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I write this letter because I work hard and work is slow and I want to keep my job.
I work for a trucking company in the oil and gas fields in Colorado and make a good living doing it when the bleeding heart liberals and brain dead, hypocritical environmentalist let me.
People in this country have forgotten that everything comes from the ground! What do environmentalists and liberals live in? Houses built from trees. What do they drive? Cars built from steel or even a bike built from aluminum. How do they heat their homes? Natural gas, propane or, heaven forbid, wood.
The left in this state, county and country have all gone insane. We are allowing a few individuals in government and people in a few small towns like Aspen and Bolder to ruin and run into the ground our way of life and living. It’s time for those of us who think with our brains to bring our communities back to good common sense principles. It’s time to use the sense God gave a horse to run things in our state and county. Not public opinion and definitely not political correctness, which are the greatest evils this country faces.
I know how people are attacked who share my political views. I don’t care. I don’t care about my lack of degrees or letters after my name. I will speak up! I am grateful to live in a country where it’s the law that I can say the things I think and you can say the things you think — even if you are wrong.
Let’s let the people we have elected know they work for us. Let’s let them know that gas and oil is how we make our livings and if you are not for the gas and oil industry we will simply vote you out of office. That’s a promise. Let’s let those who are opposed to the gas and oil Industry know we outnumber them. Let’s take back our country, communities and jobs!
MICHAEL D. NASH
Rifle
27 Responses to “Don’t let the left ruin our oil and gas industry”
Posted March 26th, 2009 at 4:28 pm Login to Send PM Report this comment
Mr. Nash,
Here is a quote from an energy analyst’s report:
“The quickest and most certain method to restore equilibrium to our currently oversupplied gas market would be to see a reduction in drilling activity.”
When was that written? In March of 2007, exactly two years ago.
Even then, those making decisions in the O&G industry knew that they were producing too much gas and that there was not enough demand. Even then, these executives knew that they needed to slow down their business. But they were greedy.
Now that the economy has tanked, O&G isn’t just slowing down, it’s cratering. Liberals and Environmentalists, while nice scapegoats, had nothing to do with this.
You need to blame the correct people, and they are the executives in the O&G industry. They could have slowed down two or three years ago and kept most everyone employed at that time. Instead they hit the accelerator and put more and more rigs in the field. Now people like you and me are having to pay for their greed with our jobs.
So yes, the people we elect do work for us. However, the blame lies with O&G executives, and frankly, they don’t care about us at all.
Posted March 26th, 2009 at 4:45 pm Login to Send PM Report this comment
Bruce: “Here is a quote from an energy analyst’s report:“The quickest and most certain method to restore equilibrium to our currently oversupplied gas market would be to see a reduction in drilling activity.”When was that written? In March of 2007, exactly two years ago.”
Whoever that analyst was, he should have been fired.
The price of natural gas climbed SHARPLY, beginning in the early part of 2008 and did not peak until July of 2008. To have reduced drillling two or three years ago would have been, not only stupid, but catastrophic as the price of natural gas would have climbed so high as to make gas for home heating the equivalent of $8 gasoline.
Bruce: “Even then, those making decisions in the O&G industry knew that they were producing too much gas and that there was not enough demand. Even then, these executives knew that they needed to slow down their business. But they were greedy.”
That is hogwash.
The reason gas prices plummeted is due to the recession, not greed. Natural gas storage is very limited so the increased production was being consumed, it wasn’t going into storage. Now that demand has collapsed, because of the recession, and storage is full, production has to slow and slow sharply.
Blame the oil and gas companies for other things, but not for drilling too much.
Posted March 26th, 2009 at 4:54 pm Login to Send PM Report this comment
Um, bullishfrog, you are aware, aren’t you, that the rapid price increase of natural gas and oil in 2008 was because of speculation, not because of demand. You knew that, right?
Even back in 2007 it was apparent that natural gas supplies were exceeding demand. Drilling faster would only make that problem worse.
