Colorado improves, but still lags in survey of oil, gas investment

Colorado has rebounded somewhat from last year’s last-place standing among oil- and gas-producing states in an annual survey measuring attractiveness for investment by that industry.

However, it continues to compare poorly to about three-quarters of U.S. states included in the Fraser Institute research organization’s Global Petroleum Survey. Meanwhile, an increasing number of nearby states were rated as being among the 10 best states, nations and other jurisdictions to invest worldwide.

The fourth annual survey asked petroleum industry executives and managers about high tax rates, costly regulation, security threats and other barriers to investment around the world. This year there were 645 respondents, resulting in enough data to evaluate 133 jurisdictions, compared to 143 last year.

In an overall composite ranking derived from 17 questions, Colorado was determined to be the 61st most attractive jurisdiction worldwide this year, compared to 81st last year.

It rated as the most favorable of any jurisdiction worldwide in the 2007 survey, but by two years later had been deemed the least attractive U.S. state for investment. The change coincided with the Colorado Oil and Gas Conservation Commission’s implementation of tougher new oil and gas development rules.

This year, Colorado was ranked 20th of 28 U.S. states and offshore jurisdictions.

South Dakota topped the global list, followed by Texas. Wyoming ranked fourth and Utah seventh, with both being newcomers to the top 10. Oklahoma was ninth.

Colorado’s overall composite score improved from 40.42 to 37.35 this year, moving it into the second quintile on a scale of 1 to 100, with 1 being best. Survey authors say jurisdictions in that quintile are considered relatively attractive for investment.

In an e-mail, David Ludlam, executive director of the West Slope Colorado Oil and Gas Association, said of Colorado’s rating this year, “Moving upward on the list is the right direction, but if this were the NFL, Colorado wouldn’t even make the playoffs. State and Washington officials should return the state to its rightful place as number one by keeping Colorado’s natural gas resources accessible, and regulations reasonable.”

But David Neslin, director of the state’s oil and gas commission, said he thinks Colorado is proving to be quite an attractive investment for industry. It is among the top three states nationally in drilling permits issued so far in 2010, is tied for first regionally in increased active drilling rigs, and has a substantial lead regionally in numbers of new well starts for the year to date, he said.

“I think those are the important numbers. Our job is to facilitate the production of oil and gas in a responsible and balanced manner that will protect our water, our air and our communities, and we’re working hard to do just that,” he said.

New York was rated the lowest among U.S. states. Survey authors say that appears to be tied to issues including emerging restrictions on natural gas drilling and hydraulic fracturing as a result of concerns about water-supply contamination.

Bolivia was at the bottom of the global list, with Venezuela the next lowest, and Russia the third-worst.


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