Flaming Gorge Pipeline: Aaron Million estimates profits at $1.4 billion

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If you’ve wondered why Aaron Million has been so dogged in his pursuit of his pipeline dream facing while facing huge opposition across Wyoming, Colorado and Utah and from conservationists across the U.S., you need only to focus on the potential rewards from a for-profit operation in the middle of Colorado’s last remaining developable water in the Colorado River basin and the wealthy Denver southern suburbs. Here’s a report from Catharine Tsai writing for the Associated Press via The Colorado Springs Gazette. From the article:

His team’s confidential business proposal, shown to potential contractors, estimates construction costs of $2.8 billion to $3.2 billion, with annual operating costs of between an estimated $70 million and $90 million per year being paid by water users.

The project would initially deliver about 110,000 acre-feet of water to municipal and industrial users, with re-use available to farm and environmental interests, according to the business plan. The water would be sold under a “cost plus 20 percent” financial model, with 20 percent being added on top of costs for delivering the water. That would result in a one-time $360 million to $480 million profit to the contractor from water sales, according to the plan.

The second stage of the project would deliver up to 140,000 acre-feet, with water sold at market rates. “Potential net profit is targeted in the $1.4 billion to $2.4 billion range,” the plan said.

Though the business plan lays out staged development, Million said the project likely would be built all at once to avoid having infrastructure costs balloon over time. In any case, costs should be lower if it’s developed privately, not publicly, he said. “The project is financially sound. We think we can get it done for 30 to 40 percent less than a public sector project,” Million said.

Million provided the business proposal to The Associated Press in response to questions about an earlier version of the plan obtained by the AP.

The role of Million’s Wyco Power and Water Inc. would be to shepherd the project through the permitting process, Million said. It would earn a management fee, which could range from 0.25 percent to 3 percent of money raised for its work, he said. The plan said Wyco is seeking to raise $15 million through 2015 to get through the permitting process. Million said the amount he has raised so far is confidential, but he has said $5 million has been spent on the project during the four years since he proposed it.

“We’ve finally learned what this proposal is about. It’s about people wanting to get extremely rich off of the natural wealth of the Colorado River and the communities up and down the basin that depend on it,” said Gary Wockner of Save the Colorado.

More Flaming Gorge pipeline coverage here and here.

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