Oil and gas service companies supporting industry boom

FORT LUPTON — The Northern Colorado oil and gas industry that heated up a few years ago has brought booming business to production companies. But that same boom has left oil and gas service companies in the Fort Lupton area scrambling to keep up with demand.

“At times I have to tell the production companies, ‘I’m a week behind. Can you wait?’ ´ said Rutilio “Shorty” Barron, owner of Barron Oil Field Service Inc. in Fort Lupton. “Sometimes they say no and go find someone else.”

According to the Colorado Oil and Gas Conservation Commission, the state’s oil and gas industry is expected to generate natural gas and crude oil worth almost $8.2 billion this year. Three years ago, the value of the state’s oil and gas was only $2.74 billion, a third of what it’s expected to reach this year.

More than a third of the oil and gas generated in Colorado this year will come from wells in Weld County. On the Wattenberg Field, an oil and gas formation that stretches from Brighton to Greeley, there are an estimated 24,000 oil and gas wells, said Marty Matchett, area manager over Fort Lupton and Trinidad for Key Energy, a service company based in Texas with Rocky Mountain division headquarters in Casper, Wyo.

Production companies such as Kerr-McGee Corp., Patina Oil and Gas Inc. and Prima Oil Co. have drilling permits for wells.

They hire companies such as Halliburton and BJ Services Co. to “frac” the wells, or inject fluids and other components into the well bore under high pressure to force the release of oil or gas from rock formations.

Service companies such as Key and Barron build roads and bring in equipment to keep the wells productive.

The oil and gas industry nationwide started booming about a few years ago because of a combination of demand for energy resources and improved technology that enabled drillers to go back to old wells, ones thought to have reached their production limit years ago, and extract more oil and gas.

Oil prices surpassed $60 a barrel in late June. Natural gas prices have risen steadily during the past few years. International energy companies and governments across the world, including the Bush administration, are promoting natural gas as more plentiful and less polluting than oil and necessary to keep the global economy growing.

The problem is that demand for natural gas in the United States has skyrocketed so high, production hasn’t been able to keep up with demand. It’s likely that vast amounts of natural gas will have to be imported from gas-rich countries such as Qatar, Iran, Russia, Angola, Yemen and Algeria.

Last spring, President Bush endorsed legislation that would allow more natural gas to be imported.

In Northern Colorado, oil and gas service companies struggle with increasing prices for steel and diesel fuel.

“The same things people face as homeowners, we face as a company,´ said Lee Daniel, president of the Rocky Mountain region for Complete Energy Services, based in Houston with an office in Frederick.

One of the biggest challenges for service companies is hiring and training enough people needed to maintain oil and gas wells. Because of the ups and downs in the oil and gas industry over the past 20 years, some service companies haven’t trained enough people.

“During the little booms of the past 20 years, we had access to people who had worked in the industry and came back for a time,” Daniel said. “That work force is getting older. They’re not interested in the difficult physical work anymore.”

Working in an oil and gas field requires people who have a knack for mechanical things, are safety-conscious and don’t mind 12 to 14 hour days.

Training happens on the job. Some companies want people with a lot of experience. Matchett, who employs about 85 out of his company’s Fort Lupton office and 45 in Trinidad, prefers those with no experience at all. He said he looks for people who have a good work ethic and want a career in the industry.

“I want to train people how we do things at Key,” he explained. “People with no experience don’t come with any bad habits.”

Service companies in Fort Lupton hire a lot of oil and gas field workers from Mexico. “The oil fields are the new onion fields,´ said Rosalie Everson of the Fort Lupton Chamber of Commerce. “The migrants are coming to work in them.”

Matchett estimates 70 percent of his employees are Hispanic. With starting pay at $12 an hour plus overtime, Matchett’s employees can make up to $70,000 a year including overtime, he said.

Drilling companies pay more than service companies, but Matchett said there’s more to consider than just pay.

“Drilling a rig is hectic,” he said. “Sometimes you’re working in the middle of the night. The people who work for me may work 6 a.m. to 8 p.m., but they get two days off a week. You can raise a family and have a life.”

Daniel said he’s looking to hire 25-30 people as truck drivers, rig crew members and equipment operators. So far, Matchett and Barron said their companies have been able to keep up with demand. Barron knows his company, which has 26 employees, could get a lot bigger if he had the time and means to hire and train more people.

“We do the best we can,´ said Barron, who started his company 14 years ago. “It’s been hectic, but we just go along day by day.”

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