Now there is so much of a glut and a bunch of brand new wells producing more gas than anyone can use, so the cut back in drilling will be very severe.
Greed. That’s what was driving the industry then. There was too much gas, not enough pipelines, and the industry increased the number of new wells. What else could it have been besides short term greed?
Posted March 26th, 2009 at 5:05 pm Login to Send PM Report this comment
“Um, bullishfrog, you are aware, aren’t you, that the rapid price increase of natural gas and oil in 2008 was because of speculation, not because of demand. You knew that, right?”
No doubt speculation had a lot to do with how high the price got, both in natural gas and crude. I even wrote a letter to the editor about that and have posted that here in the past.
But that does not mean that demand was not at very high levels. Where do you think the gas that was being produced was going? It wasn’t being vented, was it?
Bruce: “Even back in 2007 it was apparent that natural gas supplies were exceeding demand. Drilling faster would only make that problem worse.”
Really, please tell me where the gas was going that wasn’t being consumed. are you suggesting that producers were not selling all they could make into an $18 an MCF market?
Bruce: “Greed. That’s what was driving the industry then. There was too much gas, not enough pipelines, and the industry increased the number of new wells. What else could it have been besides short term greed?”
Greed as a favorite word used by the anti-business crowd. While it certainly fits some folks, particularly the scoundrels who caused the mess we are in now, it most defintiely does not apply to drilling.
Bruce, I somehow do not envision you praising the gas companies last July for having shut down their production, as you suggest they should have, with gas going over $20 an MCF. Instead, I envision you screaaming GREED at those producers shutting down in order to get prices to go higher.
NO?
Posted March 26th, 2009 at 5:07 pm Login to Send PM Report this comment
Correction to next to last paragraph above:
“it most definitely does not apply to drilling TOO MUCH.”
Posted March 26th, 2009 at 5:23 pm Login to Send PM Report this comment
bullishfrog, The following supports your impulse to fire the analyst, his quote was used out of context, and allegations of HOGWASH!!
“Declining Rig Count: The quickest and most certain method to restore equilibrium to our currently oversupplied gas market would be to see a reduction in drilling activity”. from The Yin and Yang of Production Growth, Rig Count, and Gas Storage by Dave Pursell 713-333-2960 on March 28, 2007 (dpursell@pickeringenergy.com) http://www.tudorpickering.com/pdfs/Pickering%20-%20The%20Yin%20and%20Yang%20of%20Production%20Growth%20Report%20March%202007.pdf
Please, read the report. The quote from post # 1 comes from the section entitled “Production in Various Rigcount/Well Quality Scenarios”, a purely theoretical discussion as elucidated by the title of the subsequent section “Enough Theoretical Scenarios…What About the U.S. Gas Market?”.
Posted March 26th, 2009 at 6:40 pm Login to Send PM Report this comment
Goodness me the left is responsible for a lot. Two months in office and already passing laws that have ruined the oil and gas industry. Never mind that lack of regulation and outrageously risky behavior tanked the economy. Let’s forget that natural gas prices have fallen 70% in the last year.
Our schools are in grave shape indeed if someone with at least a fifth grade education doesn’t know who was in control of the country when all of these things were happening.
Look what’s happening in Wyoming (http://www.casperstartribune.net/articles/2009/03/26/homepage_lead/doc49caeab94314d403449268.txt), where the energy industry doesn’t have to worry about all those pesky liberals.
Actually, after the right ruined the country we DID remind those in office who they work for, though around here people seem to want to blame the left despite all the incontrovertible evidence to the contrary.
We may not make it out of this mess. We’re in a deep hole and my heart goes to all those unfortunate souls who are losing their jobs. No one is safe and things are going to get worse before/if they get better.
But don’t fear, Mr. Nash, around here you’re in the majority. And yes, you have every right to speak your mind even if you are wrong.
Posted March 26th, 2009 at 7:47 pm Login to Send PM Report this comment
Actually, I believe the Democrats have been in control of Congress for over 2 years. Everyone blames the president for the state of the country but it is Congress who makes the laws. So, dgadbc, the left has been “in office” for a lot longer than 2 months.
