By Richard Williamson
Denver Rocky Mountain News Staff Writer

Exxon Corp. did not set out to build a retirement community when it sank a billion dollars into Western Colorado oil shale.

But a retirement community is what became of the most ambitious energy project in Colorado history.

Today, a population skewed toward senior citizenship golfs, swims, plays tennis and savors the scenic grandeur of Battlement Mesa, a company town that stuck around after the company left.

Instead of adding Battlement Mesa to Colorado's map of ghost towns, Exxon kept the housing development alive as a retirement community with an 18-hole golf course, indoor swimming pool, tennis courts and hiking trails.

Today, Battlement Mesa is thriving and growing. But beyond the real estate ads promoting "carefree living" lies one of the darkest chapters in Colorado's intermittently tragic economic history, a day known as "Black Sunday."

On May 2, 1982, Exxon dropped its massive Colony shale oil project like a slippery rock, leaving an impact crater that spread from the Western Slope to the skyscraper canyons of downtown Denver.

Until Black Sunday, then-Gov. Richard Lamm's major concern about the oil shale industry was the environmental destruction that would come with excavating the equivalent of a Panama Canal every month.

Based on predictions that oil someday would cost as much as $70 a barrel, oil companies had staked their claims to hundreds of thousands of acres containing what the Ute Indians once called "the rock that burns." At the $40 a barrel oil was fetching after embargoes and OPEC-enforced production quotas, it made sense to strip-mine tons of rock and extract oil from the shale through a costly refining process.

Ranchers whose land had sold for $200 to $300 an acre before the oil shale boom were cashing in at $2,000 an acre.

When Lamm got a call from the president of Exxon that the company was pulling the plug on oil shale that Sunday morning in 1982, "it came as a shot out of the blue," Lamm said, "because they were spending millions of dollars over there literally the week before."

While Lamm empathized with the people who lost their jobs and the small businesses that would see the free-flowing dollars disappear, the environmentalist governor said he was relieved that the scenic vistas of the Piceance Basin would remain undisturbed.

"I don't want to sound cavalier about it," Lamm said. "But I did not order the flags at half-staff."

"In my mind, it prevented the most drastic transformation of the Western Slope that could possibly be imagined. We were looking at the biggest growth event in Colorado history in oil shale."

Historians and economists point to Black Sunday as the surest sign that Colorado's energy economy literally was heading south, sending Denver oil offices home to Houston amid a death spiral in petroleum prices.

"I think that was a definite turning point, and it was a reminder that we were a boom-and-bust state," Colorado historian Tom Noel said. "There were parallels to the silver crash of 1893."

A year after Black Sunday, foreclosures in Grand Junction and Mesa County were more than quadruple their 1980 numbers, and bankruptcies had doubled.

In 1982, Denver's landmark "Cash Register Building," which would house United Bank, was under construction in an office market that already was overbuilt.

By the end of the '80s, the economy in metro Denver was in such a deep recession that thousands of homeowners were surrendering their houses to foreclosure as the state's population began to shrink.

In western Colorado, Exxon's decision to abandon the $5 billion Colony Project brought 2,200 layoffs and an exodus of other companies, including TOSCO (The Oil Shale Co.) and UNOCAL, which were involved in production of oil from shale.

Towns such as Parachute, Rifle and Silt, which had struggled to keep up with growth, suddenly were feeling abandoned. Boasting newly paved streets and municipal buildings financed by the industry, the towns were all dressed up with nowhere to go.

Instead of the tenfold growth projected by the end of the century, Rifle's census began falling at the rate of five people a day after May 2. The town had gained 1,800 residents in 1981, giving Rifle a peak population of 5,426 in the month before Black Sunday.

Miles of new streets in Rifle had to be maintained with a shrinking tax base. A new water plant built for a town of 12,000 proved an expensive luxury for a town of 4,000. And a newly expanded sewer system raised a stink in some areas because low usage diminished the flow of waste.

But at least the towns were not stuck with the bill. By requiring the oil companies to pay for the needed infrastructure (schools, roads, water systems), Colorado managed to avoid its historic role of being suckered by an exploitive industry, Lamm said.

"We were not left holding the bag," Lamm said. "It's because the locally elected officials insisted that we were not going to put up the front-end money for oil shale."

Whether the oil industry will ever return to Colorado's shale remains an intriguing question. With oil at $20 a barrel, the question is moot. Alternative fuel sources under development now could make the question moot in the future.

But with an estimated reserve of 500 billion barrels of oil -- more than the crude flowing from the Middle East -- an energy-starved world someday could come back for the rock that burns.

Colorado Milestones, which appears Tuesdays, is part of a yearlong project by the Denver Rocky Mountain News, NEWS4 and the Colorado Historical Society. Digital and print copies of historical images available at the Colorado Historical Society (303) 866-2305

Online: InsideDenver.com, keyword "2000."

On TV: Sunday at 10 p.m.: Colorado History: It took vision -- and visionaries -- to create Denver from dirt fields.

October 5, 1999

Colorado Millennium 2000 is a yearlong project by the Denver Rocky Mountain News, NEWS4 and the Colorado Historical Society
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