Oil and gas report card: Industry expands westward

Oil and gas exploration in Northern Colorado is coming back from a market downturn, as drilling applications and production numbers are on the increase. And the industry is now moving west into largely uncharted territory, in particular filing large proposals to drill in parts of eastern Boulder County.

The regional uptick in activity is also being seen statewide.

“While still low, global market conditions have stabilized,” said Dan Haley, executive director of the Colorado Oil and Gas Association, the state’s largest energy industry trade group. “Colorado’s oil and gas industry has responded well since the downturn. In fact, 37 rigs are now operating statewide, while only 18 rigs were active this time one year ago.”

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According to the Colorado Oil and Gas Conservation Commission, the state has produced about 81 million barrels of oil and 1.5 billion Mcf, or thousand cubic feet, of natural gas through August of this year. At that rate, production could surpass 2016 totals of 116.4 million barrels of oil and 2.1 billion Mcf of gas.

Northern Colorado counties, which produce about 90 percent of the oil and 30 percent of the gas in the state, could also end higher in 2017.

Weld County continues to lead the energy charge in Colorado. In 2016, it contributed 89.3 percent of oil and about a third of natural gas production for the entire state. But other northern Colorado counties could soon become major producers, at a time when they’re experiencing record population increases and increased political pressure from cities to regulate production.

According to a recent analysis by the Denver Post, the oil and gas industry is filing twice as many permits for counties such as Boulder, Larimer, and Broomfield, than in remote, rural areas. The industry is generally moving west toward the cities of Boulder, Longmont, and Fort Collins.

Industry watchers say the moves are driven by a desire from companies to explore the western edge of the Wattenberg Field, one of the nation’s most productive gas-producing areas. The Wattenberg, part of the Denver-Julesburg Basin, covers more than 2,000 square miles of northern Colorado, and most or all of the towns of Broomfield, Lafayette, and Erie sit atop it. It’s also home to more than 20,000 currently-operating wells. And many more are planned.

“The DJ Basin is one of the most prolific oil and gas development areas in the nation,” said COGA’s Dan Haley. And, he added, parts of counties such as Larimer or Boulder that overlay gas-producing fields have historically been very productive.

The western boundary of the Wattenberg Field generally follows U.S. 287, with extensions as far west as the towns of Superior and Niwot. How far west in the counties are companies willing to file major drilling applications? Haley didn’t say, but pointed out that drilling has occurred just outside of Boulder for a long time.

“Some of the first wells in the state were actually drilled in Boulder in 1901,” he said. “Over 100 wells were drilled in the first five years of production.”

The Boulder and Boulder Valley Fields are small oil and gas fields just a few miles outside of Boulder. Current COGCC data shows 17 producing wells on the Boulder Valley Field, while all wells and facilities in the Boulder Field are listed as “closed,” “plugged and abandoned,” or “dry and abandoned.” Despite its current dormancy, however, the Boulder Field itself has not been listed as abandoned by the state.

That means companies may again see drilling opportunities on the outskirts of a town known for its opposition to oil and gas exploration.

That opposition isn’t unique to Boulder. Some residents and governments of other Front Range cities are opposing, and in some cases, taking action against major drilling proposals. (See related story.)

Two large-scale plans, in particular, are drawing attention because of their proximity to heavily-populated areas. Crestone Peak Resources has filed a plan to develop as many as 216 wells between Longmont and Erie, and 8 North LLC seeks to drill at two locations along County Line Road, which divides Boulder and Weld counties.

Both drilling plans come before the COGCC early next year.

See related story – Northern cities continue push for industry regulation