But figures are hard to come by to confirm such holdings.

A spokesman from the American Petroleum Institute in Washington said the Interior Department estimates 1.4 percent of all U.S. production of natural gas comes from Indian lands. That amounts to almost 0.3 trillion cubic feet of the 19.8 trillion cubic feet of gas produced in 1998, the spokesman said.

A 1999 report of the Center for World Indigenous Studies in Olympia, Wash., estimated that tribal lands in the lower 48 states contain 4 percent of all U.S. oil and natural gas reserves. Although those are small fractions of total production and reserves, they still represent millions of dollars worth of resources if the commodities can be developed and sold.

Next month, the Southern Ute Tribe in Ignacio will host a meeting to determine the size of interested tribes' equity investments in the company. Lester said it will take about $250,000 to establish the corporation and another $2 million to finance it initially. Council members are taking those issues to tribes across the country to see how much each will contribute to participate. For now, council members are very much undecided.

"We haven't formed an opinion on that," said Robert Santistevan, director of energy for the Southern Ute Tribe, which operates Red Willow and Red Cedar Gathering Co., a gas transmission company.

In contrast, Tony Helton, general manager of a 546-megawatt electric power plant under construction on the Fort Mojave Reservation, which overlaps the borders of California, Arizona and Nevada, said that tribe of 1,074 members fully supports the creation of the company. Helton, not a tribe member, said plans to fuel the power plant anticipate buying natural gas from Red Earth, the proposed intertribal company, or Red Willow, the Southern Ute company, then selling electricity from the plant on the commercial market.

The council will begin publishing a magazine this spring, also to be called Red Earth, which will report on business developments on reservations and within natural resource industries. The aim is to promote the council's message of tribal resource development.

The magazine will follow the model of Emerging Markets Magazine, a direct-mail publication produced in Denver by Kaleidoscope Publishing Corp., a subsidiary of Romero & Wilson Public Relations. It promotes minority-owned companies and minority-business issues and is sent free to officers of large corporations throughout the Rocky Mountain West and the Southwest. It is largely supported by corporate advertising. Lester said Red Earth will have a first press run of 20,000 copies and will also be sent free to tribes and corporations throughout the country.