The boom slows

When it comes to natural gas drilling in western Colorado, 2009 is shaping up to be a far different year than 2008 or its immediate predecessors, when each new year seemed to top the breakneck pace of the year before.

That’s hardly surprising, however, since 2009 is shaping up to be a far different year for the entire economy than recent years.

The natural gas boom has shielded this region from many of the economic events that have wounded other areas of late. But, as The Daily Sentinel’s Dennis Webb reported Sunday, natural gas prices have dropped significantly, there are pipeline-capacity problems in this area and major companies are cutting back on the number of drill rigs they are using.

Anxiety over the fate of the gas industry on the Western Slope is not unreasonable.

A small retreat from the frenetic pace of the recent past wouldn’t be horrible. As Parachute Mayor Roy McClung noted, such a slowdown would allow communities like Parachute to catch up with the impacts from the gas boom.

The tricky part, of course, is to see to it that there is only a modest slowdown and not a large-scale retreat in the industry. And that is not within Coloradans’ control.

There are people associated with the industry who argue that new rules being enacted by the Colorado Oil and
Gas Conservation Commission are major impediments to maintaining a healthy gas industry.

However, as an EnCana spokesman noted in the Sunday story, the rule most feared by many industry people has been tamed. A compromise worked out earlier this year eliminates the possibility that drill rigs will have to stop operating for up to 90 days to protect wildlife in certain areas. The most dire cost estimates for the industry were based on the potential 90-day curtailment of drilling.

Recent drops in the price of natural gas are having a greater impact on the industry than the new regulations. So, too, are new gas fields being developed and old ones being expanded from North Dakota to West Virginia to Texas.
Industry officials were relieved that Colorado voters this month wisely rejected Amendment 58, which would have increased severance tax payments just as the industry was feeling the impacts of the national recession. And 2009 won’t be a good year to look for more ways to extract money from the natural gas industry. But whatever changes occur in the coming year, they will be brought about far more by national and even global events than anything occurring in Colorado.


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