The impact of the oil and gas industry on Weld County has only increased in recent years and should continue to grow in the years to come, thanks to some recent regulatory changes.
The county is home to the Wattenburg Field, which extends from Greeley to Brighton and Longmont to Keenesburg and produces enough natural gas and crude oil in one minute to heat five homes for a year. In December 2005, the Colorado Oil and Gas Conservation Commission passed an amendment to Rule 318A allowing oil and gas operators to increase the number of wells on 160 acres in the Wattenburg Field, which is part of the Denver-Julesburg Basin.
The amendment, which allows for approximately 5,000 additional wells in the prolific field, expanded drilling operations while still protecting the interests of the growing communities in the area.
“The amendment allows operators to have three additional wells, which is an increase from the five that was previously allowed,´ said Greg Schnake, executive vice president of the Colorado Oil and Gas Association. “The additional wells are drilled off of existing land pads, which decreases the expense yet still provides a growth engine for operators. This also allows for a perception of a decrease of the physical presence of the wells because they are in the same location.”
Schnake said the amendment was needed to compensate for declining production as the field matures.
“This growth will keep the field productively vibrant and chugging along as the nation’s seventh-largest field,” he said.
The Independent Petroleum Association of America ranks Colorado seventh in the nation for natural-gas production and 11th for crude-oil production. In 2006, Weld County produced more than 7 million barrels of oil – nearly half the state’s total – and 103 billion cubic feet of natural gas, second only to Garfield County, according to COGCC figures.
“Oh, yes, the Wattenburg field has been a tremendous blessing for Weld County and its people,´ said Weld County Commissioner Bill Jerke. “There are thousands of people in the area who are receiving royalty checks from holding on to mineral right after selling land.”
Because most of the active wells are located in unincorporated Weld County, rural areas receive more of the monetary benefits than urban areas. The industry accounts for 41 percent of Weld County’s $70 million in property taxes, or approximately $28.7 million annually.
“The oil and gas industry provides thousands of jobs in the area, and there is a direct link to thousands of more jobs that are a spinoff of the industry… this is clearly a primary employer in the area,” Jerke said.
The Independent Petroleum Association reports that the industry employed 26,903 in Colorado, with positions ranging from exploration to retail sales in 2003, the most recent figures available.
According to the COGCC, Weld County has 11,963 active wells, with the number changing daily.
“The number of active wells is based on drilling permits, which may get approved in October ’06 but may not get drilled until summer ’07,´ said Tricia Beaver, hearings manager for the commission.
In 2006, the COGCC approved 1,844 drilling permits for Weld County.
“It is definitely an important county for the state… It has been a productive field since the 1940s, and multiple geological formations have been found,” Beaver said.
The field is an attractive prospect for domestic producers who continue to levy to improve their asset position. In May 2005, Houston- based Noble Energy Production Inc. purchased Denver-based Patina Oil and Gas Corp. for $2.76 billion to expand in the Rocky Mountains.
“Wattenburg is an important core asset and provides a stable basis of operations for our company,´ said Greg Panagos, director of investment relations for Noble Energy. “We have a lot going on there now; it is very active, with seven rigs running to add wells.”
The company has 1,700 projects in the field, with 65 percent of its production focused on natural gas and an additional 35 percent on crude oil.
“The acquisition added a domestic long-lived base, and we can grow from its assets. There is still a lot of life left in the field, and we plan to expand our presence in the area,” Panagos said. “Wattenburg is our second-largest field in terms of reserves in production and in terms of production it is our largest asset.”
How a business manages its inventory can have a tremendous impact on the financial health of the company. Managed properly, inventory can be a great source of increased margins, higher revenue, or a combination of the two.