Times changing in western Colorado’s gas fields

RIFLE — Times are changing rapidly in western Colorado’s natural gas fields, and there may be no clearer sign of the times than the kind now found on the front door of many energy-related companies.

“Not accepting applications at this time,” says the one outside Bronco Oilfield Services in Rifle.

A region that couldn’t find enough employees last year is turning them away from the door now, as energy companies sharply cut back their drilling activity because of falling natural gas prices, a tight credit market and other factors.

Garfield County still is the statewide leader in new drilling permits issued.

But the local job market has shifted so quickly that even the sign doesn’t keep people from dropping off their resumes at Bronco Oilfield Services, which rents equipment and does well flowback and testing work, said office administrator Jennifer Lafleur.

And after selling her Southern California home at a big loss and coming to an area where the economy was strong, Lafleur admist being nervous about the future of Bronco’s local office, and leery about buying another home.

“I’m kind of reluctant to get back in that kind of situation,” she said.

Partly because of such concerns within the energy industry, Garfield County’s once-red-hot real estate market has turned a cooler blue.

“Our bubble, somebody let the wind out of it,” said David Kittle, who owns A&D Pawn in downtown Rifle.

He paused to take a phone call from someone wanting a loan against a television.

“Those kinds of calls are picking up quite a bit,” he said.

A lot of people are out of work because of the drilling slowdown, he said. And although many drilling workers have gone back to their homes in other states or tried to get work in other oil and gas fields, local construction workers also are hurting, as evidenced by the tools they take to his store to pawn.

Garfield County’s seasonally unadjusted unemployment rate was 4.1 percent in December, up from 3.8 percent in November and 2.7 percent in December 2007. Construction is the county’s biggest industry sector, making up 18 percent of jobs as of October, the state reports.

Morgan Sommers, branch manager of the Fowler & Peth construction supplies location just east of Rifle, said the energy slowdown has helped lead to some larger commercial projects being put on hold.

After a strong 2008, “we’re seeing a slower winter this year than in probably 10 years,” he said.

A construction slowdown in the Aspen area hasn’t helped either, he said. The regional slowdown forced a quick shutdown for the newly opened Rifle-area location of CMC Construction Services, which has 40 locations nationally.

“It started last year. Construction just wasn’t what it should have been, I guess,” said Brian
Bennett, who was operations manager in Rifle.

The company closed its Rifle location in October, just when LHR Services and Equipment, which offers safety gear, was opening a downtown Parachute storefront, targeting the energy industry. That’s also about when energy companies started talking about reducing local drilling rigs.

“Had we had a crystal ball, we would have delayed things a bit,” said Jim Walts, the company’s director of business development.

“Today’s a typical example” of how slow things have been since the start of the year, he said as he stood alone in a store devoid of customers on a recent weekday, having told his employee to go home early.

At Intermountain Toxicology Collections Inc. in Rifle, owner Dosena Adams said the company is doing probably a quarter of the pre-employment drug screening tests it did before energy companies started making cutbacks.

“The random testing is also down because companies don’t have the number of employees that they did,” she said.

At the Winchester Motel in Rifle, occupancy rates are about half of what they were last year, when out-of-state energy workers generally helped keep the place full as a result of long-term stays, said Ania Maj, who with her husband, Marcin, manages the Winchester.

She feels for those workers.

“They’re not happy because they’re trying to find jobs and provide for their families, and it’s just hard,” she said.

Her husband notes a bright spot in the current economic situation: The long lines have disappeared at Rifle’s Wal-Mart, he said.

Similarly, the traffic backups at Parachute’s Interstate 70 interchange aren’t what they used to be.

Still, the slowdown in business worries Ania Maj.

“We’re just hoping that it gets better,” she said.

At least some of the current economic slowdown may be seasonal.

“It’s definitely picked up in probably the last part of February,” said Sommers, of Fowler & Peth. “It’s definitely not going to be what it was last year, but it will pick up.”

Walts, of LHR, has worked in the energy industry for a long time and knows the drill, so to speak.

“It’s cyclical in nature, and it will rebound,” he said.

Adams, owner of the drug-testing firm, said an industry source told her to expect the energy industry to come back locally, but not return to the heyday levels of last year. In the end, the slowdown might give her 15-year-old company an edge over upstart competitors.

“Maybe that’s not a nice thing to say, but it might get rid of some of my competition,” she said.

Ben Stopani knows the local energy industry is still alive and kicking. The Parachute resident said he left his job as general manager of an energy contractor before it all but shut down local operations because of the drilling slowdown. Eight jobs were lost. Stopani hired on with Sturgeon Electric, which is doing work for Exxon Mobil’s drilling program.

“I’m very fortunate, very blessed,” he said as he prepared to leave a gas station in
Parachute on his payday and take his children to Grand Junction for dinner.

Other signs of hope, or at least persistence, can be found in Rifle, where a Hampton Inn & Suites, Comfort Suites and Super 8 Motel are in various stages of construction.

“There’s still quite a bit of pent-up demand there,” said Shane Fowler, principal with Golden-based Aardex LLC, the developer of the Hampton Inn project.

He said it’s hard to compare to 2008, which was a “fantastic year” for the lodging industry in Rifle.

Still, “We see long-term growth in the area, certainly fueled by a good spurt by oil and gas here recently.”

He believes the energy industry is in it for the long term in the region, based on the fact many major companies have become active locally after smaller players did the initial
exploration.

Doug Weaver, area operations manager for Occidental Petroleum, affirmed as much this week during the quarterly Northwest Colorado Oil & Gas Forum in Rifle. Although Oxy has suspended its local drilling program, “We’re here for the long term, and hopefully we’ll see some (gas) pricing improvement and put people back to work,” he said.

The Rifle area is well-suited in terms of its location and demographics for continued growth, Fowler said, and the city’s focus on sustainable development independent of the fossil fuel industry makes him feel good about the region’s economic future.

Doug Wright is vice president of the Wright Group, which is the contractor on the Super 8 project and owns La Quinta Inn in Rifle and the Holiday Inn Express Hotel & Suites in Silt.

The Wright Group opened La Quinta Inn in 2006, and it immediately was filled to capacity.

The company finished a 48-room addition to that hotel in 2007, and followed up by opening the Silt hotel last year.

“From our standpoint there’s been a downturn in occupancy for us,” Wright said. “These projects were planned when everything was in full stride. Do I think they make as much sense today as they did a year ago? No. Hopefully the (energy) slowdown will turn around, because it’s good for the economy.”

He said Rifle’s lodging industry relies on a successful energy industry and doesn’t need that many hotels otherwise.

“I think in the long term it will come back around. … Hopefully it will keep everybody successful for years to come.”


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