COMPANY LATEST TO SLOW NORTHWEST COLORADO EXPLORATION
Citing falling natural gas prices, Chevron announced Wednesday it has dropped plans to speed up its natural gas development program north of De Beque.
The company joins several others that have been adjusting their drilling programs in northwest Colorado as a result of changing economic conditions.
Chevron spokeswoman Kristi Pollard said the company has called off plans to double its De Beque drilling rig program from two rigs to four and boost its local investment by 50 percent. Instead, it plans to continue spending at the current level for the next three years.
“We’re just taking a little bit slower, more paced approach to the program,” Pollard said.
Chevron plans to keep its De Beque program budget for the next three years the same as this year. It won’t be laying off any of its 63-person local work force, which is primarily based in Grand Junction, Pollard said.
However, the decision means putting on hold plans under which it could have expanded its local employment to about 80 company workers and close to 500 contractors. It has about 300 contractors.
Several other companies have said they are scaling back drilling operations in the gas-rich Piceance Basin in Garfield and neighboring counties. The biggest local player, Williams Production RMT, plans to run about 20 rigs next year, down from 26 this year.
Companies have cited factors such as the national credit crisis, which has restricted business lending; falling natural gas prices; and anticipated expenses associated with new oil and gas development rules being finalized by the state.
In Chevron’s case, “it would be false to say this is a direct result of the rules,” Pollard said. “We do take that into consideration, but there were a lot of other factors at play as well.”
She said for Chevron, the chief concern has been the drop in natural gas prices. Those prices are even lower for gas produced in the Rockies because of limited pipeline capacity to get plentiful local gas supplies to lucrative markets elsewhere in the country.
Chevron has long-range plans of drilling 2,000 wells on 40,000 acres over 15 to 20 years north of De Beque. It expects to continue to be involved in gas production there for a half-century and to invest about $7.3 billion over the life of the project.
Despite its revised short-term plans, Chevron is going forward with contributing up to $25 million toward reconstruction of Garfield County Road 204 north of De Beque, Pollard said.