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June 11, 2009
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EnCana official warns against strict regulation

SILT, Colorado - A senior official with EnCana Oil and Gas said on Tuesday that his company is confident the U.S. economy will recover fairly soon and that natural gas will play a big role in the nation's transition from an oil-based economy to a greater reliance on alternative energy resources.

But, said vice president Don McClure, that "big role" may not include gas pumped from the rich fields of Western Colorado, if it turns out that companies must turn their focus on regions where it is cheaper to get gas out of the ground and move it to market.

McClure, speaking to a small crowd of locals at the Silt fire station, said Colorado's future in the gas industry depends on such variables as the costs of production versus the market price of gas, and difficulties posed by government regulations.

He said that the cost of drilling and extracting gas from deep underground is roughly half as much in newly discovered eastern fields, such as one in Pennsylvania, as it is in for wells in the Piceance Basin, a vast region that includes territory in Colorado, Utah and Wyoming.

Until late last year, Colorado was the center of a huge boom in gas drilling, but many companies either cut back their Colorado operations or simply left the state when the national and international recession took hold.

Concerning the nature of the gas fields on the Western Slope, McClure reassured his audience that "it is very, very solid," and is "one of the best" fields discovered so far in the U.S. The basin is estimated by the Colorado Petroleum Association to contain as much as 31 trillion cubic feet of gas, the largest field in the Rocky Mountain Region.

McClure said that there is enough gas in the ground in the U.S. to meet the nation's needs for up to 100 years, which he estimated may be about how long it will take for the country to complete the transition from an economy based almost entirely on coal and oil to one that relies more on alternative energy resources.

McClure also told his audience that his company is opposed to proposed federal legislation aimed at forcing gas companies to reveal what chemicals they use in the process of hydraulic fracturing.

Known as "frac'ing," the process involves the injection of a mixture of sand, water and other substances into a newly drilled well to break up the surrounding rock and make it easier to get the gas out of the ground.

Critics of the practice say it has the potential to pollute nearby groundwater with potentially hazardous substances, while industry representatives say that there is no evidence of this and that the practice is essential to getting as much of the oil and gas as possible out of the ground.

Colorado legislators Diana DeGette, D-Denver, and Jared Polis, D-Boulder, joined two eastern lawmakers this week to introduce the FRAC Act, which would require gas drilling companies to reveal exactly what chemicals are used in the process.

McClure and another EnCana representative, Sherry Long, told those at the meeting that the state already requires that gas companies report the chemicals they use in regular reports known as MSDS sheets, which are on file with the Colorado Oil and Gas Conservation Commission and available for public inspection.

McClure rejected the commonly held notion that the gas companies are opposing the legislation because they want to avoid disclosure, and said, "The states are doing a good job of regulating [the frac'ing components]. The industry's perspective is, it's a state matter."

McClure also said that Colorado's regulatory oversight of the gas industry is stricter than it is in Wyoming and Utah, and implied that the stricture regulatory environment could discourage gas companies from returning to the Piceance Basin well fields when the economy recovers.

jcolson@postindependent.com


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The Post Independent Updated Jun 11, 2009 01:16AM Published Jun 11, 2009 01:15AM Copyright 2009 The Post Independent. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.