Despite tax and regulatory uncertainty — or perhaps because of it — the pace of oil and gas exploration in Colorado has jumped in recent months, according to state data.
Between March and May, an average of 621 drilling permits per month were approved by the Colorado Oil and Gas Conservation Commission, compared with 763 a month for June through August.
The number of drilling rigs in the state rose about 12 percent between May 7 and Sept. 9 to 130, according to the Anderson Report, a Golden-based survey of Western drilling activity.
The surge in drilling permits comes as the oil and gas commission is poised to adopt new, comprehensive environmental, safety and operating rules.
It also comes as a ballot initiative seeks to raise more than $300 million in energy taxes annually by removing a local property tax credit for the industry.
“With all the uncertainty, companies may be looking to get some additional permits in the bank,” said John Harpole, president of Mercator Energy, a natural-gas broker in Littleton.
A slowdown in issuing permits — known as an application for permit to drill, or an APD — also has played a role, industry executives say.
“We are putting in for more APDs in part because the time for approval has gone from 30 days to three months,” said Donna Gray, a spokeswoman for Williams Companies Inc., one of the state largest operators.
Tulsa, Okla.-based Williams has about 130 applications for permits to drill pending for sites in Garfield County, according to the oil and gas commission website.
EnCana Corp., another major operator, has more than 100 permits pending in in Garfield, Mesa and Rio Blanco counties.
“We are trying to get ahead of the curve,” said Douglas Hock, a spokesman for the U.S. subsidiary of the Calgary, Canada-based company.
“While we are adding more staff, the commission is a little short-handed,” Hock said, and that is leading to the delay in approvals.
“Some of the uncertainty about the rules is also playing into this,” he said.
There also are economic reasons for the rise in drilling, Harpole said.
“The winter gas season, with its higher prices, is coming, so you want to get wells in place,” he said.
Prices also should rise when the Rockies Express Pipeline, which moves natural gas out of the region, is reopened later this month after a section was shut for safety tests.
The oil and gas commission in slated to meet Monday and Tuesday to complete its deliberations on the new regulations and set an implementation date.
