Energy-hungry nation behind boom
The Piceance Basin is turning into a giant of a natural gas field in the United States.But it’s still a mere pipsqueak of a supplier to a country with an insatiable demand for gas.Skyrocketing consumption contributes in large part to the county’s gas drilling boom. Demand increases gas prices and makes investment in local gas production worthwhile where it once wasn’t.Put another way, if you’re looking for a reason why drilling rigs dot Garfield County’s landscape, look in the mirror.”Clearly it’s consumer demand that’s driving natural gas production,” said Pete Kolbenschlag, Western Slope field coordinator for the Colorado Environmental Coalition. Even Americans whose homes natural gas doesn’t supply still may contribute to the demand. People who turn on a swamp cooler or a computer rely on electrical power that’s increasingly being generated by natural gas.”Most everybody uses natural gas. It is a clean-burning fuel,” said Steve Soychak, district manager in Parachute for Williams Production, one of the leading gas developers in the county.”I think if you look at 20 years ago, there was a move away from coal and nuclear power and more of an emphasis on natural gas because of the cleanliness and the abundance.”But natural gas isn’t as abundant as it once was. Randy Udall of Carbondale, director of the Community Office for Resource Efficiency, an Aspen-based nonprofit office that promotes renewable energy and energy efficiency, said some estimates hold that over half the gas that ever will be produced in this country already has been burned.Much of that half was the easiest gas to produce. Now energy companies are turning their attention to more technically challenging gas fields such as the Piceance Basin.When natural gas was yielding only around $2 per thousand cubic feet (mcf) until about the end of the past decade, it wasn’t worth it for energy developers to do much drilling in Garfield County. But as those who heat their home with natural gas know, prices have risen substantially. Today, gas costs as much as $5/mcf.”At two bucks these gas guys never made much money. Now they are coining in bullion,” Udall said.Putting it in slightly different terms, Brian Macke, deputy director of the Colorado Oil and Gas Conservation Commission, said higher gas prices have “made projects for getting gas in the Piceance Basin very economically attractive.”‘Extravagant appetite’The outlook for continued high gas prices, and a continued local drilling boom, is the result of a trend toward increased demand and decreased supply that shows no sign of reversing.The demand reflects a nation with a growing population, and an economy that is making increased use of computers and other electronic equipment, and generating more gas use in the commercial sector. Americans also are doing more cooling of houses in the summertime, particularly in Sunbelt states.As a result, a fuel that used to see mostly seasonal winter demand for home heating is now consumed heavily all year-round.”The nation has an extravagant appetite for natural gas,” said Udall.”Each year, 280 million Americans use as much natural gas as 3 billion people in Europe and Asia,” he wrote in “Methane Madness: A Natural Gas Primer,” a CORE publication prepared with the assistance of Denver energy analyst Steve Andrews.Natural gas consumption in the United States has increased 36 percent since 1986.The United States consumes more than a quarter of the gas being produced around the world. But unlike the situation with oil, it has not had to rely heavily on imports to meet supply. Rather, it produces 85 percent of the gas it needs, and imports most of the rest from Canada, according to CORE.But domestic production has “flatlined” for 15 years, Udall said. Production is actually down almost 5 percent so far this year, despite heavy drilling activity being encouraged by the Bush administration’s pro-energy policies. Meanwhile, Canada is losing its enthusiasm for exporting gas to the United States. After all, Canadians are also paying more for gas, the country is dealing with the impacts of its own drilling boom, and it is facing its own prospects for production declines.Yet Udall notes that the U.S. Energy Information Administration forecasts that the United States’ gas demand could increase 50 percent by 2015.These reasons combined put an increased focus on boosting domestic production in places like Garfield County, and create an expectation for a continued drilling boom here.The county alone probably produces about enough gas to heat every home in Colorado, said Udall. Colorado, which ranks sixth nationally in gas production, exports more gas than it consumes. Those exports have increased 20-fold in the last 15 years, said Udall.On a national scale, though, the Piceance Basin produces only about 1 percent of the approximately 60 billion cubic feet per day being consumed in the United States.Yet the area has much potential. Some parts of the Piceance Basin are estimated to contain 60 billion cubic feet per square mile – enough to meet a day’s domestic demand. Some industry experts say reserves could run as high as 100 bcf per square mile in the so-called “sweet spots” of local gas fields.That, according to Ken Wonstolen of the Colorado Oil & Gas Association, is why the basin is considered “one of the crown jewels on the whole continent.”If the state Geological Survey is correct in estimating that 20 trillion cubic feet could be recovered from Garfield County gas fields, that would be worth $100 billion, Udall notes.If it turns out that 100 tcf is recovered, as some in the industry say is possible?Well, as Udall has been wont to say in reference to energy producers’ local gas bonanza, “You do the math.”Contact Dennis Webb: 945-8515, ext. firstname.lastname@example.org
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