The breakneck pace of drilling in Colorado’s oil fields will speed up a notch this fall as new rigs from China, Oklahoma and Texas begin to ease the serious shortage of drilling equipment that has hampered oil and gas production across the country.
Two made-in-China rigs are to be put into operation in western Colorado’s Piceance Basin and on the Eastern Plains in September and October. About seven more are to follow from China over the next several years.
The first of 20 Piceance-bound rigs manufactured by Oklahoma and Texas companies will be delivered in November.
“It’s a race to keep up the number of rigs available – to increase the number of rigs to meet the demand,” said Brian Macke, director of the Colorado Oil and Gas Conservation Commission.
The frenzy in the western Colorado fields is occurring because of increased demand for natural gas from new power plants and natural-gas prices that stand at $7.68 per thousand cubic feet. In the 1990s, the average price for gas was $2 per thousand cubic feet.
Macke said he can’t put figures on Colorado’s drilling-rig shortage. Nationally, there were 5,580 rigs on line during the last oil-and-gas boom in the 1980s, compared with 1,309 rigs today.
Two of the largest producers in the Piceance Basin are contracting for 37 of those rigs. EnCana has 23, and Williams has 14.
The average cost of operating those rigs has risen in a year from $8,500 a day to $14,000. Doug Hock, a spokesman for EnCana, said daily rig rates can be as high as $20,000, depending on age and size.
Many rigs now operating have been brought out of mothballs; some were cobbled together from scavenged parts.
“But we’re just about tapped out with refurbishing to get rigs working,” said Bill Croyle of Western Energy Advisors, a Denver-based company that is the sales agent for rigs made by the China National Petroleum Corp.
Croyle said eight companies have expressed interest in contracting for the Chinese rigs, which will each come with a crew of 15 to 20 workers.
Staff writer Nancy Lofholm can be reached at 970-256-1957 or nlofholm@denverpost.com.