Posted March 26th, 2009 at 8:28 pm Login to Send PM Report this comment
So much bickering. Ok, just for once, lets not do the finger pointing game and forget the past. It is irrelevant except it gives us a perspective of what the damage is and what we have to do to improve our country. So lets ask questions. What do we do next? How do we keep the O&G industry to continue employing our local men and women, but not destroy the very land we depend upon.
The new COGCC rule making process has passed the legislature. The governor has to sign it and that will be that. Finally. The measures’ opponents will bicker and fuss, but I don’t think they realize the impacts the industry has caused to Western Colorado. Example: Cripple Creek, the guy in Debeque that burned his throat from benzene poisoning in his water table, the 60 foot drilling mud turd off the side of the Roan plateau last winter. The industry has seriously impacted every aspect of our environment, from the water table to the air quality, O&G has gone unchecked for too long.
No one that I know of who has pushed the recently passed rules for gas drilling have ever had the intention to destroy the industry or our economy. But like any body that has a position of power, if the industry goes unchecked, they will always seek more power. The Iron Law of Oligarchy, it won’t be denied. It happens all the time.
Can we even start to debate our next move? Can we brainstorm different alternatives? Wind, solar, geo-thermal? Im sick of hearing people point fingers at the other side instead of getting something done.
Just remember that the definition of the problem is the performance specification of the solution. If you can figure that out, and apply it to our states and nations woes, it will truly be a happy day for America.
Posted March 26th, 2009 at 11:52 pm Login to Send PM Report this comment
Oh come now. In 2007 gas produced in the Piceance Basin was selling some months at 80-90% BELOW the NYMEX price of gas. On average during 2007, locally produced gas was sold at 30% below market price. If that wasn’t a signal that there was a glut of gas, I guess the markets were already broken and nonfunctional. This was before the speculators created an artificial run up in the price.
But in 2007 and into 2008, drilling in Colorado accelerated while sales of natural gas started to level off and sales of oil actually dropped. Someone was making the decision to push full speed ahead on the drilling side. A few people made a bunch of money off this and a whole lot of people are now losing their jobs because of this.
Greed. I’m not sure how else to explain these bizarre decisions.
I’ll try to listen to dylman now and stop “bickering”.
Posted March 27th, 2009 at 6:35 am Login to Send PM Report this comment
“Actually, I believe the Democrats have been in control of Congress for over 2 years”
They were in the majority, barely, they were not in control. Bush started vetoing left and right when the congress stopped rubber stamping him.
But Dylman, I agree with you, we need stop the bickering and finger-pointing. It’s taken a lot of years and a lot of bad government to get us into this mess. No one party is to blame.
Posted March 27th, 2009 at 6:59 am Login to Send PM Report this comment
dgadbc: “But Dylman, I agree with you, we need stop the bickering and finger-pointing. It’s taken a lot of years and a lot of bad government to get us into this mess. No one party is to blame.”
Cannot agree with that conclusion but, it does no good saying so without also remembering the, by now, overused statement (pardon if it is slightly in error) that “Democracy is a mechanism by which the people get the government they deserve.” So, the one actually responsible is the one far too many people fail to look at, namely themselves. Or, to put it another way “look in the mirror.”
How many people does each one of us know who will pay any attention whatever to what is going on between election cycles, even at the local level, or if they pay any attention at all if a situation is developing if it does not affect them directly? How many of them, when discussing “pork” define it as “something for someone else” but, when it is for them, or to their benefit, re-define the very same type of expenditure as “wise public or social policy”?
And, look closer to home at the recent contest between Bernie Buescher and Laura Bradford, even in Grand Junction. What did some end up discussing as part of the campaign? Who would be able to use which bathroom? Now, was that not a purely diversionary tactic? It absolutely was, as there was, and still remains a law governing the use of those facilities but, it did not keep some from getting “all wound up” over what was esentially a non-issue. The same thing happens at every level of government.
