Slowdown a chance for town to catch up
Just a few months back, the town of De Beque, on the edge of the natural gas-rich Piceance Basin, was scrambling to keep up with development.
Now it is finding time to catch up.
The number of rigs in use and wells being drilled has slowed. Companies active in Western Colorado such as Chevron, EnCana and Williams Energy have scaled back their plans and laid off employees. But it’s not all bad news, according to De Beque officials. Contractors are hungry for work, and town leaders are anticipating a drop in the price of construction supplies.
“This is the time that I would build,” Town Manager Bruce Smith said.
The town has several infrastructure projects it has fallen behind on, either through waiting for funding or the lack of available contractors to do the work. The town is now receiving funding assistance from the state and is optimistic about securing contractors at good prices.
“I’m leaning on engineers to get our infrastructure projects out to bid. We have several of them that have got to go,” Smith said. “I think the spring of 2009 is going to be a good bidding environment to get good pricing.”
Last year Schlumberger, an international oil and gas field services company, purchased more than 300 acres south of De Beque. The company announced plans for offices, a supply yard, a warehouse and a heavy-truck facility, with up to 50 employees on site around the clock, seven days a week.
De Beque’s agreement with Schlumberger locks the town into several deadlines to have infrastructure, such as water service and sewerage, in the ground. If the town misses any of the deadlines, it could give Schlumberger a way out of its obligations to the town, Smith said.
But ask Smith about Schlumberger’s future construction plans in De Beque and he says: “I don’t know.”
The ground has been cleared, but the cold and snow of winter and the global economic slowdown have significantly slowed further construction.
A spokesman for Schlumberger said things are slowing down but that the company is proceeding with its plans for the De Beque campus.
“We are not pulling out. We are still committed, and we are still building that project,” said Stephen Harris, a spokesman for Schlumberger. “We are still building, but we will slow down activity commensurate with activity in ’09.”
On Friday, Schlumberger released its 2008 year-end, economic report and future outlook.
The company reported $27.16 billion in revenue for 2008, compared to $23.28 billion in 2007.
Schlumberger Chairman and CEO Andrew Gould sketches a picture of a weakening world market for energy in the near-term future.
“Demand (for oil and gas) will erode further in 2009,” Gould was quoted as saying in the report. “We expect 2009 activity to weaken across the board with the most significant declines occurring in North American gas drilling, Russian oil production enhancement and
in mature offshore basins.
“We have no doubt that Schlumberger will emerge from the current downturn a stronger company, better positioned to participate in the subsequent upturn.”
That upturn is what De Beque will be bracing for. How long the town must wait depends on the economy, Mayor Dale Rickstrew said.
“It is obvious there is going to be a slowdown because they are not drilling as much,” Rickstrew said. “I don’t have any concerns. I think Schlumberger, when the economy and all the oil and gas regulations are put into effect and when things start rolling again, I am not concerned at all that they will be here doing their thing.”