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Recession in the gasfield?

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Jonathan Thompson | Nov 20, 2008 10:40 AM

Last weekend, the family and I drove over to Grand Junction, Colo., about an hour away from here, to run some errands. GJ, as we call it, is the metropolitan and service center of Colorado's Western Slope. In other words, it's awash with malls, big boxes, strip malls and fast food chains, not to mention the biggest airport and hospital around.

GJ is also a gasfield town. And for the last year or so, that's helped the city prosper while the rest of the nation's economy slides downward: Unemployment is way below the national average, home prices continue to stay high, and the wages are good. This spring, Burger King became famous for advertising a $300 signing bonus to lure burger-flippers. HCN covered the thriving gasfield economy in its "Boom Boom" cover story.

But now, natural gas prices are collapsing, dropping more than 20 percent in recent months. Drilling is declining nationwide, and there are signs the slump will hit Colorado's gasfields. Chevron just announced that it will slow its pace of development in Western Colorado, as have Williams Production and Bill Barrett Corp. Even a few less drill rigs could have a big impact, since each employs about 35 highly paid workers.

This boom has been so big, though, that a little dip will, by no means, equal a bust. Last month, the Colorado Oil and Gas Commission set a record for the number of drilling permits issued, and it's already issued 6,739 permits statewide -- already breaking last year's record.

That's enough, I guess, to give shoppers in Grand Junction confidence. As we drove into town on the grand new bypass "parkway," I fully expected to see ghostly malls and empty shops. Instead, we had a tough time finding a parking spot. The teeny-bop accessory store, Claires, had a line out the door. And people were opening up their wallets left and right. But perhaps the busiest place we saw was Victoria's Secret, where women lined up several deep at the two cash registers.

Bustiers, apparently, don't lose their appeal, even with when a bust looms on the horizon.

 

 

Meanwhile, in the great white north. . .
Sarah Gilman
Sarah Gilman
Nov 20, 2008 01:12 PM
Something similar is afoot in the oil fields of the eastern Montana's Bakken Formation, where a well might cost between $5 million and $8 million to drill:
http://www.billingsgazette.net/[…]/18-oilprices.txt

The state has been relatively well insulated through the economic crisis so far, even projecting a two year budget surplus of up to a billion dollars. I wonder how that number will change, given the changing calculus of the oil and gas fields as prices continue their precipitous downslide. . .
Blaming it on the regs
niko
niko
Dec 11, 2008 10:52 AM
With gas prices falling from $13 a MMBtu to $6.50 and oil from $150 a barrel to $55, I don’t see how development isn’t going to slow down, at least for a while. The thing that drives me crazy is some oil and gas companies in Colorado are blaming the new regulations coming out of the COGCC rulemaking process for declining development:

http://www.denverpost.com/ci_11065985?source=bb

I quote: “’There are a number of variables,’ Felton said. ‘There is the uncertainty surrounding policies that relate to a new administration nationally. ... Of course, there's the Colorado rule-making.’”

What a joke. What a blatant lie. The COGCC rulemaking is making ZERO difference right now in decreased oil and gas development in CO. Don’t try to stretch this into being even a contributing factor for the predicted slow in development. The price of oil fell 200%. Are you telling me that a new restriction asking companies to line their reserve pits is even a drop in the bucket compared to the free fall that prices are undergoing? ROTFLMAO! The price of gas falls by 100% and your panties are in a wad about a rule asking companies to consult with DOW? Uh-hu, riiiiiiiiiiiiiiiiiiiiight.

If the reasons above don’t already make it ludicrous that a few regulation tweeks are driving industry out of Colorado, try this one: The rules have not even gone into effect yet. Several rules won’t be applied until 2011. Yeah, I’m sure that’s making a difference now.

Check out the dates that the rules go into effect here:
http://cogcc.state.co.us/RuleMaking/Del ... 102408.pdf

Some in the industry are just poor losers and wants to take every opportunity possible to hurt Ritter and those supporting protecting our environment. Little jabs about new regs being a factor in decreasing development in Colorado are nothing more than the industry keeping up the smoke screen to lie to the public. Sorry guys, we know better.

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