Improved drilling technology and higher commodity prices have resulted in a burst of gas drilling activity on the Western Slope of Colorado.
The number of gas drilling permits issued this year has soared as a result of renewed interest in the area, said Brian Macke, director of the Colorado Oil and Gas Conservation Commission.
“Northwest Colorado is expected to see upward of 2,500 permits this year, compared to 2,000 last year. That amounts to about a 42 percent increase in activity in the entire area for all of northwest Colorado,” Macke said.
“Although natural gas prices have softened considerably over the last year, they’re still at a level that’s encouraging natural gas production,” Macke said.
Thousands of new gas wells are expected to be drilled in the next year in the Piceance Basin, Colorado’s fastest growing area, Macke said.
Garfield County is the focus of energy development on the Western Slope, he said. So far this year the commission has issued 1,355 permits to drill with 1,600 expected for the year.
“In Garfield County, we’re expecting about 1,600 gas drilling permits for 2006. Last year there were 1,198. This is a significantly higher level of activity and a good forward indicator of new well drilling in the next year,” Macke said.
Most of the drilling in Garfield County is located in the Colorado River corridor area between the towns of Silt and Parachute.
“It’s the Williams Fork Tight Gas Formation,” he said. “It’s tight sand natural gas development.
“That whole corridor both north and south of the Colorado River has been a very active area in the Piceance Basin. It has been happening for a number of years, but activity has really increased dramatically in the last three years because of improved oil and gas commodity prices and improvements in drilling and completion technology,” he said.
Some of the energy companies active in the area include Williams Production Co., Noble Energy, Bill Barrett Corp., Petroleum Development Corp. and Laramie Energy, he said.
Drilling activity also has picked up in Mesa County where some 275 gas drilling permits are expected to be issued this year, up from 189 last year. “That’s a significant increase,” Macke said.
Rio Grande County also has experienced growth lately. “We’re expecting to see 400 permits to drill this year while we had 270 last year. It’s primarily for natural gas development,” Macke said.
Rio Grande County includes the towns of Meeker and Rangely. “There’s a lot of drilling activity there just north of the southern county boundary next to Garfield County,” he said. “It’s an extension of the Piceance Basin.”
Another area, Moffatt County, also is experiencing a rapid increase in permits for natural gas drilling. “We’re expecting 135 permits there this year, compared to 92 the year before,” he said.
Macke said drilling in Rio Blanco County may double this year to about 400 permits. So far this year some 280 permits have been issued for the county. Last year the total permits for the county amounted to 161, he said.
Meanwhile, Yuma County in northeast Colorado also is experiencing a growth spurt. In 2005 there were 551 permits issued to drill there while at the beginning of October there were already 595, he said.
“That’s shallow Niobrara Formation natural gas development. It’s a very prolific formation out there in the Denver Julesberg Basin. It has some chalk, shale and mud stone in it,” Macke said.
“There’s a strong level of activity in the Raton Basin, too, in Los Animas County. We’ve had 365 permits so far this year (in October) compared to 344 for the entire year in 2005,” he said. “It’s still a very robust trend.”
Elsewhere, the Paradox Basin in western Montrose County may be the next Colorado region to expand in oil and gas development, Macke noted. The Paradox Basin is one of the most underdeveloped parts of the state of oil and gas, he said.
In the last couple of years energy companies had shown hardly any interest in developing areas of the Western Slope south of Mesa County, Macke said. In fact, there were no permits issued to drill in Montrose County last year and only one issued so far this year.
A total of 29 permits have been issued so far this year for San Miguel County, compared to 47 permits to drill there last year, he said.
However, the under-exploration in this area has recently prompted some interest among energy companies, he said.
The Bureau of Land Management had more than 24,500 acres up for lease in San Miguel and Montrose counties in a November oil and gas lease sale, Macke said. Most of the land on the auction block in Montrose County is located along Colorado Highway 141 north of Naturita, covering more than 12,400 acres.
The San Miguel County land amounts to 12,227 acres and is located along Highway 141 north of Egnar, he said.