Colorado regulators issued a record 5,904 oil and gas drilling permits in 2006 to the state’s fast- growing energy industry, more than double the permit total from two years earlier.
The surge reflects Colorado’s growing prominence as a source of natural gas, analysts said. As production begins to drop from mature gas fields in the southern U.S., drilling in Rocky Mountain states is expected to continue expanding.
“It’s healthy growth in a region where most of the gas is still in the ground, as opposed to areas where production is declining,” said Greg Schnacke, executive vice president of the Colorado Oil and Gas Association.
The Energy Department estimated last year that the Rocky Mountain region was the nation’s top gas producer, with estimated 2006 production of 4.18 trillion cubic feet. That compares with 4.11 trillion for offshore production in the Gulf of Mexico and 4.11 trillion for the Gulf Coast onshore area.
Drilling permits issued in 2006 by the Colorado Oil and Gas Conservation Commission represented a 35 percent increase over the previous record of 4,373 permits issued in 2005, and 102 percent more than the 2,917 permits in 2004.
Garfield County in western Colorado was the state’s most active drilling area, accounting for 32 percent of all new permits issued through November. The next-busiest was Weld County, with 24 percent.
But Rio Blanco County in northwestern Colorado is growing fast, with its permit volume more than doubling from 161 in 2005 to 343 through November.
The growth in statewide drilling might have been greater except that natural-gas prices fell in 2006, lessening the zeal to produce by oil and gas companies.
Colorado gas prices dropped from a record high of $11 per 1,000 cubic feet in December 2005 to as low as $3 in the fall. The causes were unseasonably warm weather last winter that left storage levels high, as well as a shortage of pipelines to export gas, leaving a glut of the heating fuel in the Rockies.
EnCana Corp., one of the state’s largest producers, drilled about 200 wells last year in the prolific Piceance Basin of western Colorado, 25 percent fewer than in 2005.
“Lower prices were certainly a factor,” said EnCana spokesman Doug Hock. “Higher drilling costs combined with lower prices gave us a little less activity.”
Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.
By the numbers
5,904
Record Colorado oil and gas drilling permits issued in 2006
4,373
Permits issued in 2005, then a record
4.18 trillion
Gas production in the Rocky Mountain region, in cubic feet, for 2006
4.11 trillion
Production in each of the Gulf of Mexico offshore and the Gulf Coast onshore regions
