Drilling permits could top 1,000 | PostIndependent.com

Drilling permits could top 1,000

Garfield County is on pace for more than 1,000 drilling permits to be issued in 2005, some 200 more than 2004’s record-breaking total.More than a third of oil and gas drilling permits issued so far in Colorado this year are for wells in Garfield County. The county is in the middle of a natural gas development boom. Almost twice as many drilling rigs are operating in the county now than at the start of last year, according to Colorado Oil and Gas Conservation Commission figures. As of Thursday, the state had approved 436 permits in the county. That’s 34 percent of the state’s total. “The pace of development is astounding,” said COGCC director Brian Macke. Weld County, long the state’s leader in drilling activity, is second so far this year, with 344 permits. Statewide, 1,284 permits have been approved so far, Macke said. He now expects 3,700 oil and gas permits to be issued statewide this year. That compares to a record-high 2,917 permits last year, and 2,249 in 2003. A continuing increase in activity caused Macke to revise his prediction of only about two weeks ago that about 3,330 permits would be issued in Colorado this year. “I guess my annual projection keeps changing,” he said. As of April 6, 38 of the 74 rigs in the state were operating in Garfield County. It has long been the case that as many as half of the rigs operating in the state have been based in the county. But many more rigs are now active both statewide and in the county. At the start of 2004, 21 rigs were operating in the county, and 47 statewide. By year’s end, some 70 rigs were in the state. In early March, 42 rigs were in Garfield County alone, almost as many as were in all of Colorado at the beginning of 2004. Macke said Colorado and Wyoming recently have been trading back and forth as the leading state in the Rockies for rig activity. Gas developers in Garfield County and the state continue to obtain more rigs despite a nationwide shortage of them. “They’re having them built, they’re moving them in from other states,” Macke said. As for drilling permits, Weld County led the state in 2004, with 831, up from 757 in 2003. Garfield County came in a close second, at 792, a huge jump from 567 a year earlier. But Garfield County started out this year in the lead, with 25 percent of all permits issued for January. Its share of the statewide total has continued to grow since then. Macke said the county could significantly exceed 1,000 approved permits this year.Last year, industry observers began predicting that the county could see 10,000 wells drilled over the next decade. “At the rate they’re going this year that’s starting to look more and more realistic,” said Doug Dennison, Garfield County’s oil and gas auditor. As of January 2004, Garfield County had a total of 1,669 active wells. That figure has since topped 2,500. What actually happens in terms of drilling in future years depends on gas prices, Dennison noted.”I guess my personal feeling is that we’re kind of at the tip of the iceberg. I think we’re going to see increased levels of activities for the next couple of years at least,” Dennison said. He said Williams Production, one of the county’s leading gas developers, wouldn’t have recently ordered 10 new rigs “if they didn’t have plans to use them.” Dennison said he thinks 45 rigs could be operating in the county within three to six weeks, and 50 by year’s end. Macke said rising natural gas prices in Colorado continue to drive the drilling boom. The price now stands at $6.65 per thousand cubic feet of gas, compared to $2.50 just three years ago. “I’d say that all the dynamics are in place for Garfield County and other places in the Piceance Basin to be a primary focus for oil and gas activity,” he said. The natural gas basin, centered in the county’s western half, offers immense resources and low drilling risk, Macke said. Also, more pipeline projects are continuing to be planned and will help provide transportation to markets elsewhere across the country. Macke said 86 percent of wells being permitted in the county are now directional, meaning more than one well is drilled from the same pad. “The directional drilling does help a lot in terms of the county absorbing the impacts,” he said. Macke said gas companies also continue to pursue bringing in rigs that are quieter and create less visual impact. Meanwhile, the state’s new budget includes funding for a new COGCC field inspector in Garfield County. “We’re doing whatever we can to keep up with this high level of development,” Macke said.Contact Dennis Webb: 945-8515, ext. 516 dwebb@postindependent.com

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