A Rocky Mountain High

A Tale of Two Regions

While oil and gas drilling has stalled in most parts of the domestic United States, Colorado is setting new records this year in the number of wells drilled as the Rocky Mountain region becomes a hotbed of drilling activity.

Colorado's producing well count is expected to top 25,000 wells by the end of this year with total value surpassing
$3 billion.

Currently, there are about 1,400 more wells operating in Colorado than at the same time last year, officials said. In fact, the state now has more drilling rigs operating than at anytime since 1986.

Through September of this year, 24,808 wells were producing oil and gas, said Rich Griebling, director of the Colorado Oil and Gas Conservation Commission.

In the same period last year, the well count totaled 23,352. It reached 22,742 at the same time in 2001, he said.

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While oil and gas drilling has stalled in most parts of the domestic United States, Colorado is setting new records this year in the number of wells drilled as the Rocky Mountain region becomes a hotbed of drilling activity.

Colorado's producing well count is expected to top 25,000 wells by the end of this year with total value surpassing
$3 billion.

Currently, there are about 1,400 more wells operating in Colorado than at the same time last year, officials said. In fact, the state now has more drilling rigs operating than at anytime since 1986.

Through September of this year, 24,808 wells were producing oil and gas, said Rich Griebling, director of the Colorado Oil and Gas Conservation Commission.

In the same period last year, the well count totaled 23,352. It reached 22,742 at the same time in 2001, he said.

Griebling said he expects the year to finish out with about 25,000 active wells.

"We've never been close to that for the number of active wells," he said. "It's an all-time record."

The record total value of drilling for the state was $3.05 billion set in 2001.

Most of the wells are natural gas -- about 83 percent -- while 17 percent are oil wells.

"Some of the wells are drilled for both oil and gas, so it's like pulling hairs," he said.

Initial indications are that the state will issue about 2,500 well permits in 2004, he said. The number of new permits for wells for 2003 will be about 2,200. The all-time high of 2,300 permits was set in 1981.

From 1995 to 1999, the number of permits issued annually rose about 1,000 each year, according to Griebling. Then it climbed to about 1,500 more each year. In the last three years, it has risen by about 2,000 or more permits per year.

Markets for Rocky Mountain gas are expanding with the addition of new pipelines from the area.

Recently, a major new pipeline to carry Rocky Mountain gas to the West Coast opened, enabling gas producers to get better prices outside the region. Another pipeline to carry gas eastward is now under development. In the past, Rocky Mountain gas usually stayed in the region for local consumption.

With an estimated 90 percent of all new power plants being fueled by natural gas, demand for gas is expected to grow dramatically in coming years. Demand is outpacing the production from domestic suppliers, and that imbalance has pushed Western gas into the forefront of production.

Nationwide, gas production outside of the Rocky Mountains has either remained flat or declined in the past few years -- the region is the only place in the United States where natural gas production is increasing, according to Griebling.

In the past 20 years, natural gas production in the Rocky Mountain West has climbed 162 percent. Meanwhile, production in the historically rich gas areas of Texas, Oklahoma, Louisiana and the offshore Gulf Coast has fallen by 29 percent.

As older gas fields in the South are depleted, the West now has the distinction of the largest gas reserves of any region in the domestic United States.

In fact, the West consisting of Colorado, Montana, New Mexico, Utah and Wyoming now has 41 percent of the proven and potential gas reserves in the continental United States, according to the National Petroleum Council.

The Bush administration has launched several initiatives recently to open gas-rich federal lands in the West and speed approval of natural gas leasing and drilling here. The energy industry has claimed that environmental obstructionism has prevented access to these lands.

The White House recently formed the Rocky Mountain Energy Council, a group of officials charged with streamlining energy permitting decisions in the West.

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