Colorado shale companies focus on methods to offset costs
Areas of oil shale of the Green River Formation, Colorado, Utah, and Wyoming (USGS)
Source: US Geological Survey
Last year, oil prices hit 12-year lows.
While fantastic news for consumers, it has been rough for the oil and gas industry. Colorado is no exception as drilling shale there is expensive. Rather than move to the Permian Basin where drilling is cheaper, however, several energy companies are taking a different tactic.
CNBC last week reported that energy companies such as Noble Energy, Anadarko Petroleum, and Colorado natives PDC Energy and SRC Energy have buckled down in Colorado’s shale fields, favoring their best properties and focusing on their drilling methods and the knowledge they’ve gained from years of operating in the Centennial state to drive their costs down.
Denver-based PDC Energy, for example, invested effort in its Wattenburg property and as a result of refining its processes the company will see a growth in oil production by 20% a year, even with oil prices low. It did recently enter the Permian Basin, but actually plans to sell its assets in the Utica Shale of the northeast to focus on Wattenburg and Texas.
So far, these drilling companies have seen some success.
Overall production in Colorado is making its way back up, and Colorado’s economy is seeing the benefits. In general, Colorado’s economy is diverse and hard times in the oil and gas industry won’t cripple it. Since the 1980s, the state has worked to make this so. JJ Ament, CEO of the Metro Denver Economic Development Corp, told CNBC, “While oil and gas is a very important component of our economy, we don’t rise and fall based on the price of oil or the price of gas.”
Even so, the industry still a large part of Colorado’s economy. Ament himself said that the oil and gas industry creates about $10 billion in economic activity, and is also a “critical job creator,” especially in rural areas. Its importance to Colorado should not be understated.
The state has an established history of regulating voluntarily to promote safety, responsible practices, and community welfare while simultaneously promoting growth of the industry. Colorado’s oil and gas industry currently supplies more than 5% of the nation’s natural gas, and is home to 10 of America’s largest natural gas fields and 3 of its largest oil fields. It produces 1.1 million barrels of oil per day with projections leading to 1.5 million by 2030. It supports over 213,000 jobs, and pours more than $25 billion into Colorado’s economy. Though it’s true that without the oil and gas industry Colorado would still stand, it would have one heck of a limp.
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