The real problem is that the attention span of most people is about 30 seconds, even relating to things that would command our constant attention. And, underlying that is simply that they don’t care enough, either to pay attention or act when they should.
Posted March 27th, 2009 at 7:24 am Login to Send PM Report this comment
Bruce: “Oh come now. In 2007 gas produced in the Piceance Basin was selling some months at 80-90% BELOW the NYMEX price of gas. On average during 2007, locally produced gas was sold at 30% below market price. If that wasn’t a signal that there was a glut of gas, I guess the markets were already broken and nonfunctional. This was before the speculators created an artificial run up in the price.”
Bruce, if there was a glut, where was the gas going?
You cannot deny the fact that gas prices skyrocketed in 2007-2008. Storage levels were not rising. Gas produced was being consumed and the rise in price was not all a result of speculation. What you are saying flies in the face of reality.
Last summer, as oil prices were skyrocketting, Democrats in congress were opposing drilling offshore. Their excuse was that oil comapnies were NOT DRILLING ENOUGH on land leases. Many were accusing the oil companies of GREED because they were holding back production in order to push prices higher.
Now here you come along blaming the oil and gas companies for DRILLING TOO MUCH.
Bruce, you are making no sense. You want to accuse the gas companies of greed because they drilled too much. Laughable.
Posted March 27th, 2009 at 1:41 pm Login to Send PM Report this comment
From post # 1 reference that I cited in post # 6, “The onshore gas production growth has been modest (2.5% annually) even though rig count has more than doubled in the past 5 years.” this time under the section entitled “Enough Theoretical Scenarios…What About the U.S. Gas Market?”. The increase in rig count does not translate into greedy increases in gas production. “First year well productivity is in a declining trend over the past 12 years as the number of wells drilled has generally increased. This is why production growth did not shoot through the roof.”, pretty much shooting the “greed” argument full of holes, which is what I would expect when we use real world numbers instead of theoretical numbers. Bruce86’s assertion that “those making decisions in the O&G industry knew that they were producing too much gas and that there was not enough demand”
is based on a theoretical dissertation of what would happen if drilling decreases from 10 wells annually to 6. Deceptive people can use quotes for their own purposes when they don’t declare their source.
Posted March 27th, 2009 at 1:53 pm Login to Send PM Report this comment
Dan, what makes no sense to me, in Bruce’s argument, is that a gas company, for reason of greed, would spend millions of dollars drilling wells that would be producing into a glutted, and therefore uneconomical market.
That would not be greed, because greed implies that the motivation is profit. It would be better characterized as stupidity.
Posted March 27th, 2009 at 3:06 pm Login to Send PM Report this comment
bullishfrog, I agree. One actually has to think about your argument. I had the luxury of finding the original document from which the quote was pulled. I didn’t know gas production, as in first year productivity, is actually in decline. One doesn’t have think about that, it hits them full in the face right between their eyes.
Incidently, my post # 6 was added at about noon today. GJSentinel.com told me it ended up in the spam file and recovered it when I inquired.
Posted March 27th, 2009 at 3:07 pm Login to Send PM Report this comment
bullishfrog,
“Last summer, as oil prices were skyrocketting, Democrats in congress were opposing drilling offshore. Their excuse was that oil comapnies were NOT DRILLING ENOUGH on land leases. Many were accusing the oil companies of GREED because they were holding back production in order to push prices higher.
Now here you come along blaming the oil and gas companies for DRILLING TOO MUCH.”
I could be wrong, but I believe the complaints about not drilling on land leases were for OIL wells, while the blame is on GAS companies for drilling too much (Capitals for emphasis, not yelling). Two different animals.
Posted March 27th, 2009 at 3:33 pm Login to Send PM Report this comment
Scott, I believe you give those complaining more credit than they deserve for being able to differentiate between oil and gas. Those are the same people who do not differentiate between the value in drilling into oil and gas reserves that are rich in hydrocarbon deposits and those that are poor in hydrocarbon deposits. Of course, from the posts previous to yours being recorded, we now know that there really was only a 2.5% annual increase in gas production. That does not translate into too much gas drilling, because although rig counts increased, gas volumes from new wells kept decreasing.
