Pipeline proponent says profits would be $1.4B

Apr 5, 2012 The Associated Press

DENVER (AP) -- A Colorado businessman seeking to build a pipeline to deliver water from Wyoming to Colorado's Front Range estimates that whoever designs, builds, finances and operates the project could see at least a $1.4 billion profit, according to a document shown to potential contractors.

Aaron Million, of Fort Collins, and his team have put out a request for proposals from contractors to develop the project. Proposals are due Friday.

Million envisions drawing Green River water from the Flaming Gorge Reservoir in southwest Wyoming and sending it to water users in southeast Wyoming and northern Colorado. His team still needs federal permits to proceed with the plan, which includes a 578-mile pipeline plus three reservoirs, nine natural-gas powered pump stations and six hydropower facilities.

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.

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