Drilling rig numbers start to climb in Piceance

Thirty-five rigs now are operating in the Piceance Basin as Colorado is poised to issue 6,500 permits to drill this year, officials said.

The 6,500 permits would be the second-most issued by the state in a year.

“We continue to have a pretty consistent high level of activity at this point,” Thom Kerr, permitting manager for the Colorado Oil and Gas Conservation Commission, said Thursday during a meeting of the commission.

Williams dominates the drilling activity in the Piceance Basin. It has a dozen rigs operating there, followed by EnCana’s seven rigs, industry analyst Carter Mathies said.

The rig count is the highest it has been since the second quarter of 2009, when an average of 46 rigs were operating, but well below the average 87 that were drilling in the basin in the first quarter of 2009, Mathies said.

Colorado now has 66 rigs operating statewide, more than are running in most neighboring states, Commission Director David Neslin said. Those optimistic notes aside, Commissioner Mark Cutright said Colorado’s recovery is the most stunted of those in the intermountain states.

“I don’t want to paint a rosy picture for the oil and gas industry,” Cutright said. “There’s been layoffs that have been extreme in the state, and companies still have not recovered in the state of Colorado.”

Neslin said there is no question low gas prices continue to make for a tough business environment. That’s particularly the case for smaller companies operating in western Colorado, where there is more production of gas than oil, which is getting better prices, Neslin said.

Garfield and Weld counties lead the state with “extremely high levels of activity,” Kerr said.

So far this year, Garfield County leads the state with 1,327 drill permits, and Weld County follows with 1,206. The state has issued 222 permits in Mesa County.

Kerr noted there are 4,355 active permits that have yet to be drilled but have not expired. He said those permits provide “plenty of opportunities for those 66 rigs to drill.”

Among the Piceance Basin wells, 88 percent are directional, and 12 percent are vertical, Mathies said.

The wells also are tending to be deep, with 38 percent drilling down for gas at 10,000 to 15,000 feet.

A little more than one-third, 35 percent, are 8,000 feet to 10,000 feet deep, and 26 percent go only as deep as 8,000 feet, Mathies said.


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