Posted March 27th, 2009 at 3:46 pm Login to Send PM Report this comment
Dan,
Thanks for tracking down the full report by Pursell. I only had a couple of hardcopy pages of it attached as an appendix in another report.
You may be right, the passage I quoted might be out of context, but I’m not sure. Yes, it was from the section of simplified scenarios, but the author drew the same conclusions in the section where he evaluated the real life situation of the Barnett Shale rig counts and production values.
He observed that during times of rapidly increasing drilling more marginal wells get drilled, and thus the value of average production per new well drops during these times. When new drilling slows down again, the marginal wells are not longer attractive and average production per new well will increase again.
After evaluating the productivity of the Barnett Shale, the author concluded “that ~350 onshore gas-directed rigs will have to be laid down to cause 1.7bcf/day of onshore production growth to flatten”
Maybe I’ve missed the point of this analysis. It wouldn’t be the first time. And maybe I’ve incorrectly attributed the actual drilling trends to greed. Maybe bullishfrog is correct and what actually happened the last couple of years is better described as motivated by stupidity.
I disagree that I was being deceptive. I did not try to hide the source. I clearly provided enough information for you to find it. It was just laziness on my part not to track down the source first. Both economics and psychoanalysis are way outside of my areas of expertise. I probably should not have been so quick to draw conclusions.
But, to get partially back to the original topic, what was driving recent drilling activity in Colorado?
In 2007, the monthly average price for Colorado natural gas peaked in February at $6.44 per million BTUs (this was only 7% below the NYMEX price). The price of Colorado gas dropped over the year, bottoming out in October at $3.13 per million BTUs (this was 51% below the NYMEX price). *These numbers are from the COGCC web site.
During this same period, the price of gas to Colorado residential consumers went from $9.11 per mcf in February to $13.69 in August then back down to $7.81 in November. *Numbers from the US Energy Information Agency. 1 mcf (thousand cubic feet) in Colorado = about 1.06 million BTUs.
So the prices that consumers in Colorado were paying were divorced from the prices that producers were selling their gas to the pipeline operators. Prices for Colorado producers were dropping and were way below the NY market pricing levels. Yet, these producers continued to drill thousands of new wells in Colorado even though prices were below what they claim to need to make a profit, and even though pipelines were full, even well into 2008. Yes, the price of gas that consumers were paying went through the roof, but Colorado producers were not seeing this rate of increase.
What happened? Why was the pace of drilling so frantic even though producing gas in Colorado was, at best, marginally profitable? I don’t claim to know, but it sure seems bizarre.
Sorry for the long post.
Posted March 27th, 2009 at 3:55 pm Login to Send PM Report this comment
Scott, yes, as I stated in my post, I was referring to oil.
Here Bruce accuses the gas companies of drilling too much. The price of crude and natural gas move pretty much in tandem.
The supply/demand situation for both oil and gas was very tight in the first half of 2008 and that was the main reason prices shot up. Speculators jumped on the trend and exagerated the move.
If one were to look at the inventory of natural gas in the first half of 2008 one would see that it was at the low end of historical averages. That means that gas production was barely keeping up with demand.
Had gas companies intentionally cut back on production in the sort of supply/demand environment we had in the latter part of 2007 and the first half of 2008, they could have been rightly accused of intentionally driving prices higher. They could have been accused of greed.
They were not, as Bruce claims, drilling too much.
Posted March 27th, 2009 at 4:00 pm Login to Send PM Report this comment
Bruce: “What happened? Why was the pace of drilling so frantic even though producing gas in Colorado was, at best, marginally profitable? I don’t claim to know, but it sure seems bizarre.”
