Oil, gas permits still lagging; longer permit life a factor

Eight months through the year, oil and gas drilling permits in northwest Colorado continue to lag significantly behind a year earlier, something state regulators say is at least partly attributable to a rule change that makes permits last longer before expiring.

Through Aug. 30, 927 permits had been issued for wells in Garfield County, Colorado Oil and Gas Conservation Commission data shows. That puts the county on pace for about 1,400 permits to be issued by the end of the year, compared to 2,037 in 2010.

For Mesa County, 97 permits had been issued, compared to 306 for all of last year. In Rio Blanco County, where 441 permits were approved last year, just 58 have been issued so far this year, partly reflecting the slowdown in drilling by Exxon Mobil there during the last year.

Statewide, 3,103 permits have been issued so far this year. Last year, 5,996 were approved.

Garfield County ranks second in permit numbers, with Weld County solidifying its position as the leader. Last year it reassumed the top spot after Garfield County held the lead for five years.

So far, 1,553 permits have been issued this year for Weld County, where companies have been hotly pursuing new oil opportunities.

High oil prices and low natural gas prices are a factor behind companies’ drilling decisions. Chevron has yet to resume drilling in the De Beque area since natural gas prices plunged a few years ago. Local Chevron official Michael DeBerry said Thursday at the Northwest Colorado Oil and Gas Forum in Rifle that “oil-favored pricing” instead has led it this year to drill seven oil wells in the Rangely area, as it worked to apply new technology to an old oil field. Its first three wells are producing a combined 2,000 barrels a day.

Oil and gas commission Director David Neslin said a rules change making drilling permits good for two years rather than one year continues to contribute to lower permit numbers this year. He said companies currently hold close to 5,000 active permits.

Anderson Reports figures show 21 rigs were operating in Garfield County through Aug. 2. The county’s rig levels have hovered in the low to mid-20s during the last year.

Williams is operating 11 rigs in the Piceance Basin, and Encana Oil & Gas (USA) is operating nine and Bill Barrett Corp. two. Exxon Mobil is down to one, from five a year ago.


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