GarCo drilling levels reach decade low

CHRISTOPHER TOMLINSON/The Daily Sentinel—A drilling rig is seen from above on the Roan Plateau in Garfield County. As of Nov. 6, the state had issued 904 drilling permits in Garfield County. Garfield County ranks only behind Weld County in permitting and well starts, but permits and drilling activity are down statewide this year.



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CHRISTOPHER TOMLINSON/The Daily Sentinel—A drilling rig is seen from above on the Roan Plateau in Garfield County. As of Nov. 6, the state had issued 904 drilling permits in Garfield County. Garfield County ranks only behind Weld County in permitting and well starts, but permits and drilling activity are down statewide this year.

Garfield County’s oil and gas drilling activity is at its lowest level in a decade, the latest state statistics show.

Meanwhile, Mesa County continues to rank third in the state in drilling permits this year, although there’s been nearly no actual rig activity in the county this year.

According to Colorado Oil and Gas Conservation Commission statistics, Garfield County has seen drilling begin on 444 wells this year, as of early November.

That compares to 877 for all of last year, and 1,688 in 2008, when drilling activity peaked in the county.

The last time the county has seen less drilling was 2003, when there were 417 well starts. There were 585 the following year.

The state had issued 904 drilling permits in Garfield County this year as of Nov. 6, compared to 1,323 for all of last year.

The county continues to rank second statewide in both permitting and well starts.

Weld County leads the state in those measurements, with 1,543 approved permits and 1,180 well starts this year. However, it also has seen permitting and drilling activity slow down from last year.

Statewide, 3,243 permits have been issued so far this year, compared to 4,659 for all of last year. Well starts are at 1,888, versus 3,128 for all of 2011.

In Mesa County, 136 permits have been approved, up from 127 for all of last year. However, drilling has begun on just four wells this year, versus 37 in 2011.

Rio Blanco County ranks fourth this year in permits, with 102, compared to 109 for all of last year. But it also has seen actual drilling activity slip from last year (44 well starts versus 69).

Mesa County’s permitting activity was buoyed by numerous applications early in the year by what at the time was Delta Petroleum, a company with lease holdings centered in the Collbran area. Delta later this year completed bankruptcy reorganization, changed its name to Par Petroleum Corp., and pooled its Mesa and Garfield county assets with Laramie Energy II in a joint venture called Piceance Energy, LLC. Piceance Energy has begun applying for permits in Mesa County.

Encana USA and Axia Energy, a Denver-based company that also has leases near Collbran, have been fairly heavily involved in permitting in Mesa County as well.

Companies in western Colorado’s Piceance Basin have been beset by low natural gas prices, and more recently by dropping prices for natural gas liquids such as ethane and propane.

According to Anderson Reports, just eight drilling rigs were operating in Garfield County as of early November, compared to 20 at the start of the year. Most of the recent activity in the county in recent years has involved just a few companies, and one of them, Bill Barrett Corp., ended up suspending its local drilling program to pursue projects elsewhere involving oil.

It subsequently announced plans to sell what eventually will amount to about a quarter interest in its natural gas holdings south of Silt to Vanguard Natural Resources to help reduce debt and fund other projects.

Meanwhile, Antero Resources revealed it is selling all its Piceance Basin assets to focus on eastern U.S. projects involving liquids-rich gas and oil.

Both Vanguard and the buyer of the Antero assets, Ursa Resources Group II LLC, have expressed optimism that natural gas prices will increase over the long term.

In another recent announcement with a bearing on the future of Piceance Basin activity, Encana and steel-maker Nucor Corp. reached a joint venture cost-sharing agreement that could enable Encana to drill more than 4,000 wells in Garfield and Rio Blanco counties over 20 years. The deal is designed to serve as a hedge for Nucor against potentially higher future natural gas prices at its plants, while helping Encana pursue its long-term drilling plans.

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