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Bill Grant does come up with the “Bash Sen. Penry” headlines. On March 24, he stated how Penry’s facts were wrong. He says Penry gave the figure of Piceance Basin is down 60 percent in rig count. The next closest was New Mexico at 50 percent. Within 2 weeks, the rig count had gone down 78 percent in the Piceance and 69 percent in New Mexico.
It depends upon which day you ask what the rig count is. The count went down from 30 to 23 in five days. Grant’s authority is Richard Alward, whose numbers in a recent column also indicate that the Piceance has dropped at least more than any surrounding states I believe all these statistics show that the Piceance has dropped the most.
The Piceance has suffered the most from the Colorado Oil and Gas Conservation Commission rules because the rules are the harshest here. Weld County and Trinidad were spared some of the Division of Wildlife rules. The Piceance was not spared.
It is true that New Mexico was looking at similar rules to Colorado’s COGCC rules. Gov.
Bill Richardson asked for suspension there when the economy began dropping.
We may think “a few rigs” don’t make much difference. It takes $50 million per year to drive one rig — which translates to jobs and services locally. At the reduced rate in 2009, versus 2008, there will be $3 billion to $3.2 billion less investment in local energy. Get ready for 2009/2010, when the severance tax is severely reduced.
The tired argument goes on that the reduction in drilling is all about
the national economy, over-supply, commodity prices. That is one part.
Northwestern Colorado has lost far more than surrounding states due to the
COGCC rules, the one part Colorado has control over.
March 17, 2009 at a “Community Energy Forum” panelist Susan Alvillar, community affairs specialist for Williams Energy, concurred that the rules aren’t the sole reason for the drilling slowdown: “Laying the rigs down is a business decision. Putting them back up is an economic decision.”
Sen. Penry is right. If we make it impossible for energy companies to make economic sense in western Colorado when the price of gas rebounds, those companies will go to states with less punitive regulation and tax on their business.
LOIS DUNN
Grand Junction
3 Responses to “Piceance has suffered from COGCC rules”
Posted March 26th, 2009 at 3:09 pm Login to Send PM Report this comment
The rules (when they take effect) won’t apply to any existing drilling permits. Why would the gas companies take out wells that cannot be effected by the new rules until the new permits are issued for next year? Why would they not continue to drill THIS year under the old rules for as long as they can?
Unless there’s some other factor involved…
Posted March 26th, 2009 at 4:46 pm Login to Send PM Report this comment
Scott, The oil & gas industry is very conservative and capital intensive. These companies plan as far ahead as possible in order to protect their equipment and project investments. Moving out of Colorado as soon as possible gives exploration and production projects greater lead time to set up in states where environmental regulations are more favorable as there is competition for choice drilling locations. Oil & gas companies have to commit financial resources early in order to end up with successful drilling programs. Starting such a program requires overcoming inertia and then keeping the inertia rolling. So, these companies have been pulling equipment and personnel out of the adverse circumstances in Colorado to put them to work quickly in more favorable climates. Timing is everything when negotiating with land owners, filing for drilling permits, setting up infrastructure and complying with environmental regulations. Creating a climate conducive for both environmentalists and industry is something current Colorado politicians have not mastered, because, I believe, most Colorado legislators have very little business experience.
Posted March 26th, 2009 at 4:49 pm Login to Send PM Report this comment
Ms. Dunn,
When you just repeat Penry’s talking points, you really don’t appear to be much of a thinker.
Yesterday Sen. Penry complained about the fact that the rules were different in different parts of the state. However, last spring he was screaming the COGA complaint about the rules being “one size fits all.” Thus, the COGCC final rules were modified so that they were appropriate for different areas around the state, exactly what COGA and Penry claimed the industry wanted. Then they are given what they want and they reverse their story.
Fortunately for those of us who live in western Colorado, our environment and our wildlife are the envy of the rest. So what has truly happened is our natural heritage has been spared while the rules allow the areas around Trinidad and Weld County to continue to be plundered.
As for the New Mexico pit rules, their original rules were much more onerous than anything proposed for Colorado. They were retroactive and very rigorous. So NM Gov. Richardson scaled them back a bit, but they are still harder than any rules developed for Colorado. You ought to read the rules, not just someone else’s talking points.
Can you explain what is the difference between an “economic decision” and a “business decision” ?
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