Gas rules could affect drilling in Garfield County’s Piceance Basin | PostIndependent.com

Gas rules could affect drilling in Garfield County’s Piceance Basin

Phillip Yates
pyates@postindependent.com
Glenwood Springs, CO Colorado

GLENWOOD SPRINGS, Colorado ” The Colorado Oil and Gas Conservation Commission (COGCC) may approve revised oil and gas rules in early December.

But already some companies operating in the Piceance Basin have indicated the proposed rules, which include several wildlife, health and permitting process revisions, are a factor leading them to scrutinize their investment plans for the Piceance Basin next year.

Falling natural gas prices, problems affecting the financial markets and limited pipeline capacity have companies planning to either reduce their capital investments, pull drilling rigs out of the area or maintain their current level of production.

Dave Neslin, the acting director of the COGCC, said companies currently face a “tough economic climate, and they are likely to face a tougher economic climate next year,” Neslin said.

“The oil and gas industry is certainly a capital intensive industry, and capital markets have tightened up considerably,” he said.

Neslin added that recent reports indicated that companies throughout the American West have announced that they may or will be cutting back drilling activity during 2009.

“I don’t think this is unique to Colorado,” Neslin said. “It would surprise me if our proposed rules, or amendments, are much of a factor.”

Neslin said the companies’ altered plans for the Piceance Basin are a combination of factors many operators have previously cited.

“It may also be a function of how active things have been for the last 12 months,” he said of company plans to pull rigs from the area. “We have seen permitting and drilling operations at an accelerated level during the past year.”

Chevron has been one of the most outspoken companies about how the rules may impact its investments in the Piceance Basin next year. In a statement, the company said its decision not to go forward with a plan to ramp up production in the area was made in the current “regulatory environment,” not the “uncertain one it will be facing in the near future.”

Chevron added that any decision the company may make in the future about any increase or decrease in its drilling activity in the Piceance Basin will be “affected by the new regulatory environment and the potentially increased costs of doing business.”

Representatives from EnCana have said earlier this year that proposed rules for the state’s oil and gas industry and the possibility of an increase in severance taxes led the company not to spend a portion of its $500 million in capital investments in Colorado this year. The vast bulk of the company’s operations in the state are located in the Piceance Basin.

Contact Phillip Yates: 384-9117

pyates@postindependent.com

Post Independent, Glenwood Springs, Colorado CO


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