Applications for drilling permits rise
July 23, 2010
GLENWOOD SPRINGS, Colorado – Piceance Basin oil and gas drilling activities continue to be well below levels reached before the Great Recession and a drop in gas prices put local activities into a tailspin, according to the Garfield County oil and gas liaison Judy Jordan.
But, Jordan told the Board of County Commissioners this week, the pace of applications for permits to drill (APDs) in the basin, which underlies much of the county, has risen sharply and is about on a par with that of three years ago.
“As usual, we are the lead,” Jordan said, explaining that in the second quarter of 2010 (April, May and June) the
Colorado Oil and Gas Conservation Commission (COGCC) issued more permits to drill in Garfield County than in any other county in the state.
As of July 8, she reported, the COGCC had approved a total of 1,146 well permits for Garfield County, compared to 1,048 for Weld County. The two counties vie for the distinction of having the most gas production activity in the state.
Current projections by the COGCC, Jordan reported, are for approximately 2,280 well permits to be approved for Garfield County this year, which she said would make it the third highest number of permits since the gas boom began in 2004.
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Those numbers, she said, are close to the levels achieved in 2007, when the state approved 2,550 well permits for Garfield County.
Overall, Jordan reported, Garfield County is host to 7,411 active oil and gas wells, compared to 15,575 in Weld County, where drilling has a significantly longer history.
Jordan was at a loss to explain the upsurge in APDs this year, noting that the price of gas has remained below what is considered the minimum price needed to justify drilling new wells. She said the industry needs “between about $5 and $7 per million BTUs” to justify drilling. The current price, she said, is averaging just under $5 per million BTUs.
But, she noted, it is possible that drilling companies are reacting to a change in COGCC rules that extended the length of time that permits stay in effect before expiration, from 1 year to 2 years.
Plus, she told the commissioners, drilling rig operators in the Piceance Basin generally have been cutting production costs and getting more “bang for their buck” out of their operations here, and that “the long-term outlook is for natural gas use to increase dramatically” in the future.
As of early June, Jordan reported, there were 20 gas drilling rigs operating in Garfield County, and she said the latest statewide data indicated that there were 56 operating rigs in Colorado earlier in July.
In terms of complaints, she told the commissioners, her office received six complaints from county residents in April, May and June – three for odor, two for noise and one for traffic conflicts.
Jordan called that “a tremendous drop” from an average of 12 complaints per quarter in 2008.