Bruce, it is my understanding that this area of Colorado was under-drilled in the past because of a lack of pipeline capacity. It is also my understanding that, while pipeline capacity has increased, it still remains insufficient to fully transport all that can beproduced in the area. As a result, the cost of transportation is very high and that helps explain why producers here get a discounted price for their gas.
Maybe someone else here has the facts on this issue.
Posted March 27th, 2009 at 5:25 pm Login to Send PM Report this comment
I know that gas can be left in the ground in a completed gas well, if the price is not right. I know that the gas wells in western Colorado are shallow and, consequently, are comparably less expensive to complete. Also, diagonal and horizontal drilling allows several wells to be drilled from the same pad with the same drill rig, which cuts drilling costs even more. So, fearing Colorado was going to implement environmental regulations that significantly increases their costs, gas companies completed lots of relatively low cost gas wells in the past several years that as a whole will continue to produce long after the rigs have left Colorado for greener pastures.
I prepared low cost proposals over the past several years for treatment of produced water for several gas companies. These proposals were not accepted, because, I believe, they were planning exactly what has happened, leaving Colorado. My proposals were part of these gas companies’ contingency plans for staying in Colorado if the political climate fostered less onerous environmental regulations. Oil and gas companies are conservative and employ long term planning. It is a myth that local, state and federal governments are going to hurt them for long. They just pick up and move. The people left behind are the ones that get hurt.
Posted March 27th, 2009 at 5:39 pm Login to Send PM Report this comment
Bruce86, I did not accuse you personally of being deceptive and appreciate your disowning deceptive. From my comment: “Deceptive people can use quotes for their own purposes when they don’t declare their source.”, you can rightly infer that I have encountered deceptive people and that they offend me. So, when I see something that looks deceptive, I will attack it, not the person, as several on these blogs are quick to do. I will deal with those case by case.
Posted March 27th, 2009 at 7:58 pm Login to Send PM Report this comment
Laura Bradford, Bernie Buescher and bathrooms on an Oil & Gas blog??? RLaitres, what kind of off-topic discussion is this? I thought the knock against Bernie was SB 08-199, the mill levy freeze, for Mesa County residents. Laura got her support from walking District 55 neighborhoods. What is the bathroom’s contribution??? How does a bathroom impact our oil & gas industry???
Posted March 28th, 2009 at 12:44 pm Login to Send PM Report this comment
Mr. Nash
you have some tough luck and some hard times ahead I think. However, it is not only oil and gas folks who are loosing their jobs. Millions of hard working americans such as yourself have lost jobs or are in danger of losing their jobs because of the recession. Unfortunately for you, the rules are here to stay. Since you hate lefties, greenies, enviros, etc. you could always move to Wyoming or Utah which are primarilly right winged. However, the recession has hit Wyoming and Utah oilfields as well and they cannot blame Colorado oil and gas rules for their slowdown, but believe what you want.
Posted March 30th, 2009 at 9:46 am Login to Send PM Report this comment
Mr. Nash I am sorry to disappoint you but oil and gas is not good. Just because we have been doing something for years and years doesn’t make it right to do. Oil and gas is not healthy for people or the environment. Also we are using our heads and thinking about the future instead of immediate gratification. I understand change scares many people. But it is something that needs to be changed for the better for everyone. It is time to think of the future and what can be done for the better of man and woman kind every where. I understand losing your job is scary but isn’t there another way instead of sticking to something that is not working. Oil and gas is destroying our environment that we all need and live in not just the left side or environmentalist. We all live here and we all need to find something better not the same because it not longer works. I am sorry to disappoint you Mr. Nash. But please look around before pointing fingers.
Posted March 30th, 2009 at 11:25 am Login to Send PM Report this comment
From an3378;
Mr. Nash I am sorry to disappoint you but oil and gas is not good.
Not good??
You must be nuts! Oil and gas are GREAT! There is no realistic alternative at this time. I am sure that 50-100 years from now something will be invented to take the place of most gas and oil usage—not all though. By then the average citizen will probably be producing what ever gas or oil they need at their home.
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