Diversifying Lifts Denver International Airport

While aviation generates most of the cash at Denver International Airport, a significant and growing share of the airport's revenue comes from businesses that have nothing to do with airplanes.

DIA reaps $3 million a year from oil and gas wells that dot its sprawling, 53-square-mile property, and more wells are on the way. Farmers working under contract with DIA to grow wheat, sunflowers and other crops bring in about $290,000 a year, an airport official said.

A golf course and two solar-power plants are also in the works.

DIA is not the only airport looking beyond its runways for revenue. Dallas/Fort Worth International, for example, has an airport hotel and a nearby golf course and has sought bids for an oil- and-gas lease. Other airports have industrial parks and farms.

"This is an area that has typically been underappreciated by airports," said Eliot Lees, vice president at aviation consulting firm SH&E Inc. "In an era when airlines are in financial difficulty, airports need to be looking outside the traditional source of revenue -- which is the airlines -- to alternative and creative resources." In 2005, DIA had operating revenues of $495 million. Of that, the largest piece -- $204 million -- came from rental of various airport facilities. Parking accounted for $98 million, and landing fees brought in an additional $95 million.

But DIA is the largest airport in the country as measured by land area, and development on airport grounds is expanding.

Fifty-one oil and gas wells owned by the airport itself are among nearly 100 that were on the site when the city originally bought the land for DIA.

Separately, Canadian energy company Petro-Canada Resources has 10 wells on the airport grounds. Under a DIA-approved plan to expand oil-and- gas development on 22,000 acres of airport property, Petro-Canada is drilling 20 new wells and may complete as many as 10 this year. Four of these new wells could start pumping in a matter of days, said DIA property manager Pete Gingras.

DIA profits directly on sales of oil and gas from its own wells, and it collects royalties on wells operated by Petro- Canada.

"At $30 a barrel, we might have lost the cost-effectiveness (of the wells)," Gingras said. But at today's oil prices, near $74 a barrel, "it's worth continuing to do. We always knew that our oil and gas was a significant opportunity."

Another revenue producer on DIA property is farmland generating crops such as wheat, sunflowers, millet and corn. DIA partners with farmers who grow and harvest the crops.

The city of Denver also hopes to build two solar-power plants at DIA that will generate 4 megawatts of electricity. One would be north of Concourse C and another farther south along Peña Boulevard. Global Solar of Tucson would build the solar plants, and the city is working with Renewable Ventures of San Francisco for financing.

If the plan clears all hurdles, construction could begin before the end of the year, with operations starting in 2007.

DIA also has an agreement to develop a British links-style golf course near 64th Avenue and Tower Road on airport property. The airport hopes to open the golf course within the next few years and draw patrons from business travelers, including those staying at a hotel planned off airport grounds near DIA.

Copyright: The Denver Post -- 7/21/06

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